The problems considered

I freely admit I only have a broad brush knowledge of economics. Like most people, I read and listen to a range of commentators and try to work the ones who seem to make most sense. I also watch in amazement at how economic crises arrive, if not entirely unexpectedly when you look across all economic commentary, but certainly with a timing that seems to be well beyond the abilities of accurate forecasting. (Of course, some economists get some predictions right just by always predicting the next crisis is just around the corner.)

I have a hunch that the problem with economics is twofold: to a large extent it's based on human psychology (and even more unpredictably, human group psychology); but also I suspect that international financial systems have become so complicated that it has become extremely difficult for anyone to understand it in sufficient entirety to make accurate forecasts.

But what has become clear at the moment is that some economists have become well and truly caught up in a sort of culture war.

On the one hand, the Tea Partiers and small government libertarians in the US have decided that the key idea is the need for urgent reduction of debt. This ties in with wanting small government generally, which they argue also means low taxes, even while government debt is still high. They also both share a disbelief in climate change, frequently claiming it is merely the wolf of socialism and redistribution of wealth in sheep's clothing.

On the other hand, you have the proponents of Keynesian economics, arguing that stimulus is what is needed to help prevent a bad situation becoming worse. Although Tea Partiers and right wing pundits of all types now paint Keynesian economics as a Leftist sacrilege against good sense, the basic idea of Keynesian economics seems to have been accepted as making sense by many economists who you would not identify as being of the Left.

The culture war in the States clearly has Krugman on the one side, and the right wing noise machine on the other. (I'm not sure who to cite as a prominent economist who always supports what the Tea Partiers and Republicans say - their main support seems to come mainly from the likes of journalistic commentators in the Wall Street Journal and whole bunch of bloggers.)

In Australia, we get a whole lot of huffing and puffing about it from the "centre right" website Catallaxy, with Sinclair Davidson and especially Steve Kates citing every day the mantra "reduce debt, lower taxes". Of course, they totally oppose a carbon tax and a minerals tax, mainly (I suspect) because those phrases contain the word "tax".

Steve Kates seems so obsessive about Keynesian economics as the root of all evil that he has just written a whole book about it, and promptly promoted it on the Catallaxy website.

Sinclair Davidson is a member of the IPA, which not only runs campaigns against the carbon tax as a tax, it promotes actual disbelief in AGW science by hosting and publishing material by geologist sceptic Bob Carter. If you ask me, the IPA starts with its ideological hostility to taxes first, then works backwards to find any justification for no carbon pricing, including hosting a scientific maverick like Carter, despite his clear failure to make an actual dint the mainstream of climate science. They also hosted Vacla Klaus' recent talking tour of Australia, where his attack on carbon pricing was based on it being too much like communism.

Given that non-economist Rafe Champion takes every opportunity to promote anti-AGW articles from pure propagandists like Jonova, and spends all his time analysing AGW science as if it were entirely a result of Leftish propaganda; and Judith Sloan makes her disdain for the topic clear as well, it appears that not believing that climate change is real (or if real, not serious) is the essential requirement for anyone given posting rights on the Catallaxy.

This conflating of issues across economics and science seems to me to be a worrying phenomena. As the Europeans have shown, antagonism to climate change science does not have to be a prerequisite to conservatism in politics. Yet it is virtually a cornerstone of right wing small government philosophy in both America and Australia, even when the Coalition's policy is actually for direct government intervention, as opposed to the Labor trying to set up a more market orientated approach of an ETS.

Climate change skeptics spend all their time criticising alleged over-confidence of climate change scientists, and of course they have occasional PR wins when someone (often non scientists like Gore or Flannery) can be quoted with a careless exaggeration from years ago.

But when it comes to economics, Steve Kates in particular is like the epitome of over-confidence in one rock solid formula for economic truth, and it seems rather ludicrous to me that he and his co-bloggers should spend much of their time criticising climate change scientists for being stuck on one idea.

