OP-ED: Response to “Matthew Kahn addresses the business side of climate change”

Last week the Wire published an article titled “Matthew Kahn addresses the business side of climate change” about the Classical Liberalism Lecture on Wednesday October 27.

The Classical Liberalism Lecture series is meant to engage students in topics such as the role of free markets, individualism, and innovation. Dr. Matthew Kahn, Professor of Economics at USC, was invited based on his work on the role of markets and adaptation in addressing the effects of climate change. 

The crux of his talk is as follows: The current U.S. economy, in many ways, is not a free market. In fact, governments often explicitly prevent markets from sending the signals that would force consumers to make different choices as water becomes more scarce, floods and wildfires become more prevalent, and additional carbon emissions become more detrimental to the planet. There are many ways to address these government failures to mitigate the economic effects of climate change, while also protecting low income and disadvantaged populations; those covered by Dr. Kahn are summarized below. 

(1) Allow the price of water to rise during drought, so prices reflect scarcity. Many cities have implemented increasing block pricing for water, where prices for low amounts of water are kept very low, but high water users pay an increasing rate per unit of water. If water prices appropriately reflected scarcity, consumers would be incentivized to conserve water, farmers would switch to less water intensive crops, and the demand for products that use less water would accelerate technological advancements.

(2) Allow flood and fire insurance premiums to reflect actual risk to accelerate migration from high-risk natural disasters areas, which are likely to become more costly in the future. Additionally, governments could remove barriers to building more affordable housing (such as restrictive zoning laws) which could encourage more investment and migration in areas less prone to flooding and wildfire.

(3) Implement a tax on carbon (reflecting the externality costs of emissions) and combine this with a universal basic income via a lump-sum rebate to offset costs for the poor and the short-term costs of this transition. If fossil fuels become more expensive over time, renewable substitutes will become more attractive; this, in turn, will accelerate the research and development necessary to make renewable substitutes more affordable for everyone. 

For those who only read The Wire’s piece, these arguments—and the broad notion that sometimes, free markets can be good—may be new or unfamiliar. Though we certainly do not agree with everything Dr. Kahn presented, and believe there’s a larger role for the government to directly address inequality and environmental racism than what was covered in his talk, this doesn’t justify the one-sided overview that was published in this newspaper. 

And because the solution to climate change, to say the least, is complicated, presentation matters. This isn’t a flat-earth vs. round earth debate; there is no clear-cut right or wrong here (other than, perhaps, to do nothing), and to think otherwise would be high handed. To arrive at fair solutions to big problems—and climate change is a big problem by any definition—requires that we not just talk, but also listen, to those with whom we differ. 

To their credit, the author and the student quoted in the article civilly disagree with Dr. Kahn’s arguments. They’re allowed, even encouraged, to do so! However, a newspaper should tell a story with balance and refrain from offering opinions represented as news. 

While Dr. Kahn’s talk was certainly provocative, it is important for the Whitman community to engage with different perspectives—even those with which they may disagree. We encourage you to listen to the full talk here or read one of his recent articles here to form your own opinion.