1. Enda Kenny was on the cover of Time recently. The Celtic Comeback it read. His interviewer said “[Kenny] didn’t do anything […] particularly foolish”, a clear improvement on his predecessors. But the current government has not done much to restore the economy to growth and prevent a future bust either.

    Before the bail-out, some hoped that the technocrats of the IMF would sort the country out. Instead, we got the Troika, led by the ECB with its narrow focus on the banks of Europe. Irish politicians are distracted from genuine reform by hitherto unsuccessful attempts in renegotiating the terms of the bail-out. There is less pressure to structurally reform economic policy now that Ireland is tentatively returning to the capital market, Europe is focussed on its south while praising Ireland, and there is a possible oil bonanza. But Ireland did not go (almost) bankrupt by accident. Unless it changes itself, Ireland will run into similar problems again, maybe before the decade is over.

    There are many theories about the causes of the crisis. To me, the root cause is the electoral system, which favours generalists and populists. No TD has a national mandate, and few TDs have the experience and skills to design and implement a successful economic and fiscal policy. The Cabinet has an economist and an accountant, but the Cabinet’s Economic Council has three teachers and a lawyer. Political change is not on the agenda. The focus is on the Seanad. But abolishing a powerless institution (if it ever comes to that) will not change politics. Instead, the Dail should be reformed so that it is populated with competent policy makers.

    George W. Bush once said “you don’t have to be smart [to be president], you can hire smart”. Since 2008, economic policy advice has changed dramatically. Economists who speak well dominate the media, sometimes at the expense of those who know what they are talking about. There were a few economic think tanks in 2008. Now there are more, but the new ones are small and can just as easily be ignored as the older ones. The Central Bank has greatly expanded its number of economic analysts, but has yet to deploy them to any notable effect. The debacles with water meters and electric vehicles were foretold, and alternative solutions offered. Experts are unanimous that self-assessment is the wrong way to implement a property tax, and have suggested other options, but the government is ploughing ahead to another fine mess.

    The programme for government and the bail-out agreement foresee privatization of companies. There is no reason why the state would own companies in energy, transport, agriculture, media, and sport. State-owned companies are poorly run in Ireland, as recently again demonstrated by CEI and EirGrid. They are there for the benefit of employees and as a slush fund for politicians’ pet projects. Privatization would bring some relief to exchequer and, eventually, the taxpayer. There is little competition in the sectors where state-owned companies dominate. The nominally independent regulators often find it difficult to stand up to the responsible minister, who doubles as company owner and policy-maker. Privatization would improve competition. That is also true for the sheltered profession, particular the legal ones. The programme for government promises to open up these sectors. More competition would reduce prices and help households and companies. The government is making haste slowly.

    During the Tiger years, incidental tax revenues (stamp duty, capital gains) were used to reduce structural taxes (primarily income taxes) and to finance a structural expansion of the public sector – more civil servants were hired and their wages rose very rapidly. The Croke Park Agreement is too weak to rectify the structural imbalance between tax revenue and public spending, but the government has been unwilling to face up to this reality. The abolition of one out of 1100 public pay allowances is symptomatic. The programme for government also promised that the number and role of (quasi-)government organizations would be rationalized, but little has come of this.

    The Irish economy is no longer in freefall, thanks to exports by private companies, big and small, Irish-owned and foreign. The government is on target to stop adding to the public debt within the next few years. But then the debt will need to paid back, plus interest. Interest only will be twenty cents of every euro tax paid. The national pension reserve fund is as good as empty. If the government sets one foot wrong, the market will loose confidence and Ireland will be back, cap in hand, at the Troika.

     The Irish economy needs all the growth it can get. The government has no money for a stimulus. The Central Bank has lost its power to the ECB. Structural economic reform is the only option to promote growth. The government, however, is unwilling or unable to deliver.

     This op-ed was meant to be published well before the budget.
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  2. De internationale klimaatonderhandelingen zijn in volle gang in Doha. Ongeveer 17,000 mensen zijn naar het Midden Oosten afgereisd voor de 18de ronde van de internationale onderhandelingen. De eerste 17 rondes zijn mislukt. Wereldwijd is de uitstoot van broeikasgassen niet lager dan wat het geweest zou zijn zonder al dat gevlieg en gepraat.

    Als een experiment 17 keer op rij mislukt, dan is de kans op success 2.3% -- tenzij er geleerd wordt van mislukkingen in het verleden. Dat is niet het geval. Het doel van de eerste klimaatonderhandelingen in Berlijn in 1995 was wettelijk verbindelijke uitstootbeperkingen. In de aanloop naar Berlijn werd er een stapel alarmerende rapporten gepubliceerd. In Berlijn beloofde ieder land zijn best te doen, en riep ieder ander land op tot actie. Doha is niet anders. En Doha zal net als Berlijn uitdraaien op een teleurstelling.


