David Suzuki still hasn’t figured out what an “externality” is

A reader of this (seemingly defunct, but stay tuned) blog sent me a link to a portion of a movie called Surviving Progress in which Dr. Suzuki gives an even more offensive, ridiculous, and staggeringly ignorant take on economics than those previously discussed on this blog. For the amusement of fellow economists, here’s the video, complete with helpful visuals of a guy in a suit—possibly modeled on Ben Stein’s character in Ferris Bueller—standing in front of a chalkboard with some dull looking stuff that’s not even recognizable as economics. Dr. Suzuki recites his oft-repeated claim that “economics is a form of brain damage” and here adds the allegation that economists “know damn well” that we deliberately deceive people into thinking economics is a science when in fact all we want to do is torch the planet for sweet, sweet cash.

For those interested in what economists actually think about the environment, and what an “externality” actually is, see for example “How do economists really think about the environment?” Or open any Economics 101 textbook.

14 Responses to “David Suzuki still hasn’t figured out what an “externality” is”

  1. A follow-up remark: “Surviving Progress” was funded by the NFB. Follow this link

    http://www.nfb.ca/film/surviving_progress_clip_2/

    for a little more of Dr. Suzuki’s ill-informed contribution to the film. Thanks, NFB!

  2. Blumenstock? Blumenstock?

    But, good to see you back, Chris. I was afraid some of those floating tennis shoes were yours.

  3. Suzukes was at the CPHA conference in Edmonton this year and was repeating the mantra that “we should be investing in health, not the economy.” Or something like that. At one point he had riled up the crowd so much with this talk of “real people and their health” versus “the economy” that a grad student from Geology or something like that got up to the mic and announced that the economy must be destroyed! This received an ovation from the crowd. I was a bit scared as I thought the revolution was going to start then and there!

  4. The most charitable reading I can give to Suzuki here is the environment only enters into our SWF to the extent that it enters into individual utility, cost, or production functions. If nobody cared about the environment and if there were zero feedback from environmental harms into cost or production, then optimisation would yield outcomes Suzuki wouldn’t like.

    Thanks though – I’ll use the clip to lead-off my lecture today in my Current Policy Issues class on Econ & The Environment, where we go through Hotelling pricing and carbon taxes ….

  5. The clip is awesome. I’d like to know whether the NFB paid for new footage and then mocked it up to look like it came from 1947, or whether they did the more environmentally-friendly thing and recycled an old clip, and if so, what’s it a clip from? The important takeaway, though, is that economists are boring, suit-wearing men from 1947.

    On the charitable interpretation: I just can’t see how we can bridge the gap between the `economics takes human action as paramount’—which is true but misleading for a number of reasons—and `externality means we don’t give a shit.’ That latter claim demolishes any benefit of the doubt.

  6. Dan, I assume you pointed out that the evidence overwhelmingly tells us that the most important reason we are healthier today than we were 200 years ago is increases in standard of living resulting from increased economic activity, as opposed to improvements in health care quality or quantity?

  7. No disagreement, Chris. But it’s always fun to set up the thought experiment.

    Let’s continue the thought experiment. Suppose Suzuki had said instead: “Economists make a big deal about “externalities”, but they define these far too narrowly – they only give a shit about things that enter into individual human utility functions. They don’t care about the trees or the animals for their own sake. So if the owner of a forest section decided that it was worth more as landfill, even if all the externalities economists cared about were taken into account, he doesn’t weigh that the trees care about being trees, or that the raccoons like those trees. The raccoons’ preferences only come in if people care a lot about raccoons, and most economists would say it’s not Pareto-relevant. I SAY IT’S RELEVANT…(and he starts getting more heated).”

    That isn’t what he said, and what he said was wrong and a bit nuts. But there’s a non-crazy argument where animals’ utility enters directly into the SWF. And in that world we initiate transfers from the meat sector of the economy to the petting-zoo-and-animal-massage sector of the economy.

