Senior economic policy advisor to Lehman Brothers has it

Superb article in today’s Observer reproduced here in full (sans advert) –

In a confusing climate, the scientists are probably right

John Llewellyn
Sunday September 2, 2007
The Observer

About 15 months ago, I decided that the time had come to make up my mind about the business implications of climate change – and what a fascinating journey it has been. Perforce, it started with the science, then passed through climatology, economic consequences and policy before finally reaching its destination: the potential consequences for business.

Even more fascinating, however, has been what it has shown about the various ways people disport themselves when confronted by complex, emotional issues and insufficient evidence.

The essence of course, is the science, to which all have access today in simple prose from authoritative sources. My reading, in line with 11 national academies of science, including that of the US, and upwards of 2,500 scientists on the Intergovernmental Panel for Climate Change, is that Earth has been warming over the past 100 years; that mankind is largely responsible for this; and that unless something is done to check, then reverse, the rise in atmospheric greenhouse gas concentrations, there is a significant chance of major and perhaps irreversible ecological damage. But there is no need to take my summary: see, for example, the Royal Society’s Climate Change Controversies pamphlet (a simple guide) or New Scientist’s Climate Change report (a guide for the perplexed). So what have people made of all this? The response has been impressively varied, but some categorisation is possible.

The Ideological Mainstreamers: this group has been around the longest. Its members did not have to wait for evidence. They were certain there was a problem well before the rump of scientists reached today’s near-consensus.

The Ideological Contrarians: these people require standards of proof no higher than those of the ideological mainstreamers, but hold the opposite view. If they have an intellectual belief, it is that they are smarter than the crowd. More often, though, it is just a game of attracting attention by attacking the majority.

The Grey Conservatives: members of this coterie specialise in appearing reasonable. They are neither pro nor anti, they gravely insist: the problem is simply that there is not enough evidence to support policy action of any sort. Do more research, collect more data and continue the debate, they counsel sagely.

The Non-Sequiturians: various arguments are advanced by this group, but they share a structure. Warming was caused by sunspots, or fluctuations in the Earth’s orbit, or volcanic eruptions. Therefore it cannot be caused by mankind. The ‘therefore’ is the giveaway, the delicious non sequitur: just because Earth has warmed for one or another reason in the past is no reason why it cannot warm for a completely different reason in the future.

The Busy Executives: their argumentation is loftier, but no fuller than it needs to be. Elevating pragmatism to a virtue, they take the position that what matters is not whether the science is right or wrong, but what policymakers are going to do. Given that it increasingly seems that policymakers are going to do various things, the argument runs, skip the argumentation and go straight to the implications for business.

What is so fascinating about all this is how happy most of the participants seem to be in their respective argumentational cocoons. Perhaps that is what we all do: confronted by a troubling issue, we seek out some territory in which we feel intellectually comfortable and are surrounded by friends. So where does that leave me?

As the son of two scientists, brought up to believe that we are unlikely ever to know the complete truth, I was brainwashed far too early to be able to be a happy ideologue. Two options gone, therefore. Equally, as someone who spent nearly 20 years advising on international economic policy, I find it hard to live with the philosophy that we never know enough to make policy. Another one down. Similarly, while most arguments contain an uncomfortable number of unspoken ‘therefores’, as a would-be logician I do think that when we actually spot a non sequitur we ought to reach for our gun. Another one down. So what of the busy executive’s approach? It is doubtless efficient for decision-making, but it is intellectually unsatisfying, at least on a Sunday.

Time to get off the fence. It seems to me that when the mainstream of science points almost unanimously in one direction, that ought to be given preponderant weight. Admittedly, a faint voice reminds me that, during the Great Depression, the overwhelming majority of economists agreed that wages had to be cut further, while one lone contrarian, John Maynard Keynes, argued that everybody had got it wrong. But today, the majority of mainstream economists know that Keynes got it broadly right. Of course there are some dissidents – the ideological contrarians, the grey conservatives, the non-sequiturians… but let’s not go there.

So I come down as follows. The scientists are probably right. There is a small chance they are wrong. If we do nothing about emissions we probably run a serious risk. For an annual abatement expenditure of perhaps 1 per cent of (global) GDP, mankind could probably materially reduce that risk. So, notwithstanding that I don’t have as much evidence as I would like, I would be prepared to contribute 1 per cent of my income to abatement policies – mainly on behalf of my children and theirs – so as to avoid something that I haven’t experienced and probably wouldn’t like. I guess I’m just an economist.

· John Llewellyn is senior economic policy adviser at Lehman Brothers



One Response to “Senior economic policy advisor to Lehman Brothers has it”

  1. Lehman-Brothers » Blog Archive » Lehman Brothers Centre for Women in Business Says:

    […] … mainly on behalf of my children and theirs – so as to avoid something that I haven’t experienced and probably wouldn’t like. I guess I’m just an economist. · John Llewellyn is senior economic policy adviser at Lehman Brothers. …more […]

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