     Hoewel het steeds duidelijker wordt dat internationale onderhandelingen over klimaatbeleid op niets uitlopen, wordt er steeds meer in geinvesteerd. Er waren 757 onderhandelaars in Berlijn in 1995. Dit liep op tot 24,000 in 2009 in Kopenhagen. De Verenigde Naties organiseerde 4 klimaatbijeenkomsten in 1997. Doha is de 107e bijeenkomst in 2012, en de 682e sinds 1995. Internationale klimaatbijeenkomsten alleen, zonder voorbereiding, bezinning of rapportage, kosten nu minstens 100 million euro per jaar.


     Klimaatverandering is een ideaal probleem voor een politicus. Je kan beloven de wereld te redden, maar de daad wordt pas in de toekomst, door je opvolger, bij het woord gevoegd. Als er onverhoopt toch nu al actie verlangd wordt, dan kun je je altijd achter de onwil van de Polen, Amerikanen of Chinezen verschuilen.

     Klimaatverandering is ook geweldig voor bureaucraten. Een nieuw probleem brengt nieuwe instanties, nieuw papierwerk, nieuwe snoepreisjes en nieuwe promotiekansen. En als een oplossing moeilijk blijkt, dan kunnen we altijd een nieuw rapport laten schrijven en een nieuwe commissie in het leven roepen.


     Een recent rapport van de Algemene Rekenkamer is een goed voorbeeld. De Nederlandse overheid zou niet voldoen aan de internationale richtlijnen voor nationaal aanpassingsbeleid. Dat klopt. Dat is een goede zaak. Aanpassing aan klimaatverandering is over het algemeen niet gebaat met overheidsbemoeienis. Het is in ieders eigenbelang zich aan te passen aan veranderende omstandigheden, en de meeste mensen kunnen ook zonder overheidssteun besluiten of het al tijd is de winterjas uit de kast te halen. In de landbouw, bijvoorbeeld, staan overheidssubsidies aanpassing juist in de weg. Maar ambtenaren hebben internationaal afgesproken dat de overheid zich toch met klimaataanpassing moet bemoeien, en nu worden Nederlandse ambtenaren door andere ambtenaren gedwongen iets te doen dat in niemands belang is – behalve van de ambtenaren zelf dan.


     Die regelzucht en de drang van vele klimaatactivisten naar een wereldregering roepen tegenstand op. Omdat klimaatbeleid in de naam van de wetenschap gebeurt, wordt de wetenschap aangevallen. Dit wordt vergemakkelijkt door het voortdurend overdrijven van het klimaatprobleem en het laconiek omgaan met de bewijsvoering door enkele wetenschappers. Dit vertraagd de politieke besluitvorming.


     Het bedrijfsleven is het klimaatgedoe al lang zat. Er wordt veel gepraat maar weinig gedaan. Politici blijven maar doorgaan over de twee graden doelstelling, een station dat allang gepasseerd is. En toch is het duidelijk dat er ooit een echt klimaatbeleid tot stand zal komen met verregaande gevolgen voor energie, transport, chemie, en landbouw. Maar het is moeilijk de juiste investering te maken tot het duidelijk wordt wat dat klimaatbeleid nu eigenlijk is.


     Een aantal bedrijven heeft daarom opgeroepen tot het invoeren van een koolstofbelasting. Dit is de goedkoopste manier om de uitstoot van broeikasgassen te beperken. Een koolstofbelasting brengt weinig administratieve rompslomp met zich mee. Het is minder gevoelig voor fraude dan verhandelbare emissierechten, en heeft geen last van prijsvariabiliteit.


     Daar komt bij dat belastingverhogingen onontkoombaar zijn. Europa, Japan en de VS worstelen met een begrotingstekort en een hoge staatsschuld. De Chinese regering heeft meer inkomsten nodig om in de sociale zekerheid en pensioenen te voorzien. India smeekt om nieuwe wegen, havens, vliegvelden en electriciteitskabels. Een koolstofbelasting brengt veel minder schade toe aan de economie dan een verhogen van de loon- of winstbelasting.


     Na de 18de mislukte klimaattop zou het duidelijk moeten zijn dat het anders moet. Internationale afspraken over klimaatbeleid komen niet tot stand. Ieder land dat zich zorgen maakt over klimaatverandering of geld nodig heeft, zou een koolstofbelasting in moeten voeren.

