GUEST BLOG: Douglas Renwick – Notes on Climate Change Denial in Economics Education

Benjamin Franta is a historian who has done interesting research on the fossil fuel industry’s role in shaping the economics profession’s arguments on environmental economics. He concludes in an articlethat:

For decades, the fossil fuel industry has hired economic consultants to help weaken and delay US and international climate policy. Among them, the economic consultants of Charles River Associates played a key role, helping to undermine carbon pricing, international climate agreements, and other climate policies from the early 1990s onward. The work of these economists was often portrayed to the public as independent, when in fact it was funded by the fossil fuel industry, and their models were incomplete and biased in favor of continued fossil fuel use. Yet their conclusions often passed without challenge and eventually came to represent a significant part of conventional economic wisdom.

It is a naturally interesting question to ask how significant and how conventional has this wisdom become?

Consider the following list of claims I have made in my previous notes on the subject of climate change denial in economics education:

• Nobel prize winning economist William Nordhaus saying 4 degrees Celsius is optimal by 2150

• His book Climate Casino (2013) containing lies by omission, and very selective methodology, yet has been highly influential

• Climate Casino was reviewed by Paul Krugman, Martin Weitzman, Suzi Kerr, Adam Jaffe, all mixed to positive reviews, and all observed that 4 degrees Celsius is optimal

• Weitzman being the only reviewer to claim that the target was overly optimistic in saying that the damages would be much more than estimated.

• Weitzman claiming that Nordhaus’s work “is a balanced centrist pragmatic observer who avoids extremes of right or left”.

• Suzi Kerr and Adam Jaffe recommend that it be used as a textbook, and that “The Climate Casino provides an excellent self-contained introduction to the subject”.

• Richard Tol, despite being a Nobel peace prize winner for writing in the IPCC, has an extensive rap sheet for climate denial on Desmog.com, and is called a “leading scholar in this area” of calculating the damages of climate change in Climate Casino.

• Richard Tol published a paper on the social cost of carbon rising over time, which claims that: “Between 1982 and 2022, 207 papers have been published with a total of 5,905 estimates of the social cost of carbon.”
• The majority of these estimates have been between $30-$300. A recent paper has argued that it is $1367. In my view that’s still too low. If Tol’s paper is to be believed, then vast underestimates of the costs of carbon have been the conventional wisdom, rather than the outlier.
• The “discount rate” argument has been taken very seriously in economics research. It’s taught to first year students at Victoria university of wellington.
• The argument was used to say that we shouldn’t do anything about problem X, because a dollar today is worth more than a dollar tomorrow.
• This argument was used by a notorious physicist, Fred Singer, to argue we shouldn’t do anything about acid rain in the 1970’s. Fred Singer was an employee of the Heritage institute, and had the remarkable ability to say acid rain, global warming, tobacco, the ozone layer, were all not a very big deal. He also used the selective cost-benefit analysis to downplay the costs of acid rain. This cost benefit analysis methodology was conventional wisdom in neoclassical economics of climate change.
• The discount rate was then used in a very influential report in 1983 that was used by Bill Neirenberg, the founder of the Marshall Institute (climate denial think tank). He used the three climate denial arguments of ‘adaptation, discount, tech-fix’ that came from William Nordhaus and Thomas Schelling.

It is of major interest to me that Martin Weitzman, who was considered to be the favorite, or runner up to the Nobel prize in economics, was considering that Climate Casino was essentially at the “center”. This quote, if true, would surely indicate that economics departments in most universities have been shaped heavily by climate denial.

Franta’s article narrowly focuses on the American Petroleum Institute (API) and its influence, and it contains a lot of solid gold information on their influence. Likely it’s just the tip of the ice-berg. The other big influence on the economics profession has been the free-market think tanks, as shown above. They have promoted a similar framework, and I think it’s fair to say that the cultural norms in free market think tanks and the API are not that different.

The corporate propaganda coming out of these networks of think tanks has been decades ahead of the public, and given them a great advantage. There have basically been three narratives pushed on the economics of climate change over the last few decades.

One is the cost-benefit-analysis, which has seen the solution of climate change as a trade off between the economy and the environment. The record shows that this narrative was intentionally crafted as a form of corporate propaganda, to deceive the public. The narrative is still being pushed by the consulting industry as talked about in The Big Con ( Mazzucato, 2023).

The second narrative was the Green New Deal, which sought to fix the economy and decarbonize it at the same time, as a dual positive. This was basically erased from public consciousness until it gradually started picking up in popularity after 2008. In 2019, it was supported by 64% of republican voters and almost all democrats, in polling. In 2020, support dropped to 10% for republican voters, likely due to the “Fox news effect”.

The third narrative of “steady state economics, degrowth, post-growth, doughnut economics” can find its roots in the economist Herman Daly, but you could also argue that most human beings accepted many of these principles before the 15th century.

Degrowth argues that we should provide jobs via a job guarantee, reduce inequality, while also reducing excessive consumption (planned obsolescence, advertising, food waste, reduce working hours, ect). This would be the approach to avoid drastic overshooting of our planetary boundaries.

There have already been a range of disingenuous arguments against the degrowth narrative, and given how prepared the fossil fuel industry has been in the past, we can expect that they’ve already looked at these arguments and are well prepared to try and kill degrowth the same way they did with the green new deal.

 

 

 

 

 

Douglas Renwick is a dissident interested in understanding and educating on the problems of 21^st century capitalism. He writes at https://substack.com/@drenwick