The Price of Everything (45 page)

 

201-205 The Price of the Future:
The description of the Reverend Thomas Malthus is drawn from Robert Heilbroner,
The Worldly Philosophers
, revised 7th edition (New York: Touchstone, 1999), pp. 75-104. Malthus’s quote is in Thomas Malthus,
An Essay on the Principle of Population: or, A View of Its Past and Present Effects on Human Happiness
(Cambridge, U.K.: Cambridge University Press, 1992), pp. 42-43. Carlyle’s quote is in Thomas Carlyle,
Chartism
(New York: Wiley and Putnam, 1847), p. 383. The description of the collapse of ancient civilizations draws from Jared Diamond, “The Last Americans: Environmental Collapse and the End of Civilization,”
Harper’s
, June 2003; and James Brander and M. Scott Taylor, “The Simple Economics of Easter Island: A Ricardo-Malthus Model of Renewable Resource Use,”
American Economic Review
, Vol. 88, No. 1, March 1998, pp. 119-138. The description of the world in the centuries up to Malthus’s day and the economic transformation experienced since then draws from J. Bradford Delong, “Estimating World GDP, One Million B.C.-Present,” May 1998, unpublished (at
www.j-bradford-delong.net/TCEH/1998_Draft/World_GDP/Estimating_World_GDP.html
, accessed 07/19/2010); David Cutler, Angus Deaton, and Adriana Lleras-Muney, “The Determinants of Mortality,” NBER Working Paper, January 2006; Julie Jefferies, “The UK Population: Past, Present and Future,” in
Focus on People and Migration
, UK Office for National Statistics, 2005 (at
www.statistics.gov.uk/downloads/theme_compendia/fom2005/01_FOPM_Population.pdf
, accessed 07/19/2010); Ronald Findlay and Kevin H. O’Rourke,
Power and Plenty: Trade, War and the World Economy in the Second Millennium
(Princeton: Princeton University Press, 2007), pp. 315-323; and Jeffrey Sachs,
The End of Poverty: Economic Possibilities of Our Time
(London: Penguin Books, 2006), pp. 27-37. The comparative data on carbon emissions in the United States, China, and India comes from the United States Energy Information Administration (
www.eia.doe.gov/oiaf/ieo/pdf/ieorefcase.pdf
, accessed 07/19/2010).

 

