When the Economist Lost Its Way

Last week, the Economist published an article about when the New York Times lost its way. The article traces it to a June 2020 opinion piece by conservative U.S. Senator Tom Cotton that provoked such outrage among Times staffers that the editorial page editor, James Bennet, was forced to resign. Since Bennet now writes for the Economist, and in fact was the author of this article, it is easy to see why he would consider that incident to be a turning point for the Gray Lady.

In 2020, the Economist argued that countries should take advantage of the pandemic to enact draconian policies aimed at reducing climate change.

While it is easy to argue that the New York Times lost its way long before that incident, I have a different question: When did the Economist lose its way? The weekly magazine that calls itself a newspaper was founded 180 years ago based on the principles of free trade and free markets. Yet it seems to have forgotten those principles today, advocating for more and more government control of the world and national economies.

In particular, the Economist‘s editors are so alarmed about climate change they they devoted an entire issue to the problem in 2019. While none of the editors or writers, as far as I know, are trained climatologists, they unquestioningly accept claims that the science is settled and catastrophe awaits the world if it doesn’t drastically reduce carbon outputs.

The science isn’t settled, and there are plenty of climatologists and other scientists who believe that human-caused climate change will have only mild effects on the world economy and environment. In their view, the prescriptions proposed by climate alarmists, including those at the Economist, are likely to have far more severe effects than climate change itself.

The Economist in particular favors the use of carbon taxes to reduce the use of carbon outputs into the atmosphere. The standard proposal for such taxes is that they would be offset by reductions in other taxes so that they are revenue-neutral to the governments imposing the taxes. Even if the effects of climate change are exaggerated, the editors might argue, the precautionary principle demands that we should impose such taxes just to be on the safe side.

This sounds like a free-market idea, but there are at least two crucial problems. The first is that carbon taxes could never be revenue-neutral. How could they be when the goal of such taxes is to reduce the uses of carbon (and therefore the tax revenues from them) to near zero? More important, politicians are not going to give up other tax revenues; instead, they will see carbon taxes as a giant new piggy bank they can use to fund their favorite projects, just as California is using carbon revenues to fund its high-speed rail boondoggle.

The second problem is that carbon taxes would not have neutral effects on the economy. Economist editors imagine that such taxes will simply lead electricity producers to switch from fossil fuels to wind and solar power with little effects on consumers. But wind and solar power are not continuous and places that rely on them are going to be subject to frequent brownouts.

Nor are wind and solar going to be sufficient to power electric vehicles, which even if they could be manufactured as affordably as fossil-fuel powered vehicles (which they probably can’t) would demand far more power than renewables can efficiently produce. The result would be a drastic decline in individual mobility and an increase in economic inequality as only the rich will be able to afford automobiles.

On top of this, the precautionary principle is stupid. Acceptance of such a principle effectively shuts down all debate and all progress since doing anything at all could have an impact that the principle says should be avoided.

As Bjorn Lomborg argues, climate change is not an existential threat, acting like it is that serious is hurting many people, and there are many other problems that are more important that should be solved first. Yet the Economist has joined the drumbeat for placing climate highest on the world’s agenda.

If the Antiplanner is allowed to be as self-centered as James Bennet, I would trace the Economist losing its way to a meeting that took place in the late 1980s. A group of highly creative economists in Montana had developed a number of free-market solutions to environmental problems and invited journalists to learn about those solutions. Since I was promoting free-market reforms of the Forest Service, I was invited to attend and speak about those reforms. This meeting took place at a rustic dude ranch in a remote part of the Rocky Mountains.

The key insight of the free-market economists was that nearly all environmental problems consist of a market resource that threatens a resource that isn’t in the marketplace. While the first reaction of many planners is to regulate the market resource, a better response is to put the other resources into the market so that they can survive on their own. Thus, we favored water markets, recreation fees, private ownership of at least some fish and wildlife, and similar ideas.

One of the journalists who attended this meeting was a writer for the Economist. Soon after the meeting, the magazine published a rather snide article attacking free-market environmentalism.

In particular, the writer was offended that, instead of wearing a suit, I wore clothes that were appropriate to a dude ranch. He thought I was pretending to be some kind of cowboy in an effort to win the affections of environmental activists. Since my work had helped those activists save millions of acres of national forest wilderness areas, I didn’t need to dress to impress them and don’t really see what my clothes had to do with the message that markets might be the best way to protect the environment.

In general, the writer did not see the point of using free markets to protect the environment. He seemed to be satisfied with government regulation no matter how costly, even though such regulation hadn’t always been successful. Over the next decade or so, that became the prevailing attitude at the Economist. I don’t know exactly when the Economist lost its way, but I’d have to guess it was somewhere around the time it hired writers who were more impressed by the clothes someone wore than by the quality of their analyses.