Market and Morality (2)Why we can fly after all

In my view, Mr Polk’s statements are based on a number of fundamental misunderstandings which I would like to clarify:

The core environmental problem that we are dealing with in climate policy is that people face a social dilemma in providing climate protection. This means that there is an irreversible contradiction between individually rational behavior and a collectively rational solution. From the point of view of an individual, it is not rational to make a contribution to climate protection, because this cannot influence global warming, but the costs for this would have to be borne in full by the individual. It just doesn’t make sense to do something that generates no revenue but high costs. At the same time, it would be collectively rational if at made a contribution because it would make everyone better off (despite the then individual costs to be borne). This contradiction justifies a legitimacy for collective actionbecause it removes the social dilemma and leads to a Pareto improvement.

Mr. Polk, on the other hand, argues that there is a moral obligation on every individual to make a cooperative contribution in a social dilemma. One can only contradict this, because there can be no moral obligation to act against one’s own interest if this does not eliminate the dilemma structure, but only makes a morally justified “sacrifice”. I would go so far as to say that asking people to do such a thing is morally reprehensible. After all, it means convincing people that they are only acting morally when they are doing something that is against their best interests and does not provide anyone with any measurable benefit. No, social dilemmas can only be resolved through collective decisions.

However, it is also important to make the right collective decisions. In climate policy, this amounts to the demand for cost efficiency and thus for a uniform CO₂-Price. Now Mr. Polk presents a cleverly chosen example with air traffic, because it is the only case (as far as I can see) in which a CO₂-Price alone does not solve the problem, because with flies there is no CO either₂-Emissions are produced that are harmful to the climate. But that doesn’t mean that emissions trading can’t help here. Bodo Sturm and I have made a suggestion: At first glance, integrating emissions other than CO₂ no problem in the ETS. A simple conversion to CO₂-Equivalents would be sufficient. In the case of aviation, however, things are made more difficult by the fact that the emissions depend on flight-specific parameters (altitude, type of aircraft, etc.), but integration into the ETS is still possible.

Such integration is the right decision, because it relieves people of the “duty” to forgo a flight because they have been made to feel guilty. When you consider what a huge step forward it is that we are able to fly long distances, it is clear that not doing so would be very, very expensive. Therefore, even if all emissions are taken into account and priced, air traffic will not decrease significantly. This is not a mistake in emissions trading, but an expression of the enormous advantages that people gain from flying and which they value very highly. In view of the very small contribution that flying makes to global warming, this should be bearable.

The general market bashing Mr. Polk is doing is incomprehensible. The claim that markets lead to unethical behavior is at odds with empirical and experimental evidence. Since Mr. Polk knows the work of Friedrich Breyer and I, I am surprised that he still refers to Falk & Szech without hesitation. In addition, comparative experimental studies between East and West Germans have shown that socialization in a market system leads to significantly more solidarity and cooperation than in a planned economy: Ockenfels and Weimann 1999 and Brosig et al. 2011. Recently, Biermann et al. (2023) show that the east-west difference can also be demonstrated with SOEP data.

The historical experiences in Eastern Europe and especially in the GDR show that the planned economy failed horribly in terms of environmental protection. For example, in the GDR life expectancy on the Baltic Sea was eight years higher than in Halle Bitterfeld. The fact that the environmental situation in 1990 in capitalist West Germany was far better than in the new federal states is also a reliable empirical finding. The European emissions trading system – a market system – can claim to be the world‘s most successful climate protection instrument – at least if you consider the amount of CO saved₂ and uses the costs of avoidance as a basis for evaluation. While the planned economy approach in Germany since 2000 (EEG, nuclear phase-out, priority feed and much more) up to 2017 did not result in the CO_2-If emissions had fallen, emissions trading saved 570 million tons per year from 2013 to 2017 at a cost of between 6 and 12 euros per ton. The German energy sector made no contribution to this.

Literature:

Biermann, Philipp, Jeannette Brosig, Joachim Weimann: Cooperation and Solidarity after the reunification of Germany: Do behavioral differences between East and West Germans converge? Discussion paper 2023.

Brosig, Jeannette, Christoph Helbach, Axel Ockenfels, Joachim Weimann: Still different after all these years: Solidarity behavior in East and West Germany, Journal of Public Economics, 95 (2011), 1373-1376.

Ockenfels Axel, Joachim Weimann: Types and Patterns: An Experimental East-West Comparison of Cooperation and Solidarity, Journal of Public Economics, 71, 1999, 275-287.

Sturm, Bodo, and Joachim Weimann. “Ban fly or is banning flights banned?.” ifo express service 74.06 (2021): 53-56.

Blog post on the topic:

Andreas Polk: Market and Morals (1). Why we shouldn’t fly