205-209 Mispricing Nature:
Jeffrey Sachs’s quote is in Jeffrey Sachs,
Common Wealth: Economics for a Crowded Planet
(NewYork : The Penguin Press, 2008), p. 67. The Environmental Protection Agency’s evaluation of the social costs of CO
₂
emissions is in the Environmental Protection Agency, “Technical Support Document on Benefits of Reducing GHG Emissions,” June 12, 2008 (
www.eenews.net//files/11/32/27/f113227/public/25/10084/features/documents/2009/03/11/document_gw_04.pdf
, accessed 07/19/2010). Data on energy prices, energy consumption, and carbon emissions in Germany are drawn from Eurostat news release, “Household Electricity Prices in the EU27 Fell by 1.5% and Gas Prices by 16.0%,” May 28, 2010 (
epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/8-28052010-AP/EN/8-28052010-ap-en.pdf
, accessed 07/19/2010); United States Energy Information Administration (at
www.eia.doe.gov/cneaf/electricity/epm/table5_30.html
. , accessed 07/19/2010); OECD Factbook (
www.oecd-ilibrary.org/content/book/factbook-2010-en
, accessed 07/18/2010); and International Energy Agency, “CO
₂
Emissions from Fuel Combustion, Highlights,” 2009, p. 89 (
http://www.iea.org/co2highlights/
, accessed 08/09/2010). American driving patterns and gas consumption compared with other countries is drawn from Edward Glaeser and Matthew Kahn, “Sprawl and Urban Growth,” NBER Working Paper, May 2003; and World Bank, “World Development Indicators: Transport Sector Gasoline Fuel Consumption Per Capita” (data.worldbank .
org/indicator/IS.ROD.SGAS.PC
, accessed 07/19/2010) and “World Development Indicators: Motor Vehicles (per 1,000 people)” (
data.worldbank.org/
indicator/IS.VEH.NVEH.P3, accessed 08/05/2010). The impact of gas prices on car sales is estimated in Meghan Busse, Christopher Knittel, and Florian Zettelmeyer, “Pain at the Pump: The Differential Effect of Gasoline Prices on New and Used Automobile Markets,” NBER Working Paper, December 2009. Data on bestselling cars and their carbon emissions are from “New Car CO
₂
Report,” Society of Motor Manufacturers and Traders, London, March 2009 (
http://www.smmt.co.uk/downloads/SMMT-Annual-CO2-report.pdf
, accessed on 08/16/2010); Autodata (
http://www.motorintelligence.com/m_frameset.html
, accessed 01/15/2010); and
www.fueleconomy.gov
. Data on the path of CO
₂
emissions and global warming is from the U.S. Energy Information Administration, “International Energy Outlook,” May 2010; the Intergovernmental Panel on Climate Change, “Climate Change, 2007 Synthesis Report” (at
www.ipcc.ch/pdf/assessment-report/ar4/syr/ar4_syr.pdf
, accessed 07/19/2010);
The Stern Review: The Economics of Climate Change
, Executive Summary, London, October 2006 (webarchive.
nationalarchives.gov.uk/+/www.hm-treasury.gov.uk/independent_reviews/stern_review_economics_climate_change/sternre view_index.cfm
, accessed 07/19/2010). Estimates of population and the availability of water in 2050 are from a United Nations Press Conference on Key Issues Relating to Climate Change and Sustainable Development, November 6, 2009 (
www.un.org/News/briefings/docs/2009/091106_Climate_Change.doc.htm
, accessed 07/19/2010).

 

