Cancun and Copenhagen, and Carbon as Pure Regulatory Object

Co-Conspirator Jonathan has already remarked below on the seeming collapse of the media-academic-NGO-international organization-et al. global warming coalition in-between last year’s Copenhagen meeting and this year’s much-subdued Cancun event.  I broadly agree with Jonathan, and with Margaret Wente, on whom he comments, on the policy merits.

I also think the right approach to climate change is not some massive project for the most far-reaching, long-term, costly, uncertain attempt at governance through the demands of climate for the whole globe.  It is wrong as a global political project, doomed not to just fail but to transmute into some set of spectacularly bad unintended consequences, and wrong as a question of management of long-run uncertainties.  It is noteworthy that even the voice of the global establishment, bien pensant global opinion, the Economist, is now saying what should have been said a decade ago – you have to manage the problems as they arise through mitigation, not some exercise in doomed global political glory to seek to head it off on the front end.

I say all that as background, not to try and persuade anyone, but simply to be clear what the starting point of the discussion is for me (be warned, this is a long post).  As far as the future of the global project over climate change is, I would point you to Walter Russell Mead’s new blog essay on Cancun (h/t Instapundit) (for the glass-half-filled view, see this news story from the NYT; note that it is filed from DC and NY, not Cancun).  It is useful in large part because it lays out something on which I have commented occasionally in the course of writing about the UN and its member states as a (non-) governance mechanism, and its “public choice” pathways of rent-seeking, income extraction, and wealth transfer under the banner of climate change.  Mead offers a comprehensive essay in a relatively short space and it is worth reading closely.  But on the daunting problems of collective action at Copenhagen and UN mechanisms generally, Mead notes, a Copenhagen climate treaty

was intended to be the successor to the ineffective and expiring Kyoto Protocol, and was conceived of as a ‘grand bargain.’  The US Senate had in effect rejected Kyoto 95-0 because the Protocol limited US emissions without placing restrictions on the rapidly growing economies of the developing world.  Son of Kyoto (call it SOK for short) would get around this by placing limits of some kind on all the world’s countries.  The geniuses behind SOK framed the problem this way: how do we get the developing countries to sign on to carbon limits strict enough that the US Senate would ratify the next global treaty?

The answer was obvious: bribe them.  Put enough rich country taxpayer money on the table and even the most corrupt and shortsighted rentier regimes in the developing world will experience an extraordinary upsurge in green conviction.  The dream was that the developing countries properly and appropriately compensated would sign on to emission limits of their own, the US Senate would ratify and as Barack Obama explained it to us, the earth would begin to cool and the seas start to recede.

In the diplomatic negotiating event, the “experts and enthusiasts” of the northern environmental lobby departed, predictably, from anything the rich country publics, in the midst of financial crisis on top of everything else, might have been expected to support.  The elites of the climate change movement, raised on the statist milk of the EU breast, figured they were doing God and Gore’s work on behalf of once and future voters, and devoted themselves to negotiating with the developing countries, seemingly without regard for the willingness of said publics to pay the price.  On the developing country side, the question was how much and how fast:

Northern green activists lobbied to get strict carbon targets adopted.  Developing country diplomats focused on ‘appropriate compensation’.  Just how green did the North want the South to become, and just how much money was the North willing to pay to make this happen?  Negotiators played with rich country aid budgets like kids with Monopoly money, and issued vague and intoxicating pledges that, in an era of austerity, will never be honored.

In the hothouse fantasy land of UN negotiations, the path to compromise looked simple.  Soon enough, the numbers began to come clear: northern activists developed a formula for carbon restriction that they liked and the southern diplomats found a number that worked for them:  a $100 billion sweetener to start, ultimately rising to $100 billion a year to be paid by the advanced countries to the developing ones in order to compensate them for pain and suffering.

