The Global Warming Bubble
You didn’t have to be a rocket scientist in the 1990s to figure out
that speculative investment in dot-coms with no revenues would be
The same goes for lenders giving mortgages to borrowers with no jobs, no incomes and no assets.
So after surviving the tech bubble and while trying to extricate the
economy from the housing bubble, why are we bent on heading into the
global warming bubble?
Just this week the Environmental Protection Agency issued its
economic analysis of the Lieberman-Warner global warming bill that is
being considered by the Senate. The EPA projects that if the bill is
enacted the size of our economy as measured by its gross domestic
product would shrink by as much as $2.9 trillion by the year 2050.
That’s a 6.9 percent smaller economy than we otherwise might have if
no action were taken to reduce greenhouse gas emissions. For an idea of
what that might mean, consider our current economic crisis.
During the fourth quarter of 2007, GDP actually increased by 0.6
percent, yet trepidation still spread among businesses, consumers and
the financial markets. Though the EPA says that Lieberman-Warner would
send our economy in the opposite direction by more than a factor of 10,
few in Congress seem concerned.
For more perspective, consider that during 1929 and 1930, the first
two years of the Great Depression, GDP declined by 8.6 percent and 6.4
percent, respectively. And what would we get for such a massive
self-inflicted wound? It ought to be something that is climatically
spectacular, right? You be the judge.
The EPA says that by the year 2095 — 45 years after GDP has been
slashed by 6.9 percent — atmospheric carbon dioxide levels would be 25
parts per million lower than if no greenhouse gas regulation were
Keeping in mind that the current atmospheric CO2 level is 380 ppm
and the projected 2095 CO2 level is about 500 ppm, according to the
EPA, what are the potential global temperature implications for such a
slight change in atmospheric CO2 concentration?
Not much, as average global temperature would only be reduced by a maximum of about 0.10 to 0.20 degrees Celsius, according to existing research.
Sacrificing many trillions of dollars of GDP for a trivial,
45-year-delayed and merely hypothetical reduction in average global
temperature must be considered as exponentially more asinine than the
dot-bombs of the late-1990s and the NINJA subprime loans that we now
look upon scornfully.
So who in their right mind would push for this?
I met many of them up-close-and-personal last week at a major Wall
Street Journal conference at which I was an invited speaker. My fellow
speakers included many CEOs (from General Electric, Wal-Mart, Duke
Energy and Dow Chemical, to name just a few), California’s Gov. Arnold
Schwarzenegger and the heads of several environmental activist groups.
The audience — a sold-out crowd of hundreds who had to apply to be
admitted and pay a $3,500 fee — consisted of representatives of the
myriad businesses that seek to make a financial killing from climate
There were representatives of the solar, wind and biofuel industries
that profit from taxpayer mandates and subsidies, representatives from
financial services companies that want to trade permits to emit CO2,
and public relations and strategic consultants to all of the above.
We libertarians would call such an event a rent-seekers ball — the
vast majority of the audience was there to plot how they could lock in
profits from government mandates on taxpayers and consumers. It was an
amazing collection of pseudo-entrepreneurs who were absolutely
impervious to the scientific and economic facts that ought to deflate
the global warming bubble.
In the interlude between presentations by the CEOs of Dow Chemical
and Duke Energy, for example, the audience was shown a slide — similar
to this one — of the diverging relationship between atmospheric CO2 levels and average global temperature since 1998.
That slide should have caused jaws to drop and audience members to
ponder why anyone is considering regulating CO2 emissions in hopes of
taming global climate. Instead, it was as if the audience did a
collective blink and missed the slide entirely. When I tried to draw
attention to the slide during my presentation, it was as if I were
speaking in a foreign dialect.
The only conclusion I could come to was that the audience is so
steeped in anticipation of climate profiteering that there is no fact
that will cause them to reconsider whether or not manmade global
warming is a reality. The callousness of their blind greed was also on
display at the conference.
In an instantaneous poll, the Wall Street Journal asked the audience
to select the most pressing societal problem from a list of five that
included infectious disease (malaria, AIDs, etc.), terrorism and global
warming. Global warming was the most popular response, receiving 31
percent of the vote, while infectious disease was far behind in last
place with only 3 percent of the vote.
It’s an amazing result given that billions are sickened and millions
die every year from infectious disease. The consequences of future
global warming, on the other hand, are entirely speculative.
Finally, I was astounded by the double-speak practiced by the global
warmers. Virtually every speaker at the conference professed that they
were either in favor of free markets or that they supported a
free-market solution to global warming. But invariably in their next
breath, they would plead for government regulation of greenhouse gases
and government subsidies for alternative energy.
It’s hard to conceive of any good coming from a public policy in
which facts play no substantial role in its development and words have
no meaning in its public debate.