It seems to be common sense to me that the middle ground in economics is almost certainly right - a Keynesian type response is appropriate for some situations, but it can't always work and you obviously have to take into account the prospect of crippling your nation with too much debt for too little return. Same with taxes: sometimes lowering them will work with the economy generally, sometimes it won't. Refusing to increase taxes even moderately on the very richest (such as is happening in the States at the moment) makes little sense psychologically, even if it contributes to the bottom line minimally without reducing spending. Small government ideology can even be its own worst enemy to effective reductions in spending. I have noticed recently, for example, commentary emphasising how the key spending problem in the States is on health, and yet you get Australians in threads at Catallaxy, despite our egalitarian, high quality and yet cheaper health care system, siding with Tea Party opposition to substantial reform of the American system on pure ideological grounds of dislike of government involvement in anything.

The problem is, the ideologues on display at Catallaxy, as well as Republicans in the States, show no interest in trying to make objective assessment on climate science, and view it all through their "small government, lower tax, we hate Keynesians" ideological glasses. I wouldn't mind if they kept their little ideological school to themselves, but they spend a fair amount of their time as evangelists too, and in the US and Australia such evangelism seemingly has had some success on public opinion as to whether it is worth making any response to climate change at all.

They could contribute to useful discussion as to best policy options to move to reducing carbon, but instead they prefer to devote their time to insisting or insinuating there is not a real problem at all, and spreading negativity on an ETS in toto. I can't say that legitimate criticism of how a policy might fail is useless - I have a long standing scepticism of ETS' myself - but it is hard to get a clear idea of how valid some criticisms are when you know that they are all issuing from a largely ideologically driven hostility to accepting the very problem being addressed.

Anyway, that is how I see it: a bunch of non-scientifically interested economic ideologues interpreting a field of science through their cultural glasses and devoting a lot of time to criticising policy on it by claiming that all of the politicians and scientists involved are a bunch of political ideologues who have fooled themselves on both the science and policy.

Their position is not credible for the reasons I have outlined. To the extent that they run interference for their being no political response at all to reduce the use of carbon fuels, they are acting against the long term interests of humanity collectively.

The best that one who is sympathetic to their economics can argue is that they are trying to preserve a strong economy which will have better resources to adapt to climate change which is inevitable due to Chinese and Indian growth in carbon fuels regardless of what the West does.

The reason I do not find this compelling is because I find the uncertainty in the precise effects of climate change, something skeptics argue as a reason for doing nothing, is actually a more compelling argument for reducing CO2, because it may well that effective adaptation is simply not possible for many of the consequences of climate change. In the Australian context, for example, there is not a lot of adaptation to be done about severe flooding of the type that Queensland just went through: there is no other dam that can be built on the Brisbane River, and the floods were so widespread across the southern half of the State there was no relevance of talking about damming having any significant effect. The same applies for the flooding in Victoria, I expect.

Make formerly 1 in a 100 year floods happen, say, every 10 to 20 years, and the economic cost is surely very large, and the only adaptation possible is, I suppose, abandoning large swathes of Brisbane.

The same for droughts of the type currently happening in the USA. Make them more frequent, and I just don't know that there is any possibility of adapting to them at all.

Instead, you take the scientists' advice that limiting CO2 levels should limit to a lower range the possible climate changes.

My attitude to the problem of China and India is twofold: global climate change effects appear to be well on the way anyway, given the world's climate of the last year or so, and so recognition of the problem is not likely to be an issue. (In fact, it would appear that at least in China there is no serious government skepticism on the science, perhaps because "small government" is not an ideology that appeals to them!) Recognition of the equity issue, in terms of the telling these countries that they can't follow the Western route to increased prosperity, is going to be important, as will be all assistance possible to finding effective technological solutions to clean energy. Both of these are hindered by any large part of the West (being the USA and Australia) refusing to start any action towards carbon pricing, which should assist market moves to clean energy.

The bulk of non-ideologically bound economic commentary on the matter is that carbon pricing does not have to kill economies; I don't see why I should accept the ideologues against Keynesian economics are correct in their assessment to the contrary.

Of course, an international recession has its own problems for carbon pricing, and for all I know there may be a legitimate argument for delaying its start it in the worst affected countries. I suspect, however, that even in recession, it is not going to be a killer for recovery. Any reader who knows better can opine below. What I do think is that the longer the delay for any reason, the worse are the prospects of getting China and India to treat it as urgently as we should want them to.

There: that's the position of this non-economist, non-scientist, but compulsive blogger.