Wherein One Blogger Deftly Constructs a Bet That I Won't Take

By Ian

Kevin Drum takes a shining to all the possible wonders that the new California anti-global warming bill will bestow upon the Sunshine state. Indeed, he's so certain, he's willing to place a bet on it (one that another blogger is willing to take up).

Still, this is a good first move, and I'll bet all comers that not only does it not have a negative impact on California's economy, it will have a noticeably positive impact. It will spur R&D in new technologies, it will motivate businesses to become more efficient, and it will make California a better place to live. And as for businesses moving out, I'll bet against that too. Moving heavy industrial plants to new states is a lot less appealing than it sounds, and if it does start to happen I'll bet other states will follow California's lead. After all, what state wants to be the dumping ground for all the poor corporate citizens who are moving out of California because they want to relocate somewhere that doesn't mind them belching tons of pollutants into the air?

Here's my question: what about all of the diverted activity from companies that choose, on the margin, to avoid Cali to begin with. Stores not opened, factories not built, workforces and facilities not expanded...and so on. And, if California experiences growth, what would be the counterfactual? Would there have been more or less growth absent the new bill?

The bet seems rigged to me, focusing only on the most expensive form of altered company behavior, ignoring that this is not the only impact a change in the cost to do business will have on a state's economy. Best of luck to Jane if the bet goes forward. Me, I'd put the money into buying technology to make sure my house uses less power when I'm not home.

For disclosure, I consider myself something of a fence-sitter on global warming. Yup, it's absolutely there. Yup, it's definitely a problem. Nope, no one has a non-slip grip on how big a change and what percentage of the change is due to what factor. (Confidence intervals that include both "no change" and "Hades on a bad day hot" don't make me, well, confident.) And nope, strapping businesses down and squeezing them until they bleed money is not the best way to reduce the problem (unless you happen to like the level of development in the world RIGHT NOW so much that you don't think it should change, and, perhaps, might do with some backsliding).

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