Thomas Schelling speaks

on Waxman-Markey and the implications of climate change for rich and poor countries.

1. On Waxman-Markey:

"my only objection to Waxman-Markey is that it's such a hodgepodge, with all kinds of escape valves. And I don't think it's specific enough on what the cap will be from year to year to year. And also, it's 1,200 pages. And 1,200 pages implies that it's an awfully complicated hodgepodge.

If you were putting a cap on oil at the wellhead -- and a cap on coal at the minehead, a cap on gas at the wellhead, and on oil and gas at the port of importation -- so that it was essentially a cap on the fossil fuels, rather than trying to put a cap on electricity in the middle west versus electricity in the South. Or a cap on various manufacturing industries. Or a cap on refineries, even. That seems to me a not very serious way to tackle the problem where it originates. And my actual feeling is that the best you can hope for with this Waxman-Markey bill is that it'll take a few years to discover that it's a huge nuisance of the problem, and they ought to find a way to simplify it. And the way to simplify it is to put the cap on the fossil fuels, not on different industries."

2. On climate change's effect on the rich vs. the poor:

"If I were to come clean to the American public I would say that, except for a very low probability of a very bad result -- which is the disintegration of the West Antarctic ice sheet, which would put Washington DC under water -- we are probably going to outgrow any vulnerability we have to climate change. And in case we'll be able to afford to buy food or import it is necessary. You know, very little of the US economy is susceptible to climate. All of agriculture is less than 3% of our gross product. Forestry may be endangered. Fisheries may be endangered. But recreation might actually benefit!

So if we can double our GDP in the next 70 or 80 years, even if we lose some of our GDP from climate change -- even if we lose 10% of our GDP from climate change -- we're still ahead so much that the effect of climate change wouldn't be noticed. But it would be pretty disastrous in a lot of the less developed parts of the world. And that's why I think it's crucially important not to demand anything of China, India and so forth that will significantly impede their economic progress".



Hat tip to Mark Thoma!