I’ve been following John Cochrane’s blog, “A Grumpy Economist,” for a while now. I love the self-depricating title and, of course, the material. In a recent Substack post, he tackles the question of climate change, government subsidies, and the groups of people who win and lose.
In short, he is saying that the massive subsidies that all US taxpayers have been funneling into electric vehicles are not generating the intended return. Not at all. They are bills being scattered in the wind.
OK– but how? and why? And what else should be considered? In short, what is the new framing that would better capture the intentions, levers, and incentives to address this issue?
Consider first the who. There are the EV activists. They have provided voice to the issue of climate change. And have been successful in securing financial subsidies from US citizens at large. The population of the US is the greater group. They too care enough to syphon off funds for the cause. But John Cochrane points out that the who is really the global population. Climate change flows over political boundaries. Reductions of pollutants in California can easily be negated by activity elsewhere on the globe.
The implication here is that to solve the issue of climate change, the anchor of discretion lies in with global population. To have an impact, activity across this group must have a measurable effect. Otherwise, a small group of earnest adjusters will work and sacrifice (in the EV example, US taxpayer dollars) to no beneficial ends. Lots of effort. Lots of signaling. No results.
Lastly, Cochraine mentions time. The time frame over which the analysis is best observed is one hundred years. To bully and berate neighbors into small gestures in the name of climate change is counterproductive, he says. The perspective is global, marked over centuries, and thus requires intentions and drive measurable within that framework.
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