Climate change policy and the 'Open Frontier'

“America is, psychologically, an open-frontier society. Europe’s frontier closed a millennium ago.”

Commenting on the G-8 conference Brian Carney notes how different are the perspectives of old Europe and America. He really has a point, and not obvious… The technological optimism is reflected in the outlook of Prof. Jeffrey Sachs, a greens greenie heading the Earth Institute. We won’t know for probably 20 years whether Sachs’ optimism was appropriate. But I do think he reflects the “silicon valley” can-do perspective — in contrast to the EU instinct towards more big government, more big regulation — i.e., the command and control instinct.

…At a recent conference here hosted by the Council for the United States and Italy, an American venture capitalist and a German parliamentarian revealed just how different the outlooks are on the opposing shores of the Atlantic. The debate was not between a global warming skeptic and an alarmist, but between an American businessman and a German politician who both accept the need to address climate change and come to very different conclusions about how to do so.

The German took the floor first. His was a bold thesis: The economic transformation required to address global warming will bring huge energy efficiencies—and hence huge economic benefits—even if there is no global warming problem. But vested interests in the energy sector stand in the way of that transformation. “We cannot,” therefore, “wait for the industries that in many cases will be the losers . . . to make the necessary changes,” he told the audience of American and European industrialists.

To this American ear, this smacks of the tales about the man who invented a car that runs on water, but was bought out by Detroit to protect their market. But from a European perspective, it makes more sense.

…In other words, the characteristic American response to, say, climate change, is to believe that technologies— and even companies—that do not now exist will crop up to solve the problem, assuming there is a problem. The characteristic European response, as exemplified by the German conspiracy theorist in Venice, is to focus on how to get the businesses to behave “better.”

The open frontier view was captured by a Silicon Valley representative in the room. He stood up to announce that “clean tech” would be to this decade what high-tech was to the 1990s. The companies that would revolutionize our energy usage, he claimed, were now being funded by venture capitalists, and the Ciscos, Microsofts and Googles of the next decade would be the companies that solved the energy puzzle. We hadn’t heard of any of them now, he insisted, but they would be huge. Is he right? Maybe. Who cares? It’s his money, and the money of his colleagues in the Valley. The point is, if there’s a conspiracy to keep revolutionary clean technology down, he didn’t get the memo. The notion that this is simply a trans-Atlantic divide can easily be overstated. There are statist Americans and entrepreneurial Europeans. But the divide between the open-frontier camp and the closed-frontier camp is very real, and of the utmost importance to the global warming debate.

If you believe that the means for addressing human influence on the climate have not yet been invented, but moreover that the best chance of developing them lies with entrepreneurs whose ideas have not yet been tested in the market, then global warming is just another opportunity— and, if the doomsayers are right, a potentially huge one.

The dividing line can be seen, again, in the divergent approaches of the U.S. and Western Europe to the challenges posed by economic change. Most European employment law is focused on preserving the jobs that already exist. Policies designed to create new jobs are viewed as threatening to the status quo—and they are threatening. The question is whether the status quo is presumed to be better than an unknown future. If you believe that the economic frontier is closed, then you are wont to suspect that the future is at least as likely to be worse than the present as it is to be better. And so you fight to preserve what you have.