     Een aangepaste versie verscheen op 1 December 2012 in het NRC Handelsblad.
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  3. There is a petition in support of the Ackerman-Munitz paper in Ecological Economics. The petition is all about proper conduct. I support all the generic statements in the petition.

    I find it odd, though, that for a petition about correct procedure, only one of the signatories bothered to check directly with me. Someone else checked too and decided not to sign.

    The petition is ironic, as is clear from its history.

    In 2007, Frank Ackerman contacted me. He was unable to reproduce a result of mine. I checked his calculations and found that he kept urbanization constant whereas we do not. This fully explains the difference in results. I notified Mr Ackerman of his omission. I was surprised that in 2008 he nonetheless published his claim of irreproducibility, knowing that it was false. The journal published our commentary.

    In 2010, Ackerman contacted us again. First because he could not install our model (which is freely available to all), and later because he thought he had found a division-by-zero error. We explained that his tests were inconclusive, and shared with him the results of our standard diagnostic tests as well as a diagnostic test geared specifically to the issue at hand. These tests showed that there is no risk of dividing by zero.

    I admit that the then model documentation was opaque. The equations suggest a possible division-by-zero, but the accompanying text fails to mention the tail correlation, perfect in the appropriate limit, that prevents a material impact on the results.

    Ackerman and Munitz published a working paper in early 2011, repeating the division-by-zero claim that by then they knew was false. I protested to no avail, and again later in the year. Having learned from my 2007 experience, I protested not only with Mr Ackerman himself, but also with his publishers and employers (one of whom, incidentally, wrote back that Mr Ackerman’s alleged affiliation was a fabrication).

    The Ackerman and Munitz paper was published in early 2012. It stills contained the false division-by-zero claim. I protested. The matter was investigated by associate editor David Stern. He found that Ackerman and Munitz had indeed suppressed relevant information, namely the diagnostic tests that refute their claim.

    Stern also found that Ackerman and Munitz were not sufficiently clear about distinguishing their contribution from ours. Stern’s letter was published, as was our commentary that focused on the inconclusive tests conducted by Ackerman and Munitz.

    Later in 2012, I reviewed a paper and a book by Ackerman. The paper contained yet another factual error: Contrary to what is claimed by Mr Ackerman, we do take the agriculture literature post 1996 into account in our model calibration. The editors agreed to have that error removed.

    The book makes the same error, and again repeats the division-by-zero claim. That claim damages my reputation, it is false, and Mr Ackerman knew it was false when he made the claim. I protested with the book’s publisher and with Mr Ackerman’s employer. This issue is still unresolved.

    I welcome scrutiny of my work. Indeed, we make a detailed model description, the code, and all data freely available to anyone. We made two changes in response to Ackerman-Munitz. First, we changed the license so that anyone who makes changes to the code is obliged to put the altered code in the public domain. Second, we changed the software such that any alteration to the code can be traced to a specific programmer.

    The petition unfortunately overlooked one basic element of proper conduct in research: Facts should be checked, and corrected if need be.
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  4. More upheaval about academic pay. A substantial number of consultants, university presidents and professors are paid what seem inordinate amounts of money. Taxpayers’ money. Let us cut their pay instead of child benefit! Tempting, but it does not cut wood. Even if the wages of the hundred best paid academics were cut to zero, the savings would be miniscule compared to the hole in the budget. Academic pay, however, is one reason why Ireland’s universities perform under par.

    Academia is like soccer. The labour market is international. If you want to hire a star, you need to pay top dollar. The FAI hired Trappattoni, and pays him twice as much as Loew, the coach of Germany. Trappattoni had a stellar record, of course, but used to work with top players. Other coaches specialize in making mediocre teams surpass themselves.

    If you want to hire a top academic, you need to offer an internationally competitive salary. But you also need to offer an environment in which the new hire can continue to excel. Academics do not work alone. Every top dog is supported by less-able colleagues, students and administrative staff – and inspired by equally brilliant colleagues across the hall.

    But just like it was perhaps an illusion to think that Ireland could join the top ranks in soccer, Ireland cannot shine in every academic discipline. Merge TCD and UCD and you have a university in the European sub-top. Respected internationally but unable to attract or keep the highflyers, who will continue to flock to the top universities, not just for the pay, but also for the unsurpassed intellectual climate.

    But Ireland does not need to be the best at everything. A top medical consultant is highly specialized. Her specific expertise would be needed only occasionally for the six million people of Ireland. Rather than maintaining, and rarely using, expensive expertise at home, it would be cheaper to fly rare cases abroad. And sure, let those medical consultants who bring in lots of foreign patients be paid an internationally competitive salary.