But now a couple of additional observations that take things a step further than Mead does.  In the past I have remarked (and say in my little book manuscript now in copy editing on UN-US relations) – that the environmental intellectuals and campaigners might have done better to have paid less attention to their own favored issue and more attention to the incentives as evidenced by the history of the UN not just on this issue, but a long list stretching back decades.  They might have learned that the UN follows a well-laid out path of embracing an issue to see how much institutional leverage toward “governance” it might yield, combined with the rent-seeking interests of the UN-complex and member states.

The UN believes – Ban Ki Moon, for example – fervently that climate change is every bit as important as it is to Al Gore.  And, “serial absolutist believer” that the UN is, it will believe so … until it perceives that it has got whatever it can get in the way of leverage toward its own notions of global governance at the UN, and member state rent-seeking.  Whereupon – as is unfolding now – this issue is down the memory hole that is so crucial to being a “serial absolutist” and on to the Next Big UN Thing that promises an accretion of global governance at the UN and more money for member states.  The environmental lobbyists could have learned from considering their issue as the UN does – not as the sole issue in the history of the human race, but instead as simply a succession of possible political levers for the UN.

Second, if one looks at the bribe mechanisms underlying Copenhagen from the perspective of developing countries, they don’t much appear to be about the environment, but instead about the Next Big Thing in development.  Which is to say, the best way to understand the income transfers of climate change treaties is as a replacement for the failed Millennium Development Goals, which got started back in 2000, and which promised massive amounts of income transfer from rich world to poor (whatever they promised in the way of development, the one certainty was that they promised very large amounts of development money).  The MDGs will not go away, of course, because they now have an invested UN bureaucracy, but from the developing countries’ point of view, they are a mechanism for transferring bureaucracy-supporting money to the UN itself, but not large enough cash flows to be attractive to the developing countries themselves, as bureaucracies and governments.  Climate change, through the bribe mechanism of Copenhagen, essentially offered an alternative political process for transferring income.

It’s a development program with the words “climate change” attached, so far as the transferees are concerned.  Again, attention to the long run of the UN and resource transfer, rather than a myopic focus on climate change, might have led to understanding how Copenhagen merely replaces the MDGs. True, probably some number of environmental lobbyists did think about this, and thought that a good take-over of the income-transfer cause, but do not appear to have thought sufficiently about how developing countries would want very vague “green” labels attached to whatever they intended to do with the money anyway.

And, even if one allows a certain amount of good faith in thinking of these transfers as having some point other than rent-seeking, something actually welfare-useful in development for poor people, it has to be noted that from a purely development standpoint, in which environmental issues are one but not the exclusive package of needed goods and climate change merely one contingency among those, running the world’s biggest international development activity through a climate change lens, priority, and filter leads to grave welfare distortions.  True again, if climate change is all that matters to you, the “distortions” are a feature, not a bug – but if your concern is much more immediate and holistic development concerns ranging across issues from industrialization and jobs to public health and education, then the distortions have to be seen as a bug.  Or else, as happened in the event, you insist on such vague labels for greenness that you can justify nearly anything.

Third, one of the deep attractions of climate change as an international development income transfer mechanism is that it returns a lot of international development assistance back to a model that had been sliding away over time – direct transfers to governments in the developing world.  Since the aim of the campaigners was fundamentally to bribe their way to agreement, the actual development effects of the bribe turned out to be far less important than simply getting agreement.  But developing country governments saw that this offered a way to ensure that a far larger amount of the income transfers would go to governments rather than, as had been the trend, toward NGOs, local actors, etc., in an effort to reduce rent-seeking, out and out corruption, and so on.  To be sure, there is an important debate over the tradeoffs of de-funding governments in favor of disaggregated agencies such as NGOs – one might gain in less diversion of funds, but lose from the standpoint of building the crucial state-level governance institutions.  But whatever the right answer in any given place to that quite difficult question, once again the climate change agenda, once invested with the potential resources of the most important and expensive income transfer program in the world, would have massively distortionary effects on that debate, if one proposed to see it as a development question.  Again, if one’s priority was the climate change grand bargain-bribe, then the distortion is a feature if not simply irrelevant; if one’s priority is development, it’s distinctly a bug.

