It has been great having Steven Landsburg here this week. In fact, as I sat in my hearing this morning, I couldn't help but think how the composition of the committee and the types of questions and concerns might be different if Landsburg's electoral reforms were adopted.
His post today on FDA and pharmaceutical stocks brought to mind a related (although not identical) observation. I don't have any special knowledge of the science of global warming, whether it is actually ocurring and if so, how great its impact will be.
But I do understand economics. And if believers in global warming are so certain that it is going to occur that they are willing to impose taxes and other coercion in order to combat it, why aren't they buying up all the land 300 yards or so from the current beach, or wherever they expect the sea level to rise to in the future? Shouldn't Al Gore be cornering the market on coastal land twenty feet above today's sea level? Surely that land must be a bargain today compared to what it will be worth if his predictions are accurate.
After all, it has long been understood that the orange juice futures market predicts the weather more accurately than the disinterested experts at the National Weather Service. See Richard Roll, "Orange Juice and Weather," 74 American Economic Review 861-880 (1984). I have not heard of any run on future beachfront property that is 20 feet above sea level today. Nor have I heard of any collapse in the value of current beachfront property.
If no one is willing to put their money behind the theory--unlike the orange juice market--how confident are they really in their predictions?