    It is the same in the universities. You do not need a star to teach Introductory Whatever. It is only at master’s and PhD level that research excellence has a positive effect on teaching quality. Let those academics be paid well who bring in foreign students and research grants.

    However, the egalitarian culture of Ireland’s public sector does not tolerate wage differences. During the Celtic Tiger, in an attempt to attract foreign stars, all salaries were raised. This had negative side effects then already: Young Irish talent could make so much money at home that they never gained useful experience abroad. Irish academia is insular. A broader perspective helps. Now, with austerity biting, Irish top academics find competitive offers elsewhere, but others are still priced out of the market.

    Rather than cutting pay at the top, pay should be cut across the board – and raised again for those that deserve it.

    The people who run universities and hospitals are also paid well. They have to be. These are large and complicated organizations. Good managers cost money. Instead of cutting pay, numbers should be cut. If universities are merged, there will be fewer university presidents. Fewer but larger universities would also avoid duplication, offer broader education, and gain international visibility.

     Pay peanuts and you get monkeys. For some jobs, monkeys are all you need. More importantly, you can offer a monkey more than peanuts, but he will still be monkey. We should not reduce the top salaries in academia. Fewer should get top pay, though, and only those that are worth it.

     an abridged version appeared in the Irish Independent of 6 November 2012
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  5. In a recent paper in this journal (1), basic things go wrong with the economics. Economists are known for their fierce disagreements and spotty forecasting. Economists agree, however, on accounting principles. The balance of payments must be zero. Money is conserved. If you earn more than you spend, you build up savings. If you borrow money, someone has to lend it to you. If a country exports more than it imports, it builds up foreign assets. (1) violate this principle. Their capital account is zero by assumption, and their current account is balanced over time rather than at each point in time. Money disappears from Earth and reappears years later. This is bizarre. It is hard to think through the implications for their results. The optimization algorithm would shift income from the future to the present as that would increase net present welfare. Climate policy adds trade in emission permits, and so opens up a new channel to transfer money. More income is thus shifted to the present. Emission reduction costs are artificially lowered.
    Economists also agree on a few idealized states of the economy that make for useful yardsticks. (1) claim to use “Negishi weights” to balance the current account over time. Negishi weights, however, establish a mathematical equivalence between a hard-to-solve market economy and an easy-to-solve planned economy (2). (1) did not use Negishi weights. They used other weights instead. Therefore, their solution represents neither a market equilibrium nor a social optimum. It is not known what they computed. As per capita incomes are assumed to converge over time, the optimization algorithm would use international trade to transfer income – exporting below cost price – in the near future from poor to rich countries; and transfer income back in the distant future. As poor countries typically are exporters of emission permits, the costs of emission reduction are artificially inflated, and further so because the market does not clear.
    The abatement cost estimates of (1) are biased downwards because rapid technological progress is assumed for renewables but not for fossil fuels.
    Qualitatively, the main findings of (1) are not new (3): Without nuclear, baseline emissions increase and it is harder to meet any particular emissions target. There is one option less to reduce emissions. Climate policy is more expensive as result. Their quantitative results, although new, are meaningless, as argued above, and only roughly in line with previous studies because of cancelling errors.

    Reference List
       1.   Bauer, N., Brecha, R. J., and Luderer, G. (2012) The economics of nuclear power and the climate change mitigation policies. Proceedings of the National Academy of Sciences.
       2.   Negishi, T. (1960) Welfare Economics and Existence of an Equilibrium for a Competitive Economy. Metroeconomica 12, 92-97.
       3.   Weyant, John P. (1993) Costs of Reducing Global Carbon Emissions. Journal of Economic Perspectives 7, 27-46.

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  6. The latest university rankings are out. Ireland’s universities dropped a few places. Again. Cue calls for an end to austerity in third level education. Again. But the government does not have any money. The universities should learn to be excellent within their means.

    The universities are not that bad actually. Ireland used to punch well above its weight with two universities in the international sub-top plus a few third-tier institutions. The current rankings are closer to what you would expect from a small but rich country. Even with all the money in Ireland, a relative decline would be inevitable as Asian countries, from China to Saudi Arabia, are building world-class universities at a frightening pace.

    But Ireland’s universities could do better, also without extra money from the taxpayer. For that, they need to solve two core problems: scale and red tape.

