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February 18, 2007
David Warsh, Proprietor


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Take a Deep Breath

So federal legislation to establish carbon caps and emissions trading is suddenly all but a foregone conclusion in Washington, conceivably even before George W. Bush leaves office. What changed?  Katrina had something to do with it. The discovery that ice sheets in Greenland and Antarctica are shrinking faster than expected probably did, too. It means that lowland flooding around the world may become a problem in centuries, conceivably even in decades, rather than millennia.

Pause briefly, therefore, here at the beginning, to consider the global undertaking in which we are about to engage — limiting the accumulation of greenhouse gases in the atmosphere.  What experience do we have, if any, with such a task?

A pretty successful experience, as it happens.  For decades, meliorists have yearned for “another Marshall Plan” of one sort or another — one aimed at helping Russia and the Eastern European nations, or Africa, or Islam, all with the recognition that successful results would help the West, too.

At last, a sufficiently pressing need has arisen that, almost certainly, we are going to /need/ a grand plan, and on a scale suitable to a far, far more prosperous world than the one that coped so successfully with the problems of 1947.  The Marshall Plan would be a good model — “maybe the only model”– for the looming “collective division of assets and liabilities” required to address global warming, according to social scientist Thomas Schelling.

It goes (practically) without saying that the human contribution to climate change is a problem of industrialization and economic development, not simply an “environmental” problem. Poor countries want to grow rich, and, at last, they are doing a pretty good job of it.

Last year China brought online twice as much new electric power capacity as California possesses altogether; the Chinese will do more or less the same again this year. Ninety percent of their new capacity is fired by carbon-heavy coal.

But then some overwhelming fraction of the greenhouse gases already in the atmosphere was put there by the industrial democracies — a proportion of something like five to one compared to the developing world, on a per-person basis.

Short of arguing that poor nations have no right to become rich, then, there is no way to slow greenhouse warming unless the rich countries help the poor manage their emissions during some period of transition.

Enter Thomas C. Schelling, 86.  A life-long student of the arms race, he has an intimate familiarity with situations in which nations must pull together. He may also be the last man standing with personal, hands-on administrative experience in the post-war rehabilitation of Europe. (After gaining his PhD in 1948, he spent a year in Copenhagen and eighteen months in Paris, before returning to Washington in 1951, to work for two years in the White House for the Director for Mutual Security, the office that managed all foreign aid programs. That makes him one of the very few scholars who ever declined membership in Harvard’s elite Society of Fellows.)

It has been ten years since Professors John Agnew and Nicholas Entrikin organized a conference at the University of California at Los Angeles to mark the fiftieth anniversary of the famous speech given by Secretary of State George C. Marshall in which he sketched, for the first time, the broad outlines of the program for the reconstruction of Europe that would come to bear his name. The proceedings of that meeting were finally published in 2004 as The Marshall Plan Today: Model and Metaphor. The book is a valuable resource for all kinds of reasons; it is a pity about its preposterous $150 price. Many people wrote for it. But the voice that stands out today is that of Schelling.

In those days, he was Distinguished University Professor at the University of Maryland, having been forced into premature retirement at Harvard by the brief interval before US law was changed to make age discrimination illegal. Then in 2005, he shared the Nobel Prize in Economics with Robert Aumann of Hebrew University, “for having enhanced our understanding of conflict and cooperation….” (His Nobel lecture was a tour-de-force.) Today, Schelling is a link between the thorniest problems of the twentieth century and those of the twenty-first, an inspiring symbol of the capacity of humankind to surmount the terrifying problems it has made for itself.

There were several striking aspects to the Marshall Plan, Schelling recalls in Model and Metaphor. For one thing, it had a beginning, a middle and an end. There had been foreign aid before — Lend-Lease aid to Britain and the Soviet Union totaled $50 billion by the end of World War II, he noted, at a time when US GNP was around $175 billion — and there would be much foreign aid afterwards as well.  But the rehabilitation of the European economy was thought to be a problem both finite and soluble. Some other arrangement might be required afterwards, but it would be afterwards.   The Marshall Plan was self-limiting, and that probably had something to do with its political salability.

(That other arrangement turned out to be the North Atlantic Treaty Organization. But when the treaty was actually signed in Constitution Hall in 1949, historian Tony Judt recalls the band played “I’ve Got Plenty of Nothing.”)

