Tuesday, July 31, 2012

Palm Tolerable

Bobby calls me out for treating "proper regulation" as readily available fairy dust--just sprinkle some over your proposed solution to any problem, and enjoy the results:
Logging is the second resource-extraction issue in a week that you've said would be beneficial if it was "properly regulated." The other was your post on fracking. But when I read the words "properly regulated", I mentally substitute in the words "magical ponycorns prevent regulatory capture." So, I read your statements as "...logging, if magical ponycorns prevent regulatory capture, is generally good for the world," and "fracking, if magical ponycorns prevent regulatory capture, is safe."
And I don't necessary disagree with either of those statements, its just that I think that experience from the myriad regulatory failures of the Bush administration has shown that, even in cases where magical ponycorns may briefly exist, all it takes is for a "business friendly" administration to come to power to make all those nasty 'ol job-killing, regulation-loving ponycorns go away.
Proper regulation is great, but I think that, because it so often falls short, it is too thin of a crutch to lean on as a suitable palliative to the ecological damage caused by resource-extraction industries.
I've been thinking about this during my many airport visits this weekend, and I agree, but not entirely. I think that "proper regulation" can be interpreted to suggest an optimal framework, but the fact is that every transaction will still have winners and losers--more money for the girl scouts (or cheaper thin mints for us) if the loggers are allowed to decimate the rain forest in Malaysia, increased poverty for workers in the developing world if we impose standards on them that we ourselves ignored at a similar state, when we were clearing all the timber in the country to create space for agriculture and community.

Perhaps better, to take a lesson from Adam Smith:
Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice: all the rest being brought about by the natural course of things.
"Tolerable" being the key word, and perhaps a better substitute for "proper" than ponycorn . There is so much beyond our control, and the system is so complex, that the character of our regulatory framework seems only a small factor in our future prosperity. If I had to list the top ten factors likely to impact me over the next four years, the policies favored by Barrack Obama or Mitt Romney are not going to make it--and my life is likely to be substantially the same under either as it was during the previous two administrations. I shudder at the prospect of President Romney, as I did at President Bush, but nevertheless.

But that said, there are countries without "tolerable" regulatory frameworks, and that does seem to have a limiting effect on development. It's better obviously, for Nigeria, to have oil wealth, but better still, if they can regulate the industry in a tolerable way, whether it be like Norway, which created a sovereign fund to manage its profits, or the United States, which has environmental safeguards and penalties to prevent and deter accidents. 

Anything will work, as long as it satisfies some basic tests of fairness. That doesn't avoid the ponycorn entirely, but it does make it a little less chimerical.


  1. The Nigeria example is important, I think. The anti-fracking initiative has the logical implication that the environmental casualties associated with producing energy should be left for other countries to suffer. I think that bringing the environmental challenges home -- though unpleasant and undesirable in impact -- will compel Americans to take more responsibility for the energy they use. If those problems are left in Nigeria or the Persian Gulf, then they are out of sight, and out of mind.

    As for palm .. who is to say which is the more legitimate ground covering, forests that were pre-existing, or forests that people plant? It's not ideal. But what are the alternatives? How are 8 billion people supposed to live? During my travels in 2012 around Southeast Asia, I do find far more discussion of environmental issues now than I heard in 2005-07.

  2. Palm plantations host far less biodiversity than native forests. Tell me, Louise, did you see a lot of birds in those plantations?

    I'm concerned that whats tolerable in the short run may not be tolerable in the long run. Maybe the palm plantations in Malaysia are a boon to economic growth, but its a fragile boon. All it would take is one palm-blight fungus - or drought, or record heat wave - and those hundreds of square kilometers of palm monoculture can easily turn into standing dead wood. The resiliance is gone.

    I'm concerned that fracking will lead Americans to be less responsible in the energy they use. First, because it will be less expensive, they will use more of it. Second, because very cheap gas has dealt a pretty serious blow to the wind industry. What could have been carbon-free energy has been displaced by energy that produces marginally less greenhouse gasses than coal.

    Its possible that, given enough time to develop environmentally friendly and resilient systems, both fracking and palm-growing could be managed in a sustainable manner. But think that happens only rarely, and I think the "basic fairness" that Brian refers to tends to be the first casualty of resource extraction. Whenever there is a gold rush, the race is on to get the most, the fastest. Damaging externalities are left as an afterthought.

    Who owns the palm plantations? Where do the profits from fracking go? How much of the money gets reinvested into the communities of rural Malaysia and Pennsylvania, and how much goes to Kuala Lampur and Wall Street? And who gets to live with the environmental consequences?

  3. Good points. But I still think a gas powered economy is preferable to one based on filthy coal and Wahabbi oil. I didn't bring up a price on carbon emissions, because it seems impracticable, but it seems like a market where the environmental cost of a product is factored into its price is what we should aspire to. And if some of the profits, like in Norway, go into a fund set up to compensate those adversely affected by the change, all the better. But now I sound like a socialist

  4. Gas is no doubt superior to coal, but, ultimately, every hydrocarbon that is not left underground ends up as C02 in the atmosphere. Cheaper ways of getting it out doesn't feel like a long-term solution to me.

    You've probably listened to this already - http://www.econtalk.org/archives/2012/02/david_owen_on_t.html - in which David Owen argues that increases in energy efficiency paradoxically lead to higher energy use. It's an interesting point, and I think may be Achilles heal of using gas as a means of reducing carbon emissions. Recent replacement of coal-fired-plants with gas has indeed resulted in a reduction in emissions, but, in the long term, I'm concerned we will see a bounce-back. The energy is cheaper, so we will use more of it.

    I'm a big fan of a carbon tax-and-rebate scheme, but I agree that it seems unlikely to happen. At this point, I find it hard to reach any other conclusion that to observe that humanity has basically resigned itself to global warming.