    Ireland has more universities and institutes of technology than it needs. In Europe, Ireland is second only to Finland in the number of universities per head of population – and there are calls to add an eight university in Waterford. And all universities do everything. The result is many small departments. This is a waste of resources: Every department has a head, a director of undergraduate studies, a library committee, and so on. Small departments are not very visible, not to peers, not to funders, and not to international students. And small departments offer a narrow education, with few electives and little diversity.

    The remedy is simple. Rank the departments. Close the worst two. Reallocate the resources to the best two. And for the two or three departments in the middle, revoke their license to grant master’s titles and let them focus on improved undergraduate education. Tough times require tough measures. The Commission Van Vught recommends that the number of third-level institutions be cut by two-thirds.

    During the boom years, Irish universities were showered with money. Research of dubious quality was sponsored, academics with limited potential were appointed, and salaries rose to the world top. The 2010 report of the Comptroller and Auditor General revealed a shocking waste of public money and management systems that were so decrepit that some universities could not even tell how many people were on their payroll. The dons responded with their usual “we are special”. Budgetary discipline does not apply to the ivory tower! The Department of Public Expenditure (and Reform, apparently) duly placed the universities under strict controls. This has stifled innovation. It has undoubtedly stopped some daft ideas, but it has also blocked new courses and new research that covers their costs and even turn a profit. Some once-excellent departments are slowly dying as staff cannot be replaced and remaining faculty is crushed under a growing teaching and administrative burden. People are leaving for brighter shores or retiring early, further increasing pressure on those who stay. Minister Quinn yesterday announced even stricter controls.

    Instead, the universities should be set free. The government should give a subsidy for every paper published, perhaps weighted by quality or usefulness. The government should give a voucher to every student and let them take that to the university that best serves their needs. Anywhere in Europe if not the world. Recall that the aim is to give the best possible education to our kids – not to give the best education near to mummy. On top of that voucher, the government should offer student loans. After all, an education is primarily an investment in your future earnings.

    The universities should be allowed to set their fees at whatever level they think the (international) market can support. And the universities should be free to spend their budget as they see fit. Some will choose to give a large number of students a decent education at a decent price. Other universities will give excellent training to a select few. Some may even discard their undergraduates and focus on research grants, donations, and PhD programmes. And some universities will go bust. Radical? Sure (on the Ireland scale of radicalism). But the current approach is failing.

    The Irish system of higher education can no longer be propped up with money. There isn’t any. The choice is between continuing the gentle decline into mediocrity and a shake-up – along the lines I suggest above, or as recommended by the Commission Van Vught, or according to some other plan. However, the response to the Van Vught report suggest that the powers that be prefer to be forgotten as the people that did not try and did not win.

    That is a shame. Higher education in Ireland is still sound, and it would have a bright future if reformed.

    An edited version appeared in the Irish Independent of 5 October 2012. This piece was written before the release of the THE rankings.
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  7. Comments by an unidentified member of the editorial board:

     PNAS publishes few letters, selecting only those that "make a significant contribution to the field and help further discussion." I do not believe that the present version of your letter meets that bar. I'll say why below. If you believe you can address my comments constructively and effectively, you are welcome to submit a revised letter. 

    1) The first third of your letter (paragraphs 1 and 2) is a set of homilies that are not wrong but rather truisms well known to many of us on both the editorial board of PNAS and in our readership. Good editing is hard. Got it. We don't always get it right. But this observation is no more relevant to the present article than it is to most that we publish, especially in the Sustainability Science section. Please remove this section from your comments. 

    2) Regarding paragraph 3: We are trying to publish papers that advance understanding, not one discipline or another. So expand on the comment about the capital accounts and tell the reader -- who you should not assume to be an economist -- i) what you think is wrong with the accounting in this particular paper, ii) why ; and iii) the significance for the argument the paper is making.

     The original note is quite clear: Money is not conversed. It disappears and reappears later.

     (Its no good to say 'it is hard to think through the implications...' They have some results. If your concerns do not call those results into questions in particular ways, they don't rate a letter here.

    Nonsense models produce nonsense results. I guess the optimization algorithm shifts money from the future to the present, artificially boosting net present welfare. This is more easily done as greenhouse gas emission reduction is stricter, artificially lowering the costs of climate policy.

     In revising your text, please keep in mind that the paper was carefully reviewed by economists other than yourself who approved it. 

    The handling editor of the Bauer et al. paper told me that there were two referees, one economist (me) and someone who is not an economist. 

    3) On Negishi weigths: Make your case in a way that is accessible and meaningful to our readers. Again, say what you think is wrong, why, and so what for the conclusions. Do so in a way that takes account of the fact that other reviewers -- including economists -- approved the revised version of the paper.

    The handling editor of the Bauer et al. paper told me that there were two referees, one economist (me) and someone who is not an economist. 

