Saturday, 31 May 2014

Is Climate Change a National Security Problem?

In his commencement address to the United States Military Academy last week, President Obama called climate change a "creeping national security crisis." He means that there will be refugee flows, natural disasters, and conflicts over water and food. But really, in my narrow mind, nothing is a security crisis unless it involves violence or the threat of it. Does climate change pose that threat? Then-Defense Secretary Robert Gates made that point over six years ago.

Bruce Johnsen at George Mason once offered this example. "I'm a big guy [he is]. But if I am threatened by violence on a dark street by someone smaller than me who wants my wallet, I will give it to him even if he is unarmed. Even though I may have an absolute advantage in violence, that person is likely to have a comparative advantage in violence." I am paraphrasing, but you get the point. Also, surely Professor Johnsen is not the only person to have made this point, but he is the only big guy I know to have made this point.

The point is that people have different opportunity costs of violence. A poor mugger on the streets may have a less than 50-50 chance of winning a fight against Bruce Johnsen (that was a few years ago), but because of his extraordinarily low opportunity costs of injury, it is a chance he might take. Professor Johnsen, on the other hand, might have to cancel classes, miss conferences, and *gasp* -- even miss faculty meetings! His costs of injury would be very high. Wealth inequalities are dangerous precisely because they create vast disparities in the opportunity costs of violence.

So goes it with climate change. As the rich get richer and the poor get relatively poorer (indulge me for a moment, as Professor Johnsen noted that these claims are inferential, and may underestimate the adaptive capacity of poor nations) in a climate-changed world, the poor are likely to respond by fighting. Poorer nations are likely to respond with violence, because, after all, when your country is threatened by flooding and tropical storms, what really do you have to lose?

Thursday, 29 May 2014

End the Crude Oil Export Ban And Fix Our Nation's Roads and Bridges

The United States can end the export ban and simultaneously stabilize the insolvent Highway Trust Fund. Bridges are collapsing and 18-wheelers are falling into potholes the size of Rhode Island, and we complain that Congress has not raised the gasoline tax since 1993. That tree-hugging pit of Marxism, the US Chamber of Commerce, has called for a gas tax increase.

IHS Energy, a consulting group headed by energy writer and wonk Daniel Yergin, today released a report advocating for an end to the domestic crude oil export ban. The IHS report, downloadable from this IHS page, reports that lifting a crude oil ban would create an average of almost 400,000 jobs between 2016 and 2030. Surprisingly, ending the ban would lower gasoline prices by an average of 8 cents per gallon. This is because US gasoline prices are set by global crude oil prices not domestic production costs, and lifting a US export ban would add to the world supply by a significant amount. The only losers would be domestic refiners such as Valero, which has opposed lifting the ban. Boo hoo.

So here is an idea: lift the ban, and at the same time impose a gas tax of 8 cents per gallon. The gasoline consumer is no worse off, because the gas tax only counteracts the lower gas prices resulting from ending the export ban, and generate about $9.7 billion annually for the Highway Trust Fund (135 billion gallons of gasoline were consumed in the United States last year, 13 billion of which were ethanol). Ideally, the crude oil export ban should be accompanied by an $9 per ton of CO2 carbon tax, but that's another story.

Enacted as part of the Energy Policy and Conservation Act of 1975, the crude oil export ban was meant to secure energy supplies in the wake of the 1973 oil embargo that shocked an energy-complacent United States. The actual legislation just provides that "[t]he President may, by rule, under such terms and Export conditions as he determines to be appropriate and necessary to carry out the purposes of this Act, restrict exports of -- ... coal, petroleum products, natural gas, or petrochemical feedstocks. .." Section 103 goes on to provide that the "President shall exercise the authority provided for in Exemption, subsection (a) to promulgate a rule prohibiting the export of crude oil and natural gas produced in the United States, except that the President may, ... exempt from such prohibition such crude oil or natural gas exports which he determines to be consistent with the national interest..." So it is pretty clear that the ban is a matter of executive discretion. It is just that Presidents Ford, Carter, Reagan, Bush, Clinton, Bush, and Obama have all decided that exporting oil was not in the national interest.

But that was 1975, and the United States is now one of the major oil producers of the world today. Much of the EPCA's provisions, aimed at insulating the United States from volatile global energy prices, still seem useful today, like the Strategic Oil Reserve and fuel efficiency standards for motor vehicles. But lifting the crude oil ban now has bipartisan interest, with Senators Wyden and Cantwell joining Murkowski in calling for at least consideration to ending the ban.

