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explains:

"Most critically, climate change policies will have a lethal effect on people. They
will kill more people through raising the federal Corporate Average Fuel
Economy (CAFE) mandate for cars from 27.5 mph to 45 mph -- a proposal
pushed by several environmental groups. President Clinton recently one-upped
this by promising to triple auto fuel efficiency over the next few years.

"But the human cost of CAFE is already too high; CAFE causes
manufacturers to downsize cars in size and weight to meet the federal standard for
their fleets, and smaller cars are much less safe than large cars in crashes.

"According to a 1989 Harvard-Brookings study by Bob Crandall and John Graham, the current CAFE standard causes nearly 2,000 to 4,000 additional traffic deaths per year. If the standard were raised to 40 mph, a 1992 study by graham estimated, there would be an even greater increase in highway deaths -- resulting in a total of 3,800 to 5,800 fatalities each year. Each day, from 10 to 16 people would die unnecessarily."

In conclusion, I leave you with this thought offered by Cornell University political

scientist Jeremy Rabkin, as quoted in the December 15, 1997 Wall Street Journal ("Shanghaied

in Kyoto"): "One way or another, the climate control system means a global plan for reducing

energy consumption or, in other words, a scheme for rationing energy use. If the world can have

global governance to ration energy -- the lifeblood of modern economies -- what might global

governance not attempt. Indeed.

The Kyoto Protocol choices are clear: devastate U.S. businesses, consumers and the

economy because of a dubious theory; or allow entrepreneurs to flourish and innovate, create

jobs, boost the economy, and thereby aid, rather than hinder, environmental health.

Thank you for this opportunity to address the Kyoto Protocol, or "Global Warming

Treaty." I look forward to answering any of your questions.

Raymond J. Keating

Raymond J. Keating serves as chief economist with the Washington, D.C.-based Small Business Survival Committee, a small-business advocacy group with more than 40,000 members across the nation.

Also, Keating and Matthew Carolan of National Review are weekly columnists -"Carolan & Keating" -- for Newsday. In addition, he is a principal with Capital Hill Research -a political and economic research service for the investment community.

Keating's second book, New York by the Numbers: State and City in Perpetual Crisis, was published in May 1997 by Madison Books. His first book, D.C. by the Numbers: A State of Failure, was published by University Press of America in January 1995. He also was a contributor to Private Means. Public Ends: Voluntarism vs. Coercion published by the Foundation for Economic Education in 1996.

Keating has written hundreds of policy studies and articles, published in such periodicals as The Wall Street Journal, The New York Times, National Review, Newsday, Investor's Business Daily, Policy Review, The Journal of Commerce, The Washington Times, New York Post, Daily News (New York City), Detroit Free Press, Indianapolis Star, Times Union (Albany, N.Y.), Record (Troy, N.Y.), Buffalo News, Insight, The Freeman, Human Events, The City Journal, and many more. His areas of expertise include taxation; federal, state and city budget issues; monetary policy; regulation; supply-side economics; the economics of sports stadiums and arenas; the U.S. economy; a host of small-business issues; and various cultural issues.

Keating holds an MA in economics from New York University, an MBA in banking and finance from Hofstra University, and a BS in business administration and economics from St. Joseph's College.

Keating lives with his wife, Beth and their son, David, on Long Island.

CEL

COMPETITIVE ENTERPRISE INSTITUTE

Testimony of

Marlo Lewis, Jr.
Vice President for Policy and Coalitions,
The Competitive Enterprise Institute

Washington, D.C.

before the Committee on Small Business

June 4, 1998

Hearing on the Kyoto Protocol

Good morning, my name is Marlo Lewis. As Vice President for Policy and Coalitions of the Competitive Enterprise Institute, I welcome your invitation to discuss climate change policy. CEI is a public interest group established in 1984 with a current staff of 35 and an annual budget of about $2.5 million. Located in Washington, D.C., CEI works to educate and inform policy makers, journalists, and other opinion leaders on market-based alternatives to government programs and regulations. CEI also engages in public interest litigation to protect property rights and economic liberty. CEI is supported by the voluntary contributions of foundations, corporations and individuals. We accept no grants from any government agency, nor do we accept grants from any other party that would compromise the principled positions we espouse.

Climate change policy is a major focus of the Competitive Enterprise Institute. Indeed, we have been active in the global warming debate ever since the issue first gained national prominence in the late 1980s. Former CEI environmental studies director Kent Jeffreys published a major monograph on the issue, titled “Why Worry About Global Warming,” in February 1991. In 1992, along with the late Dixie Lee Ray, CEI President Fred Smith attended the 1992 Rio Conference as an observer and commentator. Our aim was to give intellectual aid and comfort to greenhouse skeptics in the U.S. and other delegations. Needless to say, CEI's efforts to dissuade the Bush Administration from signing the Framework Convention on Climate Change were less than spectacularly successful. But we remain hopeful that cooler heads will yet prevail in this round.