     So what you presumably mean in the last line is "I do not know what they computed." If that is the case, say so rather than using a passive construction that obscures who doesn't get it.

     I wrote "It is not known what they computed." And that is what I meant. No one knows what they computed. They do not clear the market, however, so that emission reduction is more expensive than needed.

    4) "Economic part be published in an economics journal first..." I have two problems with this. First, the authors in their paper and their rebuttal letter cite a number of econ journals where the results were published... including the one cited in your initial review as containing the authoritative conclusions you thought that the authors had ignored. Do you really mean that you believe it should have been published in a specific economics journal, and only in parts of that journal that don't include special features...? That's your prerogative. But the only point that might "advance the field" is if you want to make and convincingly defend a specific claim that the economic journals that did publish this work are not good enough to be taken seriously in serious papers. 

    My second problem is that I simply reject your contention. Some good work that makes solid contributions to understanding is truly interdisciplinary. One of the reasons we created the Sustainability Science section of PNAS was to give a home to such work, rather than force its arguments about a complex reality to be sliced up into oversimplified disciplinary pieces. Does this make quality control in the process of writing and reviewing papers harder? Of course. But it is what this section of this journal has set out to do. We say that on our masthead. People who want only to read papers produced with your discipline-first model have plenty of other journals they can go to. So again, if you want to offer a specific critique of the understanding that the authors purport to have given us, do so. But don't use a letter about this particular paper to have a general fight with us over our editorial policies. 

    5) Para 6 ("There is more..."). Your second sentence is a tautology. If you think there is a problem in this paper about a specific bias due to specific assumptions, i) say what, specifically, the authors say that you disagree with; ii) convince the reader that you are more likely to be right than they; and iii) say why it matters for the conclusion. 

    6) "The main findings are not new..." The other reviewers / editor disagree, and showed they were quite aware of the Weyant paper you cite. So if you want to say something here, make it explicit: what specific findings of this paper do you believe are already well established in what specific prior literature? 

    Again, there was only one other reviewer.

    7) In summary, we will consider a letter that makes a convincing argument that specific points made or methods used in the published paper are sufficiently flawed that they undermine the paper's conclusions. We are not interested in publishing general lectures about what you believe our editorial process is or should be, or about how you think economics works. 
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  8. [letter submitted to the Proceedings of the National Academy of Sciences]

    Academics live to move the frontier of knowledge and sometimes overlook that there is a large body of shared knowledge. We relish the discussion with our peers but tend to forget that we accept over 99% of their research. An outsider readily observes the disagreements. The agreements are harder to see.

    The climate problem does not respect disciplinary boundaries. Research that informs climate policy has to include elements of physics, biology, economics, and so on. Quality control in such research is hard. Suppose you are the editor of a paper that combines physics and economics. You send it to a physicist and an economist for review. If the physicist takes issue with the paper, is that because she disagrees on some esoteric points or because something basic is wrong? If the editor is an economist like me, it would be difficult to decide.

    In a recent paper in this journal (1), basic things go wrong with the economics. Economists are known for their fierce disagreements and spotty forecasting. Economists agree, however, on accounting principles. The balance of payments must be zero. Money is conserved. If you earn more than you spend, you build up savings. If you borrow money, someone has to lend it to you. If a country exports more than it import, it builds up foreign assets. (1) violate this principle. Their capital account is zero by assumption, and their current account is balanced over time rather than at each point in time. Money disappears from Earth and reappears years later. This is bizarre. It is hard to think through the implications for their results.

    Economists also agree on a few idealized states of the economy that make for useful yardsticks. (1) claim to use “Negishi weights” to balance the current account over time. Negishi weights, however, establish a mathematical equivalence between a hard-to-solve market economy and an easy-to-solve planned economy (2). (1) did not use Negishi weights. They used other weights instead. Therefore, their solution represents neither a market equilibrium nor a social optimum. It is not known what they computed.

     This could have been avoided if the editor had insisted that the economic part of the model be published in an economics journal first.

    There is more. Cost estimates of emission reduction are biased downwards if rapid technological progress is assumed for renewables but not for fossil fuels. The main findings are not new (3): Without nuclear, baseline emissions increase and it is harder to meet any particular emissions target. There is one option less to reduce emissions. Climate policy is more expensive.

    Qualitatively, (1) add no insight. Their quantitative results are meaningless.