209-216 The Ethics of Tomorrow:
Americans’ declining concerns about climate change are discussed in Frank Newport, “Americans’ Global Warming Concerns Continue to Drop,” Gallup Report, March 11, 2010 (
www.gallup.com/poll/126560/americans-global-warming-concerns-continue-drop.aspx
, accessed 07/19/2010). Data on carbon emissions by selected companies and the impact of a carbon tax on their profits is found in Investor Responsibility Research Center, Institute for Corporate Responsibility, “Carbon Risks and Opportunities in the S&P 500,” June 2009, and American Electric Company financial filings. The discussion of the rationale for Republicans’ skepticism about the perils of climate change draws from Michael I. Cragg and Matthew E. Kahn, “Carbon Geography: The Political Economy of Congressional Support for Legislation Intended to Mitigate Greenhouse Gas Production,” NBER Working Paper, May 2009. Data on the impact of energy taxes on the poor are found in Dallas Burtraw, Rich Sweeney, and Margaret Walls, “The Incidence of U.S. Climate Policy: Where You Stand Depends on Where You Sit,” Resources for the Future Discussion Paper, September 2008 (
http://www.rff.org/rff/documents/rff-dp-08-28.pdf
, accessed on 08/08/2010). The impact of climate change on agriculture is in William Cline, “Climate Change Economics 2008,” Lecture presented at Colgate University, Center for Ethics and World Societies, Hamilton, New York, March 10, 2008; Orley Ashenfelter and Karl Storchmann, “Measuring the Economic Effect of Global Warming on Viticulture Using Auction, Retail and Wholesale Prices,” American Association of Wine Economists Working Paper, May 2010; and Orley Ashenfelter and Karl Storchmann, “Using a Hedonic Model of Solar Radiation to Assess the Economic Effect of Climate Change: The Case of Mosel Valley Vineyards,” NBER Working Paper, July 2006. The analysis of the impact of warming on industrial production in poor countries draws from Melissa Dell, Benjamin Jones, and Benjamin Olken, “Climate Change and Economic Growth: Evidence from the Last Half Century,” NBER Working Paper, June 2008. Population projections for the end of the century come from “World Population in 2300,” Report from the United Nations Department of Economic and Social Affairs, Population Division, 2003 (
www.un.org/esa/population/publications/longrange2/Long_range_report.pdf
, accessed 08/08/2010). The discussion of rich countries’ likely reluctance to provide financial aid to help poor countries deal with the impact of climate change draws from the Organisation for Economic Co-operation and Development, “Development Co-operation Report 2010, Statistical Annex,” (
http://www.oecd.org/document/9/0,3343,en_2649_34447_1893129_1_1_1_1,00.html
, accessed 07/18/2010); and Joe Barton, “How Congress’s Drive to Stop Global Warming Is Fueling China’s Drive to Out-Compete the U.S.,”
The Hill
, July 7, 2009. The discussion about people’s reluctance to sacrifice present resources to improve the lives of future people draws from Talbot Page, “Conservation and Economic Efficiency: An Approach to Materials Policy,” (Baltimore: Johns Hopkins University Press, 1977), p. 169; Maureen Cropper, Sema Aydede, and Paul Portney, “Rates of Time Preference for Saving Lives,” Economics of the Environment,
American Economic Association Papers and Proceedings
, Vol. 82, No. 2, May 1992, pp. 469-472; and Shane Frederick, “Measuring Intergenerational Time Preference: Are Future Lives Valued Less?,”
Journal of Risk and Uncertainty
, Vol. 26, No. 1, 2003, pp. 39-53; Susmita Pati, Ron Keren, Evaline Alessandrini, and Donald Schwarz, “Generational Differences in U.S. Public Spending, 1980-2000,”
Health Affairs,
Vol. 23, September /October 2004, pp. 131-141; Pew Research Center, “Fewer Americans See Solid Evidence of Global Warming,” October 22, 2009; and W. Kip Viscusi and Joni Hersch, “The Generational Divide in Support for Climate Change Policies : European Evidence,” Harvard Law School Working Paper, February 2005. Partha Dasgupta’s democratic dilemma is discussed in Partha Dasgupta, “Discounting Climate Change,”
Journal of Risk and Uncertainty
, Vol. 37, December 2008, pp. 141-169. Evidence that there are other priorities we could spend money on besides averting climate change is found in the United Nations Millennium Development Goals Report, 2008 (at
www.un.org/millenniumgoals/pdf/The%20Millennium%20Development%20Goals%20Report%202008.pdf
, accessed 07/18/2010).

 

216-220 The Price of the Future:
Nicholas Stern’s evaluation of the investments needed to avert catastrophic climate change is drawn from
The Stern Review: The Economics of Climate Change
, Chapter 13, “Towards a Goal for Climate Change Policy,” p. 295 (
webarchive.nationalarchives.gov.uk/+/www.hm-treasury.gov.uk/independent_reviews/stern_review_economics_climate_change/sternreview _index.cfm, accessed 07/19/2010
); Lauren Morello, “Is 350 the New 450 When It Comes to Capping Carbon Emissions?,”
New York Times
ClimateWire, September 28, 2009; and Juliette Jowit and Patrick Wintour, “Cost of Tackling Global Climate Change Has Doubled, Warns Stern,”
Guardian
, June 26, 2008. Analysis of the discount rate is drawn from William Nordhaus,
A Question of Balance: Weighing the Options on Global Warming Policies
(New Haven: Yale University Press, 2008), pp. 9-11. Nordhaus’s disagreement with Stern is discussed in William Nordhaus, “The Challenge of Global Warming: Economic Models and Environmental Policy,” Yale University Working Paper, July 2007; and William Nordhaus, op. cit., p. 11. Estimates of economic growth over the past two hundred years come from Angus Maddison, “Historical Statistics for the World Economy: 1-2008 AD” (
http://www.ggdc.net/maddison/Historical_Statistics/horizontal-file_02-2010.xls
, accessed 08/11/2010).