Fourth, Mead and most of the analysts have focused on the collective action problems baked into the UN processes and Copenhagen.  Insincere promising followed by defection.  It cannot be said that the environmental movement’s intellectual wing ignored this problem; on the contrary, serious, major thinkers devoted great effort to trying to figure out ways around the collective action problems.  I don’t think they solved them, but they thought they had, or at least thought they had a reasonable way around them.  Viz., the bribe mechanism – if the collective action problem is the developing world, then bribe it.  If it is the voting public of the rich world, then steamroll it Brussels-style and declare unholy anyone who challenges the ideological consensus.

In effect, with a sufficient attenuation of democratic processes in the rich world, the costs that would otherwise be reflected in collective action problems can be externalized onto the publics of the rich world.  It doesn’t necessarily fully solve the long run collective action problem – take the money and then defect.  But if the payments are spread out sufficiently, there will be enough reason for the developing world not to defect, at least not too transparently or too soon.

Add to that the massive bribe specifically aimed at the BRICS – essentially a transfer to them of the rights to carbonize that were prohibited to the rich world, a massive structural shift in the production and consumption of carbon.  They get to make and sell what the rich world consumes.  The effect, fully intended, as Mead points out:

Kyoto would have restricted US carbon output but left China and India free to do what they liked.  This is the problem the new treaty was supposed to fix.

Our genius environmentalists came up with the idea that in order to make the treaty more palatable to US public opinion and therefore to the Senate, the US would assume an open-ended and eternal obligation to pay tens of billions of dollars a year to various developing world governments, however corrupt, incompetent, dictatorial and unfriendly these might be.  Iran, Cuba, and North Korea would get money just like Yemen, Syria and Sudan.  In exchange, these countries along with India and China would accept restrictions on their carbon output that are significantly less drastic than those to be imposed on the US.

Who could possibly object to a smart plan like this?  What US Senator wouldn’t love to defend a vote to force taxpayers to subsidize Iran while giving China permanent business advantages over the US?

Put this way, it looks remarkably silly.  But give the other side its intellectual due.  Seen from the intellectual vantage point of academic-advocacy, what are the apparently quite reasonable assumptions?  That the right ideological positioning can result in an otherwise difficult to achieve ability to externalize costs onto an unwitting group, viz., rich world and particularly US taxpayers.. How?  Through media shaping the frame of public opinion; ideological ostracism of contrary views; and, most of all, arrangement of rent-seeking opportunities for US green businesses (such as Al Gore’s investment partners) through US government subsidies inside the US economy, to produce a major and unwavering economic-political interest group in favor of this political programme.  This is not silly; it is an astute proposal for the long march through the institutions, including, in this case, those of private investment capital.

Note, however, that it doesn’t really solve the collective action problem – not as a matter of rational interests put explicitly on the table.  The ability to externalize costs in this way onto American taxpayers does not take place because of a way has been found of drawing them in as an overt expression of their interests.  It is instead by ideological obfuscation and the empowerment of rent-seeking sub-national actors such as green-subsidized business interests.  The solution is not a solution through “interests,” but instead a kind of deus ex machina from outside the “game” of collective action interests, through the obfuscation of interests and the empowerment of particular interests that have been trained to rent-seek. But the move to do this through domestic actors within the United States is crucial to the collective action “solution” of externalizing the costs of a treaty agreement off onto rich world publics and their children.  One can argue, of course, that the issue of climate change is too important to be left to childish voters – who will always vote themselves a free lunch – but that is a larger discussion of Global New Class  elites and their distaste for democratic process in favor of credentialed experts.

Fifth, for all of the analyses of collective action problems, possible solutions, and failures at Copenhagen, the most striking feature of Copenhagen was not collective action failure, something sharply different.  China did not take the deal.  The BRICs did not take the deal, China above all.  This is quite stunning, given what it purported to give China – the advantages that Mead notes and seemingly none of the disadvantages.  The most important single thing that requires explanation from Copenhagen is not how and why the world’s bien-pensants overestimated their braininess and miscalculated.  It is the geopolitical and strategic question of why China would not take the offer, then defect at its leisure.  Why reject the offer?