    Reference List

        1.    Bauer, N., Brecha, R. J., and Luderer, G. (2012) The economics of nuclear power and the climate change mitigation policies. Proceedings of the National Academy of Sciences.
        2.   Negishi, T. (1960) Welfare Economics and Existence of an Equilibrium for a Competitive Economy. Metroeconomica 12, 92-97.
        3.    Weyant, John P. (1993) Costs of Reducing Global Carbon Emissions. Journal of Economic Perspectives 7, 27-46.

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  9. BRIGHTON - De overheid zou direct moeten stoppen met het subsidiëren van windenergie. Dat zegt Richard Tol, hoogleraar economie aan de Universiteit van Sussex en hoogleraar klimaateconomie aan de Vrije Universiteit. Windenergie kost volgens hem veel te veel geld en is op grote schaal nooit rendabel te krijgen.

    Windenergie lijkt goedkoop, maar is stukken duurder dan fossiele energiebronnen. En belangrijker: het zal volgens Tol voorlopig ook duurder blijven. Er zal altijd overheidsgeld bij moeten, hoeveel prijzige windmolens er ook worden bijgebouwd. Fossiele brandstoffen zullen waarschijnlijk ooit opraken, maar de hoogleraar ziet volop mogelijkheden met zonne-energie en bio-energie.

    Windenergie kost gewoon weg veel te veel geld, zonder dat het wat oplevert. Het rendement per euro is negatief. „Het grote probleem is dat windenergie bijna niet is op te slaan”, zegt hij. „Elke minuut moet de energievraag en het energieaanbod in balans zijn. Maar het probleem met wind is dat je er niet van op aan kunt wanneer het waait. Soms waait het. En soms niet. Dat betekent dat je een backup nodig hebt.”
    Tol: „Als je de stroomvoorziening bij huishoudens constant wil houden, zul je altijd gascentrales op de achtergrond mee moet laten draaien. Ook al zouden windturbines heel goedkoop zijn, dan nog zou je structureel hoge kosten hebben voor de backup. Eigenlijk is wind dus een hele slechte bron van elektriciteit. Alles zal duurder worden, onze producten, onze exportpositie. In Nederland geldt bovendien ook nog eens dat er weinig wind is, als het koud is. Je kunt wind dus niet gebruiken voor de volgende grote stap, electrificatie van de verwarming.”

    Ook door het aanbod groter te maken zal de prijs van windenergie niet dalen. „Er zijn geen schaalvoordelen te behalen”, vertelt de hoogleraar. „De technologische voortgang in de branche is momenteel zelfs negatief. Het is oude technologie, grote doorbraken en snelle vooruitgang is moeilijk in te denken. Het enige wat nog kan, is dat we grotere turbines bouwen.”

    Het is niet voor niks dat landen om ons heen de investeringen in windenergie terugschroeven. Duitsland heeft windenergie jarenlang zwaar gesubsidieerd. Vanaf de jaren zeventig besloot Denemarken scheppen geld aan windenergie gaan uitgeven, maar nooit werd het rendabel. Tot begin jaren negentig de Duitse minister van Milieu ook besloot om windenergie te subsidiëren. Vanaf dat moment is de industrie winstgevend geworden en zijn er veel banen gecreeerd. „Maar dat kwam dus alleen omdat er gemeenschapsgeld, uit de zakken van de Duitse burgers, aan de Denen is gegeven. Het zou natuurlijk mooi zijn als we de Duitse regering zo ver krijgen om gul over te maken naar het bedrijfsleven in Nederland.”

    Overigens is Tol niet tegen milieuvriendelijke energiebronnen. Maar verkiest dan bijvoorbeeld liever zonne-energie. De energie daarvan is ook duur en bij lange na niet commercieel rendabel, maar biedt in tegenstelling tot windenergie nog veel mogelijkheden om door te ontwikkelen en efficiënter te worden. „Hier komen de kosten heel snel omlaag.”

    Dit is de geautoriseerde versie van een interview verschenen in de Telegraaf op 6 September 2012
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  10. De verkiezingen zijn in aantocht. Hoofdthema’s zijn de economie en de plaats van Nederland in Europa. Milieu speelt een ondergeschikte rol, maar is wellicht toch belangrijk voor een deel van de kiezers. Ik zet de hoofdpunten van de verkiezingsprogramma’s van de zes minst kleine partijen op een rij.

    Milieu komt laat aan bod in de meeste verkiezingsprogramma’s: Hoofdstuk 8 (PvdA), 9 (PVV) en 11 (SP). De VVD wijdt slechts een paragraaf aan milieubeleid. Het CDA behandelt milieu in Hoofdstuk 3, maar het midden- en kleinbedrijf gaat voor. Het CDA wil ook graag de 2% norm voor het klimaat handhaven. De auteurs zijn zo met het milieu begaan dat ze niet weten dat temperatuur in graden gemeten wordt. Alleen D66 geeft het milieu een prominente plaats in het eerste hoofdstuk. D66 heeft de meest gedetailleerde voorstellen, PVV en SP de minst gedetailleerde.

