Climate Change, Free Trade, and Money

TEDTalks has hit a home-run again (seriously, I can’t recommend this series of videos highly enough - whatever you think about whatever else I’ve written here, you’ll find something you like). Bjorn Lomborg, who’s not a stranger to controversy, explains in this 2005 TED presentation why climate change, relative to the world’s other great problems (e.g. disease, sanitation), isn’t an efficient problem to solve. This is a finding of the Copenhagen Consensus, who expended no small amount of effort on the exercise. He makes very clear what the ranking means - not that it isn’t desirable to ‘solve’ climate change (it is) but simply that it’s inefficient - there’s more bang for the buck in ‘solving’ free trade or controlling HIV/AIDS than in solving climate change.

Bjorn is an economist (my favourite type of -mist) and I know this doesn’t bode well for the acceptance of this theory: primarily because economics has never done a very good job of publicising what it’s about, and so there’s a frequent misconception that it’s something to do with money. The typical reaction to the conclusion above is that economists only are only looking at the monetary side of things. Well, yes, that’s true, but it’s also the whole point. Economists put prices and costs on all kinds of things that many people don’t (life or death, polluted air, a loving relationship, etc.). Of course one can argue until the cows come home about the what those prices and costs are: and everyone does (even when they aren’t quoting them in dollars or pounds). But the money is only used as a number, as a symbol.

If we were to try and rank which we wanted more, an orange or an apple, we could probably do that. In fact, we could probably say how much more we wanted one than the other (twice as much - give me two apples, and I’ll exchange you an orange). Introduce a banana and the decision becomes more complex, but the principle doesn’t. This is all prices are - a way to trade off one alternative against another and allocate resources (which is similar to the definition of economics you’ll find in any textbook).

This is why it isn’t really callous to rank the world’s big problems and say that maybe climate change doesn’t deserve so much attention. At the end of the day, the world only seems prepared to spend so much time and money solving problems. Doesn’t it make sense to solve the ones that gives humanity the greatest degree of progress, health and prosperity?