Environmental economics of Václav Klaus

A well-edited summary of Václav Klaus's book by Martin Pánek. Inside the article you will also find a presentation.

Vaclav Klaus
Vaclav Klaus

Dedicated to the socialists of all parties.

In the penultimate week of the semester I am in the subject 5ZP200 Environmental Economics presented the topic mentioned in the title of the article. It's an interesting topic and so twisted and caricatured in the media that I decided to share it.

So it's a bit long, but it couldn't be shorter.

I had about 15 minutes to present Klaus's very comprehensive views on this topic, and I would need at least five minutes for each slide. I brutally shortened the presentation during its creation, another shortening came during my own presentation, when I realized I wouldn't fit in the limit :) . In addition, there were some warmers in front of me whose every sentence deserves to be refuted. But there was no time.

Let's mark the introductory slide with the number one and move on to the second.

Here I have briefly introduced the book, which is my whole presentation. Book Blue, not green planet is an economic book for laymen. He uses economic argumentation, but argues in a language accessible to people who have never heard of economics in their lives. And you can believe me, because I read the book after graduation, when I didn't have any economic education yet.

The president does not have a meteorological booth at the Castle, he is concerned with the economy of global warming. He is without exaggeration to question the measured data in the last place. We will get to the end of the presentation. In any case, I recommend the book to everyone to read. It can be read in one afternoon if you want.

Chancellor Weigl, former Deputy Tříska, physicist Motl of Harvard and climatologist Singer of the University of Virginia collaborated on the book. Klaus's positions are also held by Bjørn Lomborg and the well-known Nigel Farage, which is well known to local readers. Of course, a lot of others.

The structure of the book and presentation is indicated in the lower half of the slide.

Slide No. 3

The third slide is relatively clear. Right at the beginning of the book, the president identifies environmentalism (or ecology or climate alarmism) as the most dangerous ideology of today. It is based on the fact that this direction completely adopted Marxist principles, but disguised itself with godly nice weather. Marx and Moscow are already discredited and there is no point in fighting them. The current rivals of the Liberals are Gore and Brussels.

Klaus goes on to say that man does not destroy nature. One changes it, it changes it permanently. And that's a huge difference. E.g. Šumava was created by the Schwarzenbergs planting a spruce monoculture, because spruce grows quickly, and thus wood can be harvested quickly. And today Šumava is wedged as untouched nature.

Slide No. 4

On this slide, I showed a graph that is similar to the graph in the book because I couldn't find the one from the book. The graph shows quite clearly that emissions have fallen drastically since the revolution. Thus, the free market does not mean the destruction of nature. It's outrageous nonsense.

Slide No. 5

It is necessary to say out loud that the resources do not end. In a market system, it is not possible for any resource to run out. This is an elementary economic fact that must be understood by everyone who has at least attended one lecture in economics. Oil (as well as water) will never run out. The price is governed by the relationship between supply and demand. If supply falls (of course ceteris paribus), then the price will rise. In the end, oil will be so expensive that no one can put it in the car.

At the same time, to claim that an expensive resource has run out is absurd. For me, Mercedes or handbags from Lousie Vuitton are expensive (even completely unavailable). Does that mean they ran out? Did the Stone Age end with a shortage of stones and did the Bronze Age end with a lack of bronze? Nor will our time end in a shortage of oil.

There are no sources and sich, that is, by themselves. Resources are resources only for specific people at a specific time. Was oil a source for the pharaohs in Egypt?

As already mentioned, the key factor is the price system. The price cannot be calculated in any way, the price must be set on the markets. See Hayek's story with a tin soldier. - He says that the consumer has no idea why the tin soldier was more expensive. However, its higher price forces consumers to allocate their precious resources (= money) more efficiently and to buy fewer tin soldiers.