 

220-222 Torn Between Two Prices:
Stern’s and Nordhaus’s contrasting prescriptions are found in William Cline, “Climate Change Economics 2008,” Lecture presented at Colgate University, Center for Ethics and World Societies, Hamilton, New York, March 10, 2008; and William Nordhaus,
A Question of Balance: Weighing the Options on Global Warming Policies
(New Haven: Yale University Press, 2008), especially pp. 1-29, 88-93, and 165-191. Data from the European Climate Exchange is at
www.ecx.eu
. Dasgupta’s difficulty in reaching a conclusion on how much to spend to slow global warming is in Partha Dasgupta, op. cit.

 

222-225 Salvation on the Cheap:
Comments about geo-engineering solutions to global warming are found in Catherine Brahic, “Hacking the Planet: The Only Climate Solution Left?,”
New Scientist
, No. 2697, July 2009, pp. 8-10. The tale about the wager between Julian Simon and Paul Ehrlich is in John Tierney, “Betting on the Planet,”
New York Times Magazine
, December 2, 1990. The price of Brent crude is drawn from the Energy Information Agency database (at
tonto.eia.doe.gov/dnav/pet/hist/LeafHandler.ashx?n=Plastic&s=RBRTE&f=D
, accessed 07/19/2010). Martin Wolf’s despair is in evidence in Martin Wolf, “The Dangers of Living in a Zero-Sum World Economy,”
Financial Times
, December 18, 2007. The price of the contents of Ehrlich’s basket can be found in U.S. Geological Survey, “Historical Statistics for Mineral and Material Commodities in the United States” (
minerals.usgs.gov/ds/2005/140/index.html
, accessed 07/19/2010).

 

226-229 When Prices Fail:
The estimate of the impact of the financial crisis on the world’s economic output in 2009 is drawn from the International Monetary Fund,
World Economic Outlook
, April 2010 (
http://www.imf.org/external/pubs/ft/weo/2010/01/weodata/weorept.aspx?pr.x=64&pr.y=7&sy=2008&ey=2015&scsm=1&ssd=1&sort=country&ds=.&br=1&c=001&s=NGDPD&grp=1&a=1
, accessed 08/09/2010). The relationship between the price of orange juice and the weather is drawn from Richard Roll, “Orange Juice and Weather,”
American Economic Review
, Vol. 75, No. 5, 1984. Data on the rise and fall of home prices is from the Standard & Poor’s Case-Shiller Home Prices Index (
www.standardandpoors.com/indices/sp-case-shiller-home-price-indices/en/us/?indexId=spusa-cashpidff
—p-us, accessed 07/19/2010).

 

229-233 When Prices Go Off the Rails:
Data on AOL’s purchase of Time Warner draws from Saul Hansell, “America Online to Buy Time Warner for $165 Billion,”
New York Times
, January 11, 2000. The discussion of the seventeenth century’s financial bubbles and the United Kingdom’s Bubble Act draws from Kevin Lansing, “Asset Price Bubbles,” Federal Reserve Bank of San Francisco, Economic Letter, Number 2007-32, October 26, 2007; and Peter M. Garber,
Famous First Bubbles
(Cambridge, Mass.: MIT Press, 2000), pp. 50-64. “The South-Sea Project” is in
The Poems of Jonathan Swift, Vol. 1
(London: William Ernst Browning, 1910), pp. 198-207. The description of new high-tech mortgages and the boom of mortgage-backed securities is in Jane Dokko, Brian Doyle, Michael Kiley, Jinill Kim, Shane Sherlund, Jae Sim, and Skander Van den Heuvel, “Monetary Policy and the Housing Bubble,” Federal Reserve Board, Finance and Economics Discussion Series, December 22, 2009. Keynes’s description of the reverse beauty contest is in John Maynard Keynes,
The General Theory of Employment, Interest and Money
(New Delhi: Atlantic Publishers, 2006), p. 140. Charles Prince’s view of dancing is reported in Michiyo Nakamoto and David Wighton, “Citigroup Chief Stays Bullish on Buy-outs,”
Financial Times
, July 9, 2007.