The Political Economy of Global Warming, Rent Seeking and Freedom
By Wolfgang Kasper
Mitigation costs in terms of lost long-term global economic growth are much more difficult to assess than the household costs inflicted by specific legislative proposals. Politicians and bureaucrats around the Western world are now imposing piecemeal regulations ‘to save the planet’, often without much analysis of their effectiveness and the costs. (page 81)
Energy users are being burdened with costly regulations and compliance costs; taxes are being diverted into subsidies for some politically preferred solutions; and new ‘climate regulations’ block otherwise promising avenues for wealth creation. These costs of climate mitigation will without doubt on balance be massively negative. (page 81)
Economists have coined a term to describe the activities of those who seek regulations, taxes, subsidies and other government programmes that result in personal benefits to them at a cost to society: ‘rent seeking’. As Kasper notes:
“Pervasive rent seeking is counterproductive in economic terms, as well as profoundly unjust. To the extent that arguments about global warming are detected as just a new excuse for rent seeking, they will be treated with disdain and contempt – regardless of their scientific merit.” (page 87)
“To most natural scientists, concepts such as public choice and rent seeking are of course unfamiliar. They therefore fail to understand that social scientists and the public are cynical about the climate advocacy of recent years, which they view as a case of massive rent seeking. This is the main reason why economists are recalcitrant to uncritically accept the assertions of the climate activists.” (page 87)
Wolfgang Kasper is an emeritus Professor of Economics of the University of New South Wales. He worked first in Germany and Malaysia, and from 1973 in Australia, as well as in the USA and most of East Asia. Apart from his academic teaching, he has a long record of research and consulting for international businesses and governments. His main interest has been industrial ( re)location and institutional economics, i.e. the role of customs, laws and regulations in shaping economic life. He was an early voice for economic reform in Australia and New Zealand, and has written widely on the role of secure private property rights, small government and economic freedom in promoting prosperity. In 1988, Kasper was elected to the Mont Pelerin Society, an international academy dedicated to the promotion of freedom. The author gratefully acknowledges helpful pointers and astute criticism from one anonymous reviewer; all errors of fact and judgement of course remain his alone.
