In preparation for college and life, I've been reading some books about real-life applications of economic reasoning and theory. And I've been reading Adbusters and some other socialist or quasi-socialist writings which are, in varying degrees, anti-free market, anti-consumerist and heavily critical of traditional economic wisdom. I'm trying to find the line of truth somewhere in between extremes, one that allows for conservation and responsible use of resources, but doesn't stifle personal freedom or liberty and still allows for economic growth and opportunity.
My book on economics is rather like an older version of Freakonomics, with some more controversial conclusions and more in-depth explanation of the economics behind decisions. (If you're interested, it's called The Armchair Economist by Steven Landsburg.) Most of it consists of explaining cost-benefit analysis, which is the main tool that economists use for evaluating the merits of a policy decision. Cost-benefit analysis, like the rest of economics, has no moral system inherent to it, and seeks to reach a solution involving the maximum possible efficiency. It relies on two premises--a cost is a cost, no matter who bears it, and a benefit is a benefit, no matter who incurs it. For example, when applying cost-benefit analysis to the legalization of drugs, the increased drug use as a result in considered a benefit, not a cost, because consumers are able to buy more drugs at a reduced cost.
So, the reasoning takes some getting used to, but it makes sense in most cases. Until the chapter called "Why I'm Not an Environmentalist". This chapter points out many legitimate flaws in what the author calls "the religion of environmentalism". A lack of willingness to question fundamental assumptions (something, incidentally, that free-market economics also suffers from). Ignoring markets when trying to solve environmental problems. Lack of willingness to compromise. A pervasive holier-than-thou attitude. These are all problems, and I wish we could solve them. But the arguments made by the author, while criticizing his opponents for their lack of economic logic and rationality, seem overly simplistic to me. Now, I'm not an economist or an environmental scientist, and if anyone can find any reasons why my critiques of his arguments are wrong, I'd appreciate hearing them.
First, Landsburg argues that recycling is bad if your aim is to preserve forests. This is because paper companies have a vested interest in keeping forests around, so if demand for paper is high, logging companies have an incentive to plant more trees and keep forests around. I don't disagree with this argument in its premise--logging companies certainly don't want to see all of our forests disappear, and it would be ridiculous to suggest otherwise. However, this argument as a whole has three large flaws. One is that is fails to distinguish between the quantity and the quality of forests--a crucial distinction to most people who are interested in forest preservation. The second is that it ignores the problem of very high demand. And the final problem is the issue of waste and finite resource consumption.
The way I see this situation is somewhat different. Paper companies currently own some amount of land which they use to plant trees which are then cut down and processed into paper. Suppose that everyone starts recycling and demand for paper falls by 50%. Many of those companies will likely choose not to re-plant trees on the land they currently devote to growing trees and will instead use that land for a more profitable activity. Thus, we have a net loss in land area covered in trees, and less carbon is offset by the presence of those trees. This is exactly what Landsburg is talking about. He didn't cite any studies showing that this is in fact what would happen, or that this has happened in the past, but let's assume that his logic is correct.
But consider the reverse. Suppose everyone who currently recycles, persuaded by Mr. Landsburg's argument, stops doing so. Demand for paper rises by 50%, and the land that paper companies currently own is inadequate to meet demand. After utilizing all of their available resources--converting some land to tree-growing, maximizing the number of trees per square mile, etc--there still isn't enough land to meet demand. What happens now? Paper companies try to obtain more land. Due to the fact that it would be more efficient for them to get land that already has trees on it, they will likely try to acquire forested land from the government or from a private source. The end result is the same--land that was once a growing forest providing a habitat for animals becomes a place where trees are grown until they are big enough to be profitable and are then cut down.
In short, an incredibly high demand for paper would lead to forest ecosystems--places with diversity of life that provide habitat--being turned into land with trees on it. I've seen these kind of forests, and they aren't pretty. The trees and skinny, have almost no branches on them, there's almost no undergrowth, and I doubt they would provide much shelter for animals. Both types of land are technically forests, but they're not the same thing.
In addition, this argument fails to look at the consequences of paper production. Logging and transport of paper takes fossil fuels--a finite resource, not a renewable one, as trees are. Recycling also takes fossil fuels and chemicals, and I'm not sure as to the environmental effects of that. It's something I'd be interested in finding out more about, but unless someone can prove otherwise, I'm guessing that the environmental costs of recycling are no more damaging than the costs of logging new trees in terms of fossil fuels and harmful chemicals. Also, using new paper constantly and not recycling it creates waste. Waste has to be stored somewhere--in landfills, which use space, which is also a finite resource (we only have one earth for the time being). I think moderation is important here, and I'm not advocating using no paper. Paper is a function of our society, and assuming Landsburg's argument is correct, a large dip in paper demand would result in less forests. But excess demand and consumption also has consequences that I think we need to keep in mind.
My economics books (textbooks too) are filled with comments about pollution. Most of these state that pollution is a cost of doing business-necessary, unavoidable, and able to be quantified. For example, Landsburg models it in cost-benefit analysis. If I live in a city that has a factory which pollutes, the correct way to determine if the factory should be allowed to continue polluting is to determine how much I, and other individuals in my city, would be willing to pay for cleaner air. If the total amount is higher than the money made by the factory from polluting, then we pay the factory to stop and it stops. If not, it goes on polluting. And that, in an economist's world, is not seen as a problem. My textbooks describe pollution as an "externality"--something that has a cost to people not involved in the profits of whatever is creating it, and something therefore, that the market does not correct for. This seems like a more optimistic idea, because it allows for the argument that it's fair to force regulation. But essentially, it's the same problem--if the government forces a factory to stop polluting, that's going to make their product cost more, which will drive prices up for the same consumers living in the city where the pollution was a problem in the first place. So the same question--how much is it worth to you?--it still the deciding factor.
I don't disagree with this logic. Again, it's the end conclusion that I have an issue with. It's fine to argue that pollution and environmental costs are just that--costs, which can be measured in monetary value to the individuals they concern. But this fails to account for the fact that environmental damage effects us all--it's not just the inhabitants in that city who breathe bad air who suffer. Everyone has a share in the effects of global warming, regardless of how close you live to the factories that are polluting. Cost-benefit analysis is fine, but what about the end of the world? Let's assume that eventually, global warming, if left unchecked could lead to the end of life on earth as we know it--mass extinctions, the end of the human race, or whatever. If you analyze that in terms of cost-benefit, I'm willing to bet everyone on earth (nihilists and suicidal people exempted) would pay the highest cost possible in order to avoid that outcome, because if we didn't, the money that we saved would be useless. So given that, I think it makes sense to make some sacrifices to stop things that effect us all, even if they lead to us having less in the end. Having less is better than having nothing.
I think, in the end, both sides need to concede a bit. Environmentalists and economists shouldn't be two separate sides--in an ideal world, they could work together. My hope for the future is just that. I wish environmentalists were more willing to consider market-based solutions to problems, to be more innovative instead of regulating everything, and to give people and companies more incentives to decrease their impact. I wish economists were willing to acknowledge that some things do effect everybody and can't practically be analyzed only in cost-benefit terms, and that morality does have a place in discussions like this when what's at stake is so large. And I wish everybody were willing to slow down production a bit and take some time to just smell the flowers.
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