27 July 2010

Unit Conversion - A Million Votes

Advocates for action on climate change are fond of arguing that costs of a few percent of GDP are really quite small in absolute terms (see image above from EDF). Here is one way to think about a 1% reduction in GDP in political terms.

Political scientist Ray Fair calculates that in historical presidential elections, every 1% decrease in GDP results in a 0.7% decrease in vote share for the incumbent party(See Table 2 in this PDF). In 2008, more than 130 million people voted in the US presidential election. In very round numbers, a 1% change in GDP has historically led to a swing of 1 million votes.

Are 1 million votes a small amount or a large amount? For selfish reasons alone, policymakers are going to be reluctant to impose any brakes on GDP, no matter how small those effects are argued to be. Climate policy will not succeed until the benefits are far more tangible and on the short term.

6 comments:

  1. Roger,

    Maybe I'm misreading, but it seems to me the EDF 'cap and trade' proposal studied results in exactly zero emissions reductions.

    Nothing more then establishing a regulatory framework which of course will be amended later to include actual reductions, where the real cost is.

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  2. Clever marketing.

    As has been discussed here before, Joe the mechanic does not sit with his wife after the children go to bed and discuss national GDP. He is more likely to discuss paying the mortgage and fuel bills. He would certainly worry if his heating, gas and other basics rose substantially.

    Joe the climate scientist, Joe the banker and Joe the Vice President don't really have to worry about fuel bills.

    What is missing is the admission by these environmentalists and politicians is that carbon trading is a regressive (right wing) way to pay for their fantasies. Also, the whole 1% will fall on private citizens because corporations are given carbon credits (thank you Kenneth Lay).

    We understand that the principal sponsor of so called leftists, like EDF and President Obama is Wall Street, so that is understandable. What is more troublesome is any plan to mitigate that problem.


    Leftists ? Where ?

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  3. Roger,

    I would argue that the 1 million votes is a minimum figure which likely significantly understates the real impact.

    Most voters are intelligent enough to understand that the economy goes through business cycles and that normal govt policy doesn't greatly impact these cycles. An argument which specifically states that the enacted policy will seriously retard economic growth would not be regarded quite so benignly. [And when the difference between 2% and 3% growth is enormous, slicing 1/2 % off the top is serious.]

    Any politician who thinks that the argument could be framed in as silly a fashion as the graphic you posted without serious re-framing by opponents is living in a fantasy world. The cost in votes would likely be far higher than the Fair model assumption which does not link the decline to specific policies.

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  4. -1-Harrywr2

    Yes, this post focuses only on costs, no discussion of benefits/

    -3-Stan

    Yes, it is perhaps understated, but the exact numbers are less important than the title -- "unit conversion" -- a few percent of GDP can be expressed in a lot of ways.

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  5. If you want a current view of what happens when you reduce GPD growth a percent or two, and run that for 40 years, look at Bratislava.

    And look at the environmental damage in Eastern Europe and Russia. This sort of economic engineering doesn't come free - or even cheap - in environmental terms.

    Of course, the Philosopher Kings of the West would never be so short sighted ...

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  6. British Gas doubles profits on Big Freeze


    The news came after energy secretary Chris Huhne warned yesterday that the coalition government's green policies could increase the price of electricity by up to a third and gas by up to a fifth.

    This would see the average family's annual energy bill soar by £300 to £1,100.
    In the government's first annual energy statement to the House of Commons yesterday, Mr Huhne detailed plans to transform Britain's power system, slashing carbon emissions by 80 per cent over the next four decades.

    http://www.channel4.com/news/articles/business_money/british+gas+doubles+profits+on+big+freeze/3725642

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