Grasping Reality on TypePad, by Brad DeLong

Megan writes:

Megan McArdle: The great, great Tom Lee on the ineffable problems of trying to lower your environmental footprint:

Doing this stuff is impossibly difficult, as is amply demonstrated every time someone tries to figure out the comparatively narrowly-defined problem of biofuels' net energy balance. This is the first problem: literally every human endeavor consumes energy — and of course, it's very hard to reduce any action in civilization to just one step. It's tough to figure out how much energy something took, very tough to accurately guess, and nearly impossible to know how much carbon it took to generate that energy.... There are unambiguous things, of course: don't leave the water running when you brush your teeth, and minimize electricity use, and don't leave your car idling. Although sometimes even those wind up ambiguous: I've heard that restarting a car takes about as much gas as running it for a minute. But then, I probably heard that from someplace like Wired. So who knows? This is the real problem... the only people with an incentive to really figure this out are academics... the only people with an incentive to talk about it are those who sell ad space to people targeting an audience that likes green content or an audience that likes counterintuitive content.... And the press is more than comfortable enough with their anecdotes and innumeracy to continue publishing hunches they had while shopping at Whole Foods, as if a half-day's worth of googling and algebra was sufficient to untangle the world's unimaginably complicated economic and energy-use web...

Oh, no, seasoned readers are already saying to themselves; I see a Hayek fit coming. Yes, my friends, you are right, like those dogs that can sense an epileptic seizure minutes before it actually appears. It is too late to force the pills down my throat; you'll just have to hang on and hope I don't hurt myself. Hayek on why prices are so, so great compared to command-and-control:

Fundamentally, in a system in which the knowledge of the relevant facts is dispersed among many people, prices can act to coördinate the separate actions of different people in the same way as subjective values help the individual to coördinate the parts of his plan. It is worth contemplating for a moment a very simple and commonplace instance of the action of the price system to see what precisely it accomplishes. Assume that somewhere in the world a new opportunity for the use of some raw material, say, tin, has arisen, or that one of the sources of supply of tin has been eliminated. It does not matter for our purpose—and it is very significant that it does not matter—which of these two causes has made tin more scarce. All that the users of tin need to know is that some of the tin they used to consume is now more profitably employed elsewhere and that, in consequence, they must economize tin. There is no need for the great majority of them even to know where the more urgent need has arisen, or in favor of what other needs they ought to husband the supply. If only some of them know directly of the new demand, and switch resources over to it, and if the people who are aware of the new gap thus created in turn fill it from still other sources, the effect will rapidly spread throughout the whole economic system and influence not only all the uses of tin but also those of its substitutes and the substitutes of these substitutes, the supply of all the things made of tin, and their substitutes, and so on; and all his without the great majority of those instrumental in bringing about these substitutions knowing anything at all about the original cause of these changes. The whole acts as one market, not because any of its members survey the whole field, but because their limited individual fields of vision sufficiently overlap so that through many intermediaries the relevant information is communicated to all. The mere fact that there is one price for any commodity—or rather that local prices are connected in a manner determined by the cost of transport, etc.—brings about the solution which (it is just conceptually possible) might have been arrived at by one single mind possessing all the information which is in fact dispersed among all the people involved in the process.

This, of course, leaves us with the problem of setting a price. But as long as we are sure--and I think we're pretty sure--that the price of greenhouse emissions ought to be higher than it is, a modest start will be adding valuable new information to a system that is very good at handling information.... [I]t's probably best for the government to do something--as long as that something is raising the price of carbon--rather than rely on individual guesses.

There is one thing you can [individually] do, if you care about global warming: eat lower on the food chain.... But will you do it? In most cases, no you will not, because chicken legs are tasty.... [The other individual thing] you can do right now is not complain so much about gas prices.