Monday, 19 May 2014

Extra-territorial Application of Domestic Law ... ?

I am preparing for a webinar in series hosted by the Canadian Bar Association, with the administrative leadership of Marc McAree, partner at the Toronto law firm of Willms and Shier, on Cross-Border environmental disputes. My old friend and co-author, Austen Parrish (now Dean at IU-Maurer), will be on hand, and he will lament the breakdown of reliance on international institutions in favor of unilaterial measures, such as domestic litigation. In Austen's previous work, he has outlined his view of the problem, which is that this leads to a breakdown of the implicit norms of international comity, and will lead to an unproductive tit-for-tat world of international diplomacy. In Austen's view, courts are even creatively redefining extra-territoriality out of existence, essentially making almost everything into a "domestic matter." Austen politely (he is Canadian after all) presses a disagreement with "sovereigntists" such as Eric Posner, Jack Goldsmith, and Curtis Bradley for advocating for a world less dependent on international institutions than say, domestic litigation or economic sanctions.

But I think Dean Parrish's cautionary notes ring hollow in several contexts, and the cyber-security threat is a good example of why. Austen's worry is about a breakdown in international legal institutions, and an over-reliance on litigation as a means of settling cross-border disputes. But let's stop and wonder here: what is the endgame? Is it true that this tit-for-tat world will give rise to a breakdown in international cooperation altogether? Surely trade between China and the United States will not suffer too much as a result of this spat over cyber-security. What exactly will bring Russia to heel over its regional ambitions to re-create some subset of the former Soviet Union? I think the U.N. is not up to it, especially with Russia and China on the Security Council. Being unable to use VISA or MasterCard -- now that sounds scary! International institutions, while not dead, are not going to be the sole bulwark against international lawlessness in the future. The deep economic interdependencies among nations will be important, and markets will play a role in disciplining both international lawlessness, and the running amok of domestic litigation. The difficulty of enforcement in areas such as cyber-security also limits the capacity of international institutions to police.

Fundamentally, the effects test as a basis for jurisdiction over foreign entities has fallen on hard times, and perhaps that is the problem. But if there is going to be some resurgence in the role of international institutions, some grappling with extra-territorial effects is going to have to take place. Without a more complex discussion of extra-territorial effects, both the "sovereigntist" and the "internationalist" positions in the abstract sound unrealistic and overbroad.

Friday, 16 May 2014

Nothing is off-limits for the Onion

Continuing on the Piketty-Beaudry-Green work on income inequalities -- that high-skilled workers are finding themselves in lower-skilled jobs -- the Onion has a piece on a high school student and her chemistry teacher applying for the same waitressing job. Nothing is sacred for the Onion: back on October 3, 2001, the Onion, having taken a reading on the national mood, decided that it was going to have a little fun in the aftermath of September 11.

Tuesday, 6 May 2014

Scalia's Blunder, and What Else It Signifies

Much has now been made of a fairly spectacular blunder made by Justice Scalia in his dissent in the EME Homer case announced last week. Scalia opined that EPA was trying to smuggle cost considerations into rulemakings under the Clean Air Act. He also said it was not the first time that EPA had tried this little bit of chicanery, and he cited Whitman v. American Trucking as an example. The problem is that EPA's position was the exact opposite, as Scalia's own opinion reflects. Scalia also ignores another of his opinions in Entergy v. Riverkeeper, in which EPA declined to mandate a very expensive technology on cost considerations. Granted, Scalia is the author of a large number of opinions (over 1000), so maybe he should get a break. Still, Dan Farber notes the casual nature of the writing from his dissent ("Look Ma, no hands!"  "Wow, that's a hard one -- almost the equivalent of asking who is buried in Grant's Tomb") that is really unusual for a Supreme Court opinion. Perhaps Justice Scalia is, in his advancing years, shedding the few inhibitions he still has. 

There are other aspects of Scalia's opinion which suggest a more significant about-face. The broader about-face is what seems to be an about-face in "conservative" (they would call themselves that, I am not sure I would) circles on cost-benefit analysis, as cost-benefit analyses start to make some regulations look sensible, like climate policy. The dismay over the social cost of carbon is a driver of that movement. But we should not be surprised that "conservatives" have discovered postmodernism late in their intellectual lives, including that of climate skepticism. As Eric Rasumussen points out, arguing over facts is more personal than arguing over theories. My view is that "conservatives" sense they are going to be on the losing end of empirical arguments, and are driven less by data than by ideology.