For another, wrote Schelling, the Marshall Plan was a European plan, not fifteen national plans.  The nations were to indicate the amount of aid they would requite to put their economies back on a sound footing. “Each nation’s requirements were scrutinized and cross-examined by other European nations. An exorbitant claim by one was perceived to be a threat to what the others could receive, and the result was a negotiated total.” As soon as the appropriations for the first year were agreed upon, he said, the Organization for European Economic Cooperation went to work on the second.

That the word “cooperation,” featured in the names of both the European organization, and the US Economic Cooperation Administration, was no accident, Schelling said. The process of working together for a common purpose was taken seriously from the start.

Fast forward, then, to the environmental summit in Rio de Janeiro in 1992. That was the international convocation attended by President George H.W. Bush — the first concerted step towards a “framework convention” designed to reduce carbon emissions. Five years later, negotiators met again in Kyoto, hoping to design broadly acceptable targets and timetables, along with mechanisms for the formal allocation of rights among nations.

By that time, however, the myriad consequences of the collapse of communism and the end of the Cold War had taken center stage. Lip service was the order of the day. And in 2001, George W. Bush surprised even his supporters by unilaterally pulling out of the Kyoto Agreement.

But five years was “too soon to be disappointed,” writes Schelling. Nothing like carbon emissions regime had ever been attempted, he noted.  The obstacles to be overcome were large.  The atmosphere was a global commons, where everyone’s emissions mixed and mingled with those of all others. It was in no nation’s interest to limit emissions on its own.  Nations differed widely in their dependence on fossil fuels. Standards of fairness were uncertain.  The burdens to be shared are large.

How large?  Schelling estimates that a serious carbon regime will require contributions by nations around the world on the order of a hundred times more than what they now pay for the United Nations, not just its staff activities but its peacekeeping ventures as well. An effective greenhouse strategy could cost participants something between two percent and three percent of GNP forever.

Two percent is, at least today, a politically unmanageable goal in many countries, including the United States. Economically, that price-tag is not so forbidding, says Schelling; growth rates in the United States are such that per capita income will double in the next 40 years. Dock GNP by two percent in perpetuity and the doubling will occur in 2062 instead of 2060.  Faster growing countries will need help capping their emissions, not to mention the poorer nations that are barely growing at all.

Hence the collective division of assets and liabilities that, as Schelling notes, was at the heart of the Marshall Plan’s success. Trouble setting targets? Assigning formal emission rights?  Monitoring compliance?  The appropriate procedure may be much the same as the one that evolved sixty years ago in Europe:  call it “multilateral reciprocal scrutiny,” Schelling says.

“There never was a formula; nor were there even criteria; there were Ôconsiderations.’ Each country made a claim for aid on whatever grounds it chose. Each was queried and cross-examined about dollar-export potential, domestic substitutes for dollar imports, dietary standards, rate of livestock recovery, severity of gasoline rationing, and anything pertinent to dollar requirements. The objective was to achieve consensus on how to divide four billion dollars.”

Curbing greenhouse emission will cost far more than that.  Some 200 nations will be involved. The technical considerations will be different. The wrangling will be greater.  But the process for dealing with global warming probably will be the same: pragmatic discourse and cooperative dispute. As with the Marshall Plan, full consensus will not be required; just enough agreement that disputes can be resolved by a trustworthy committee.

In the case of the Marshall Plan, it was a committee of two, Schelling says; in the case of NATO, a three-person panel arbitrated disputes over the burdens to be borne (but not, he notes, “enforced”).  The European Union followed a similar procedure to arrive at its carbon-reduction targets for member countries.  And in the end, the parties to the Kyoto Agreement will probably do the same.

Was the lack of formal targets responsible for the success of the Marshall Plan?  The participants couldn’t have agreed on specific goals in the time allowed, Schelling says; they had to act and, “in the end, they had to be satisfied with the division.”  The future of Europe was at stake. The world today could do worse than to begin the same way with carbon emissions — much worse. In time, he figures, more formal criteria will evolve.

Today, the Marshall Plan is a fading memory, a catchphrase whose precise meaning is elusive. Looking back, however, the improvisation probably did more than any other measure to stabilize the world in the wake of World War II and on the brink of the nuclear balance of terror. The problem of global warming is similar in many respects. (Expect awareness of the resemblance to increase: Schelling is scheduled to give Harvard University’s annual Godkin Lectures next year. In all likelihood, his topic will be coping with global climate change.)

The real question now is whether the same caliber of political leadership will be forthcoming. Some very great challenges lie ahead.

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