The quite scary thought is that China behaved as a rising hegemon behaves.  It has important, but also perhaps fragile, internal legitimacy with its own population on account of one thing, the ability to deliver a rising standard of living through phenomenol rates of growth.  But it is also reaching out, apparently, to offer an alternative form of hegemony to that of the United States, with its commitments to liberal democratic society, externally to other societies of the world.  They are listening; if you are most governments in the world, what’s not to like in a message that you can have the best rates of growth and internal legitimacy through illiberalism?  Hegemony is more than just power; it is authority that arises from power whose exercise is seen as legitimate, by a legitimate actor.  China is reaching for that – but curiously and importantly, the legitimacy that hegemony requires to turn power into authority in the international world does indeed depend upon legitimacy internally.  The United States has long believed that – but in the new alternative hegemony, the internal legitimacy that matters need not be liberal or democratic.

My own guess for why China turned down the deal – subject to a Wikileaks of China, which is not seemingly forthcoming – is that it was unwilling, in a world in which internal legitimacy matters immensely, to risk its internal legitimacy by a highly public, even if insincere, promise that might in any fashion compromise its economic growth.  I believe it did not want even the appearance of something that might, however modestly, put even a gossamer formality of restraint upon its industralization, for reasons of internal legitimacy.  Absent better evidence of China’s internal processes, we cannot know, of course, what it’s internal calculations were.

Purity and danger, a closing thought:

Finally, and a shift to a quite different kind of point about aesthetics.  Mead says (and Jonathan says too) that he hears, increasingly among environmentalists, a certain alarm at the fifteen year diversion of environmentalism from bread-and-butter issues such as air quality, water quality, all those quotidian issues of the environment that originally fueled the movement.  The abstract idea of carbon sequestration takes precedence over air quality in China’s cities.  I share the concern entirely.  I grew up in a California town, Claremont, in which the 1960s and 70s air was so chokingly poisonous that one could simply not breathe during the summer months, and in which no one ever saw the 10k peaks behind the town.  California has made immense strides in making that air livable. But these are the improvements that an enriching society makes when it has the wealth margin to embrace improvements in the commons and public goods; they are always tradeoffs with other things, and while I applaud as a voter the stringency of California’s air quality rules, I don’t think they are the tradeoffs that other places should necessarily make.

The above is said a lot, but let me add a closing thought to this.  Carbon issues are essentially unaddressable at the front end, for all the reasons Mead has noted – collective action problems meet immense uncertainties about something that happens at the fantastically retail level.  One does have to engage in thoroughly messianic thinking, or have unlimited confidence in one’s expert credentials in Nudge-‘n’-Shove, and a thorough-going belief in the rat-like behavioral manipulability of human beings and whole societies, to think that one can address through political mechanisms global issues over centuries occurring at the molecular level.  Our credentialed class has no problems embracing that self-confidence: next up, unintended consequences of complex systems.

One peculiarly unnoticed attraction of this kind of thinking, however, is that unlike the variegated, heterogeneous, differentiated forms of environmental problems that take place at the quotidian level – and the equally variegated things against which they have to be traded off – carbon has such a purity to it.  An aesthetic purity to it.  We overlook the affective, aesthetic attraction of carbon as an issue to our Abstract Class – to our peril.  Purity and danger, yes?  Carbon has all the seductions of being a single, abstract, global, free-floating, universal commodity – it is original human sin, yes, the sin of breathing, but as a pure regulatory object, it is the most methodologically and aesthetically attractive thing since … money.

Like money, carbon embraces the marginal revolution.  It moves up and down curves on graphs.  Like money, it is a universal intellectual solvent.  It gives policy and regulation a single thing to focus upon – unlike the real world.  But of course, that is the current mania for intellectual reductionism – first as a method and heuristic, second as an affect of credentialed intellectuals – regnant among our Global New Class elites, seeking ways to reduce all those complex systems to a manageable set of graphs.  The Hockey Stick, anyone?