1001 Connecticut Avenue, N.W. • Suite 1250 • Washington, D.C. 20036
Phone: (202) 331-1010 • Fax: (202) 331-0640 • E-mail: infowcei.org • Web site: http://www.cei.org

In July 1997, CEI held a full-day conference on the economic and political implications of climate change policy. Later that year we published The Costs of Kyoto: Climate Change Policy and Its Implications, a book based on the papers written for that conference. We also produced a conference highlights video with the same title. In addition, CEI conducted a congressional staff briefing, published nearly a score of op-eds and columns, and participated in numerous media interviews, press conferences, and educational symposia on global warming.

Since May 1997, CEI has chaired the Cooler Heads Coalition, the climate change working group of the National Consumers Coalition, an alliance of some 28 pro-market public policy groups, headed by Consumer Alert. On behalf of the Cooler Heads Coalition, CEI publishes May Cooler Heads Prevail, a biweekly newsletter on the science, economics, and politics of the climate treaty debate. Also on behalf of the Coalition, CEI organizes a monthly science briefing for congressional staff and media.

Finally, let me note that CEI attended all eleven days of the Kyoto conference as an officially registered non-governmentalorganization. Fred Smith wrote daily commentaries that enjoyed wide distribution in the U.S. via e-mail and fax.

Mr. Chairman, I commend you for holding this hearing. The Clinton Administration is making ambitious plans to restructure the energy economies of America and the world. Global warming may or may not be real, and if real, may or may not pose risks to human health and safety. In contrast, the risks of global warming policy are undeniably real and, I will argue, unacceptably high.

I. Risks of Precaution

What are the risks of global warming policy? They include the following: the risk that energy rationing will devastate employment in major U.S. industries; the risk that rising consumer energy prices will depress the living standards of American families; the risk that new regulatory policies and higher energy costs will handicap small business; the risk that U.S. job and export losses will fuel protectionism (carbon tariffs or quotas to offset carbon leakage); the risk that fossil fuel restrictions will impair the readiness and training of the U.S. armed forces; the risk that non-elected, unaccountable bureaucrats will gain greater control over our lives and resources; the risk that public attention and resources will be diverted from more serious threats to U.S. and global welfare; the risk that increased government control over energy production and consumption will strengthen repressive institutions, particularly in the Third World and the former Soviet Union; and the risk that Kyoto's anti-energy use policies will be extended to the developing world, condemning those nations to perpetual poverty.

The advocates of an international treaty ignore, deny, or downplay such risks. Invoking the “Precautionary Principle,” they pretend that the only risks worth worrying about are those arising from economic activity. That the political regulation, suppression, or prohibition of economic activity might also carry serious and even lethal risks is a reality they seldom if ever address. Thus, in their view, the case for an international climate treaty is almost self-evident. The use of energy might be warming the earth. That warming might produce catastrophic results. The speed of this change might require immediate action. Governments might be able to prevent that warming by an aggressive global carbon withdrawal policy. Therefore, we must take action now to reduce emissions. We must not “gamble with the only planet we have.” That they are gambling with the only economy we have never seems to trouble them.

This approach to policy making is both morally irresponsible and logically inconsistent. Precautionists demand assurances of no harm only with respect to actions that government might regulate, never with respect to government regulation itself. But government intervention frequently boomerangs, creating the very risks precautionists deem intolerable.

Examples abound. Federal fuel economy mandates force auto makers to produce smaller, lighter, less crash-resistant cars, causing thousands of highway deaths per year.' FDA regulations delay the availability of life-saving therapies, killing tens of thousands over the past two decades.? Banning DDT revived malaria epidemics in the developing world, afflicting 2.5 million people in Sri Lanka alone. Furthermore, a large body of literature documents that regulation can kill just by misdirecting resources and squandering wealth. Precautionists ignore the obvious connection between livelihoods, living standards, and lives as if jobs and income were not the chief safety nets for most of the world's people. Even in a relatively wealthy country like the United States, every $5 million to $10 million drop in economic output is associated with an additional statistical death.“S

Making people poorer is seldom a good way to make the world safer, healthier, or cleaner. Yet the Kyoto Protocol would require America to reduce its emissions of greenhouse gases, chiefly carbon dioxide from fossil fuel combustion, 31% below the level projected for

1

Robert W. Crandall & John D. Graham, “The Effect of Fuel Economy Standards on Automobile Safety,” 32
Journal of Law & Economics 97, 109-10 (1989).
Sam Kazman, “Deadly Overcaution,” Journal of Regulation and Social Costs, August 1990.
Frank Cross, “Paradoxical Perils of the Precautionary Principle,” 53 Washington & Lee Law Review, 851 (1996),

2

3

P. 891.

4

Cross, “Paradoxical Perils,” p. 919, “When Environmental Regulations Kill: The Role of Health Health Analysis," 22 Ecology Law Quarterly, 729 (1995).

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