Social Security and Global Warming
By Arnold Kling
Here’s what I’ve noticed. Some of the same people who argue there’s too much uncertainty about the climate 75 years in the future to justify drastic action now use the so-called crisis in Social Security funding 75 years from now (which is far more uncertain than climate change) to argue for drastic change today.
Before I plead guilty, let me remind Mark that Jane Galt made this point over two years ago.
Now, for my guilty plea. The reason we should try to fix Social Security now is that the cure can be painless now. The problem is that under conservative assumptions about productivity, promised future benefits exceed future revenues by an ever-growing amount. So cut promised future benefits, and then if productivity does well, you can restore benefits if you like. The point is, planning for the worst case scenario does not hurt anybody in the non-worst-case scenario.
In the case of global warming, taking drastic steps now to prevent the worst-case scenario has real costs, against benefits that are potentially nil–in fact likely nil, for a variety of reasons. So, contra Jane and Mark, it is possible to be rationally precautionary about Social Security and not so much about global warming–or precautionary in a different way about global warming, as I’ve been suggesting.
As an aside, I disagree with Mark’s assessment of the relative likelihood of a Social Security crisis and a global warming crisis. I think that we are as certain as anything to have a lower ratio of workers to dependents at the current retirement age later in this century. The productivity bailout is the best hope for Social Security, and I admit to being an optimist there.
My personal opinion of climate models, on the other hand, is that they are of very little reliability. I think that the probability that they give estimates of the relationship between carbon dioxide emissions and future temperatures that is even in the ballpark of being correct is quite low.
As I said in my essay, if I believed the climate models, I would not worry a bit about global warming, because their forecast for moderate, gradual warming is one I can live with. My uncertainty about the models actually raises my level of concern about catastrophic climate change.
If I were to put numbers on it, my subjective probabilities would be that there is about a 5 percent chance of a significant shortfall in Social Security down the road, and less than a 1 percent chance of a climate catastrophe caused by carbon dioxide emissions. The climate catastrophe is potentially much, much worse, which makes it a legitimately larger worry. But the cost of acting now on Social Security is essentially zero, and the cost of acting now on carbon dioxide emissions is huge (at least for the reductions allegedly needed).