For years, right libertarians have loved to throw around the “World population living in extreme poverty” metric, which shows extreme poverty shrinking steadily as a share of the population from 1815 on, and then in absolute terms since about 1980. The problem is that “extreme poverty” is defined in monetary terms, as living on less than a certain amount a day. As I pointed out here and Jason Hickel pointed out here and here, the metric is unsatisfactory — not to say dishonest — in a number of ways. The graph actually reflects the degree to which the world’s economy has been forcibly monetized, by nullifying entire populations’ communal rights to subsist on the land and transforming them into wage laborers who must earn money to buy food from commodity sellers. As Hickel put it:
What Roser’s numbers actually reveal is that the world went from a situation where most of humanity had no need of money at all to one where today most of humanity struggles to survive on extremely small amounts of money. The graph casts this as a decline in poverty, but in reality what was going on was a process of dispossession that bulldozed people into the capitalist labour system, during the enclosure movements in Europe and the colonisation of the global south.
In addition, Hickel argued that the poverty metric was carefully “massaged” to provide the desired result. The original “International Poverty Line” metric adopted in 1990 showed that the absolute number of people in poverty had increased from 1.2 to 1.5 billion between 1987 and 2000. So the World Bank’s pet economists simply kept reducing the bare minimum threshold downward until it showed the desired result.
So GDP already has a questionable history as a stand-in metric for a lot of poorly defined things, for people who either want to obscure the facts or can’t think very clearly….
…Which brings us to Ron Bailey. Bailey recently argued in Reason that even increases in global mean temperature at the high end of the estimate spectrum would not be catastrophic, based on an assessment by economist Richard S.J. Tol that the cost of avoiding a 2 degree Celsius increase in global warming would exceed the cost of the warming itself by 1 percent of GDP:
…the costs of implementing climate policies that aim to keep average global temperature by 2100 below the two Paris threshold temperatures of 2.0 and 1.5 degrees Celsius would respectively cost 3.8 to 5.6 percent of global GDP. In comparison, the benefits of climate policy would amount to 2.8 to 3.2 percent of GDP. The upshot is that the costs outweigh the benefits of steeply cutting greenhouse gas emissions in order to keep average temperatures below the Paris Agreement thresholds.
Now, Bailey has a history of arguing that global warming really isn’t so bad based on GDP metrics. As long ago as 2009, he was citing similar arguments from Tol:
Available estimates suggest that the welfare loss induced by climate change in the year 2100 is in the same order as losing a few percent of income,” notes Tol. “That is, a century worth of climate change is about as bad as losing one or two years of economic growth.
And in 2018 Bailey argued, based on estimates in the Fourth National Climate Assessment (NCA4) that the highest trajectory for atmospheric CO2 increase would result in a 10% lower GDP by the end of the century, that even in that scenario we would still (assuming 3% average annual growth as a baseline for the entire period) be many times richer than we are now.
Although Tol takes issue with the latest proclamations from the IPCC (Intergovernmental Panel on Climate Change) on the potentially catastrophic effects of climate change, it’s important to note that he’s responsible for the FUND “Integrated Assessment Model,” used by IPCC to estimate the costs of climate change, and authored economic impact sections of some IPCC reports in the past. So to a considerable extent we’re dealing with an unfortunate methodological culture that’s shared by even the “good guys” here.
This misuse of GDP as a metric fails in exactly the same ways as the “declining extreme poverty” graph. First, it attempts to quantify problems that are not amenable to quantification. I wonder, for example, how the experiences of the hundreds of millions of climate refugees fleeing rising sea levels and desertification, or the effect of dying oceans, or the potential for the catastrophic nonlinear environmental effects of warming beyond a certain tipping point, would figure into the GDP balance sheet. As a paper by Timothy Lenton et al in Proceedings of the National Academy of Science argued: “Society may be lulled into a false sense of security by smooth projections of global change. Our synthesis of present knowledge suggests that a variety of tipping elements could reach their critical point within this century under anthropogenic climate change.”
But second, even stipulating that the human impact of global warming could be entirely captured in GDP terms, the way in which virtually the entire body of studies tries to quantify the effects in GDP terms is ludicrous. For example, dissident economist Steve Keen criticizes the methodology of William Nordhaus, upon whom Tol has relied heavily, in estimating the GDP costs of climate change. Among the faulty approaches to the estimates, Keen mentions “assuming that about 90% of GDP will be unaffected by climate change, because it happens indoors,” and “using the relationship between temperature and GDP today as a proxy for the impact of global warming over time….” In the latter regard, Nordhaus’s methodology — like that of most of the literature — estimates the economic loss from climate change based on the correlation between variations in average temperature and state GDP across the United States.
And Tol echoes this approach on Twitter: “10K [Kelvin] is less than the temperature distance between Alaska and Maryland (about equally rich), or between Iowa and Florida (about equally rich). Climate is not a primary driver of income.”
Keen dismisses this approach as “[w]orse than nothing useful,” accusing Nordhaus and Tol of “using comparative temperature:gdp data today, which shows a weak nonlinear relationship, as a proxy for the effect of climate change. Delusional nonsense used as a ‘simplifying assumption.’”
The situation goes further downhill, thanks to Tol’s utter clownery in defending this cost-benefit analysis in GDP terms. While I have no doubt that Bailey himself is entirely well-meaning and his gullibility is genuine, it’s pretty clear that Tol — over and above his substantive positions, which embody the worst traits of Herman Kahn, Pangloss and Gradgrind — is a troll of the first order.
For example, in response to someone attempting to clarify whether he was actually suggesting a 10 degree Celsius (18 F) rise in average surface temperature would be manageable, Toll replied: “We’d move indoors, much like the Saudis have.” To the observation that in a world that much warmer “you would die simply by standing outside, naked, in the shade, during a heat wave,” his flippant response was: “Well, yes, that’s why we invented air-conditioning.”
It’s hard to believe someone is genuinely that oblivious to such basic questions as (for example) what Saudis would eat without food grown in more temperate climates, or what would happen to farm laborers working outside without air-conditioning. In addition to all the obvious reminders of Tol’s failure to consider the systemic effects of heat on things like the entire biosphere, oceanic life, food output, etc. — and the likely effect of a total food system collapse on his precious GDP — one person got right to the point of the matter: “How the fuck was someone with such callous disregard for humanity allowed to contribute to an IPCC report? Jesus christ.”
My sentiments exactly. And, I would add, how was someone gullible enough to treat him as a credible source allowed to become a science editor?