    Note: I am TOTALLY a “humans’ utility is what counts” kinda guy. But if you start from the premise that animals count the same as people (or even with some discount rate hinging on say relative cognitive capacity and self-awareness), then economists effectively don’t give a shit except to the extent that harms done to animals count negatively in other peoples’ utility functions.

  8. Eric, sure, I agree there’s a serious point to be made along the lines you sketch, but we agree there’s just no way to rescue Suzuki’s claims, even considering that point and interpreting Suzuki as charitably as possible.

    If we put animal welfare directly in the SWF we’d have to redub it the Sentients’ Welfare Function. And then we’d be discriminating against plants!

    Incidentally 1: if you type Hazel “economics is a form of brain damage” Henderson’s name into google along with “externality,” you’ll find a lot misunderstandings similar to Suzuki’s, e.g.,

    “As an early environmental activist, I worried about my baby breathing the dirty air in New York City. After co-organizing Citizens for Clean Air in the 1960s, I realized all economics was based on obsolete textbooks that allowed companies to “externalize” their costs to others, such as the pollution of air and water.”

    ( http://www.forbes.com/sites/terrywaghorn/2012/05/08/hazel-henderson-reforming-markets-metrics-and-media/ ).

    I’d like to know if Henderson got the idea from Suzuki, or the other way around, or if they independently heard the word “externality,” guessed wrongly what that word means, and just ran with it.

    Incidentally 2: Here’s Suzuki yesterday. He doesn’t mention externalities, he just rants a little about how nasty economists are because we ignore the environment:

    http://www.theglobeandmail.com/news/news-video/video-put-the-eco-back-in-economics-david-suzuki/article4562940/

    Shame on Jeff Rubin for nodding along to Suzuki’s nonsense.

  9. Are you kidding me? I kept my head down and tried to mitigate the damage done. If I had stood up I would have been booed out of there and possibly killed, everyone had the Suzuki fire in their eyes. Besides, the classic comeback to that is “But now we have so much inequality and the evil corporations are poisoning us for their buckets of money.” Which leads to much nodding and tut-tutting.

  10. But think what a great martyr you would’ve been, Dan.

  11. I don’t think David Suzuki actually believes that ALL economists treat ALL aspects of the physical environment as ‘externalities’ to the economy, but rather that the economists who have the most influence on important economic policies and beliefs of the people who do the most damage to the environment via disregard for the environment in favor of mega-profits tend to lean towards this ‘catagory’. I think David is just making an observation of this point.

    If you were an alien, watching down from space, not knowing anything about economics, but knowing about our biological needs, you too, might be inclined to say “we” are brain damaged.

    Goldman Sachs behavior during the last crisis for example, selling people garbage investments, while betting against them is a great example of what David is speaking of. It doesn’t mean they BELIEVE the damage they do to people is an ‘externality’ to their economic tug of war, it means they DON’T GIVE A SHIT as long as they profit… so why didn’t the ‘economists at the SEC file for prosecution?? Are the economists dumb, as David said in the video? The problem is, in a documentary film, simply saying that someone “doesn’t care” doesn’t explain anything or convey much emotion, unless the person who says so is crying, but then you would just say look at this David guy, he can’t even think straight or formulate a coherent thought, he’s just an emotional man!

    I think David explained it perfectly, expressing enough anger to show that he really cares and saying it in a way that makes people think about the biggest problem AFFECTING economics theories amongst CERTAIN, modern economists, greed. Now I think I am losing you Chris… so… please refer back to paragraph 1… and if you are still missing the point, then I have made mine just as well!

  12. Filip, you are repeating Suzuki’s misunderstanding of the term “externality,” which does not mean “something external to the economy.”

    The point—the point you can find in any Economics 101 textbook—is more or less that people “DON’T GIVE A SHIT as long as they profit,” so we need policy interventions to give people incentives to act as if they give a shit. For example, even someone who doesn’t believe in AGW will reduce their carbon emissions if we make it more expensive through taxation or other interventions to emit carbon.

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