This is not understood by the Meadows, on whom the Club of Rome was founded and who devised limits on the growth of production so that the world would not develop too fast. Paul Ehrlich, a great-grandfather of all warming doomsayers, did not understand this, claiming that in 2000 the whole of Britain would be under water.

Julian Simon then bet with him whether the price of the five selected metals would fall or rise in ten years, whether these metals would be more available as resources, or vice versa. Julian Simon won the bet, not only on the weighted sum of the prices of all five metals, but even the price of each metal dropped. As an economist, I must add that there was no need to adjust prices for inflation.

Environmentalists oppose markets, claiming that externalities are emerging. Economics is the only science that takes externalities seriously. The important thing, however, is that the course of the world is not based on externalities, but on internalities, although the word is hardly used. (Externality means economic theory of a situation where the costs or benefits of your actions are felt by an uninvolved party. Ex: The factory smokes from the chimney, the costs are borne by you because you smell the stench - negative externality.)

Slide No. 6

We must admit that we do not know what the world will look like in a hundred years. But we know for sure that wealth and technical progress will grow. To get an idea of ​​what the world will look like in those hundred years, let's look at what the world looked like a hundred years ago.

The most famous "environmentalist" of the time was Teddy Roosevelt and did not know words like DVD, microwave, massager, antibiotics, gene, tsunami…

The biggest weather problem at the time was ordinary mud. No one would have imagined that in 2000 all roads would be paved. Likewise, today no one can imagine what the world will look like in 2100. Many roads will be paved.

Looking at the world in 2100 with today's eyes is conceited, short-sighted, and our descendants will find it ridiculous.

Nicholas Stern, a skeptic, estimates that per capita consumption will grow at an average rate of 1,3% per year. Which doesn't seem like much, but with today's consumption of $ 7200, it'll be $ 2200 in 94000. I add again that this is the premise of catastrophes. In fact, it will probably be more.

The different assumptions about GDP in 2100 (taking into account the various amounts going to the environment) differ by about as much as we would hesitate to draw the GDP curve with a pencil of hardness 2 or 4 - so small will be the changes due to climate change.

Not to mention that warming also has undeniable positive effects.

If China maintains zero population growth for several more generations, it will do as much with the Earth's atmosphere as any measure with its 2% population growth.

Slide No. 7

This slide shows a graph of CO2 production per capita. As can be seen, since 1970 this production has stagnated. This graph shows human adaptability. One can adapt to new situations.

Slides No. 8 and 9 - belong together

The so-called Kuznets curves are very interesting. The original Kuznets curve, as shown on slide No. 9, showed the relationship between the size of income and the (in) uniformity of income distribution in society. As you can see, as per capita income rises, inequality grows at first, but once inequality reaches a certain maximum, income begins to equalize again.

This inspired economists to look for other such U-curves. Thus, they arrived at an environmental U-curve, which is the same as that in the figure, only with environmental pollution on the vertical axis and not income inequality. That is, as society begins to get richer, the environment deteriorates to a certain maximum, then it begins to improve. The logical thing follows: the environment is a luxury farm that even wealthier consumers can afford.

It can also happen with common sense. If I'm starving, I won't be embarrassed by the beauty of the deer by the well and I'll shoot it. If I have a livelihood differently, I can enjoy nature all day.

Empirical measurements have shown that the maximum comes when GDP per capita reaches $ 6700-8400 per capita. The Czech Republic has a GDP of $ 25000 per capita. So it is long ago in the right part of the Kuznets environmental curve.

Slide No. 10

The main focus of Klaus's argument against the warming religion is time preferences and the associated discounting.

Man is the only evaluator. nature it has no value in itself, but only for man. Man is the one who assigns value to everything (even nature). The green fools will explain something else to you, but any aspect of value is absurd.

Because we cannot examine and compare the benefits of individual citizens, the only relevant information we can obtain is the exchange value of the good. It is therefore essential that prices determine free markets.