    Milieu is klimaat. VVD, PVV en PvdA hebben het alleen over klimaatbeleid. SP, D66 en CDA noemen afval en grondstoffen, SP noemt asbest, maar ook in deze verkiezingsprogramma’s is klimaatbeleid veruit het belangrijkst. De Nederlandse uitstoot van broeikasgassen is nagenoeg irrelevant voor het klimaat. Het Nederlandse klimaatbeleid wordt gedicteerd door Brussel. De Nederlandse politiek lijkt nauwelijks belangstelling te hebben voor Nederlandse milieuproblemen waar Nederlands beleid verbetering in kan brengen. De nadruk op klimaatbeleid is politiek van het loze gebaar.

    De SP en de PvdA willen het klimaatbeleid versnellen, D66 en CDA vinden de huidige doelstellingen voldoende, de VVD heeft geen mening, en de PVV wil het klimaatbeleid afschaffen. Dit zijn eerder onderhandelingsposities in Brussel dan voornemens voor Nederlands beleid. De Europese en internationale klimaatonderhandelingen zitten muurvast. Europa zal daarom niet torren aan de uitstootdoelstellingen voor broeikasgassen.

    De Europese doelstellingen voor hernieuwbare energie worden waarschijnlijk stilletjes vergeten aangezien geen van de grote landen deze kunnen halen. De Nederlandse politiek wil desondanks aan deze doelen vasthouden, in een naïeve poging wereldleider te worden in een gebied waar Nederland mijlenver achterligt bij de concurrentie.

    Er zijn grote verschillen tussen de manier waarop de partijen de klimaatdoelstellingen willen halen. D66 en CDA willen meer subsidies en meer regels, PvdA wil minder subsidies maar meer regels, VVD wil minder subsidies en minder regels. SP en D66 zijn tegen koolstofopslag. SP en D66 zijn tegen schaliegas. VVD is voorzichtig voor. De andere partijen spreken zich niet uit. Alle partijen, behalve de PVV, zijn voor hernieuwbare energie en energiebesparing. SP, PvdA, D66 en CDA zijn tegen kernenergie, VVD en PVV voor. D66 spreekt zich uit voor de afbouw van subsidies en belastingvoordelen voor fossiele brandstoffen, en voor het invoeren van koolstof- en vleesbelastingen.

    De contouren van een klimaatbeleid in zowel een SP-PvdA-D66-CDA (of SP-PvdA-D66-GL-PvdD) regering als een VVD-PVV-CDA-CU(-SGP) regering zijn daarmee duidelijk: Meer overheid bij de SP, minder overheid bij de VVD. Andere coalities zijn minder voorspelbaar.

    Er wringt iets in het voorgenomen beleid van de linkse partijen. Economische groei is belangrijk voor alle partijen, en de economische belangen van de armere delen van de bevolking staan voorop aan de linkerkant van het politieke spectrum. Klimaatbeleid kost geld. Als je goedkope fossiele energie vervangt door dure duurzame energie, dan gaat de energierekening omhoog en de economische groei omlaag. Apparaten die zuiniger omgaan met energie zijn duurder. Het verschil wordt niet goedgemaakt door een lagere energierekening – tenminste niet met de rentevoet die een normaal huishouden gebruikt. Klimaatbeleid vertraagt de economische groei. Armere huishoudens besteden een groter deel van hun inkomen aan energie. Duurdere energie, het gevolg van klimaatbeleid, treft armere huishoudens het hardst. Klimaatbeleid druist in tegen de kern van wat het is om links te zijn. Verkiezingsprogramma’s beloven van alles. Dat de ene belofte de andere tegenspreekt doet niet ter zake. In dit geval zijn er zelfs een aantal zogenaamde experts die graag beweren dat groenheid de groei bevordert, maar dat is helaas een sprookje: Dure energie hindert economische groei.
    Het zou dus goed kunnen zijn dat een linkse regering haar groene plannen deels laat varen. Er is geen geld voor hogere subsidies en geen animo voor lastenverzwaring voor de zwaksten in de samenleving. Ik verwacht dat een linkse regering nagenoeg hetzelfde milieubeleid zal voeren als een rechtse regering. Milieu is geen verkiezingsthema.

    Een aangepaste versie verscheen in NRC Handelsblad op 31 Augustus 2012
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