Two crowns are more than a crown and the crown today is more than the crown tomorrow. You have to admit that. After all, if I offer to give you a thousand today, or in ten years - what will you choose? Of course a thousand today. You will be requesting interest to receive payment after a period of time.

Discounting is just the opposite of the interest rate process. When discounting, we ask: What is the value of the CZK 1000 we receive per year for us today? Definitely less than 1000 CZK. Exactly what value it has depends on our time preferences. Someone has a high time preference, and for him a thousand a year has the value of today's five hundred. Someone has a low time preference and 1000 crowns a year is the same for him as 980 crowns today.

If you understood this with money, imagine any other topic instead of a thousand. Would you like to be with your girlfriend (readers: boyfriend) today or in a year? Would you like the nice weather to happen today or five years from now? And conversely. What do you think you can adapt to better? Raising temperatures by 1 ° C today or over the next hundred years? Put any sacred ecological theme in this discounting equation, and if you discount it correctly, you will find that in a hundred years, this theme seems very small.

Why is that so? Because people can adapt.

Nicolas Stern misjudged in his report to the IPCC when he set the social discount rate at 0,1%. This would mean that CZK 1000 = CZK 1001 per year, which you must admit is meaningless. The social discount rate is usually 3-6%. He says that the future is almost as big as the present. As a result, economic nonsense is emerging throughout his report.

There is no such thing as the immutability of nature. Could the people of the garbage fields be responsible for the disappearance of glaciers from Šumava?

Slide No. 11

It is said that Václav Klaus sometimes let it be heard that there is only one economy. Whatever problem you solve, it must match you has to give - gave.

The precautionary principle imposed on us by the Bursíks is the absolutization of risk aversion. She is very human, but take a look. In their view, caution means that today we are spending huge sums of money to prevent something we don't even know will come. It's as if someone wants you to pay CZK 1000 a month for rhinitis insurance.

If we want to spend these huge sums, then we must realize what it would cost us. We need to think about what we would have to give up, what opportunities we would sacrifice. In life, one still has to choose between two variants, and one cannot have both. This is called a trade-off. Everything costs something and caution is usually the most expensive.

Without a thorough cost-benefit analysis, we will have completely absurd conclusions, such as that we can best help nature by reducing CO2020 emissions by twenty percent by 2, see Angel?

If we want to replace the Temelín nuclear power plant with wind power plants, then these windmills, built next to each other, will create a line from Temelín to Brussels.

Slide No. 12

I don't think those questions need any special comment. Disputes over measured values ​​are not the focus of the book, although all Clausobians claim otherwise. the book would be the same even if global warming were proven beyond a shadow of a doubt.

Try to think about the complexity of the process of determining one global temperature.

Also, sometimes listen to what global warming can do. This year it could have been a lot of snow, last year it could have been a hard winter without snow, the year before it could have been a warm winter, the year before it could have been a very long and hard winter with a lot of snow and a mild summer. It will fit there…

Slide No. 13

There is no doubt that CO2 emissions are a function of three factors. The number of inhabitants, their product and technology. If Anděl wants to reduce emissions by 20% and at the same time does not hope for a very rapid extinction or very rapid technical progress (which liberals believe more than socialists), then Klaus deduces a single logical conclusion: warmers intend to stop product growth.

Slide No. 14

We've been talking about 0,74 degrees Celsius warming all this time over the last hundred years. Such warming is unobservable by the "human eye". Rumors that it was a white Christmas when young and long winters are rich lies.

Ask your grandparents what was the biggest change in their lives. Do you think it was half a degree of warming? Wasn't it, for example, the electrification of their village or significant motorization?

It only warmed about seven degrees from yesterday to today. You all survived in good health. I am sure that you will survive a possible warming of one degree over the next hundred years.

That's how you see it. Mankind will not die a miserable death, as Al Gore proclaims. The world will be saved by someone who knows accounting. The accounts rule the world ;)

The article was originally published on author's blog.

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