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This is wrong because subsidies aren't just externalized costs. They are defined as monetary gifts. You're extending the definition by analogy and arguing that

by astine 7y ago

This is wrong because subsidies aren't just externalized costs. They are defined as monetary gifts. You're extending the definition by analogy and arguing that a company externalizing its costs is the same thing as a subsidy, but a subsidy implies direct and deliberate support. This is important for a couple of reasons: The main one is that it's confusing to redefine subsidy when you can just say "cost" and have people understand you. People reading this survey might see the $5.2T number and assume that that cost is in addition to whatever the cost of climate change is and will have to read the paper to understand otherwise. This is unnecessarily confusing even if one were to grant the logic of it. In addition, when people discuss subsidies, they are often most interested in government policy. The purpose of a subsidy often is to increase a certain kind of business, so we might worry about unnecessarily funding the fossil fuels and thus encouraging climate change in a manner above and beyond simply allowing them to be used the way we've always done, but that's not quite what's going on here. One thing to keep in mind is that it's a lot easier to measure a genuine government subsidy than an externality. So the distinction matters in that regard as well. Any measure of the cost of climate change is to at least some degree speculation, whereas any attempt to measure the direct amount of money given to fossil fuel companies can probably be much more exact.

mikeash 7y ago
Gifts in kind aren’t subsidies? If the government gives equipment or resources or labor, rather than money, it’s no longer a subsidy? That sure doesn’t fit how I understand the term. What would you call those?
- astine 7y ago
  "Gifts in kind aren’t subsidies?" They can be but that's less common. The key difference is that a subsidy is direct and an active policy. For example, when people talk about subsidies for renewables, they aren't talking about any externalized costs of manufacture, which do exist, they are talking about direct government gifts and tax breaks deliberately put in place to encourage investment in renewables. When people talk about subsidies given to fossil fuels the same is true, especially when they are being compared to renewables as is the case in this discussion. Edit: removed word "decision" to clarify my meaning
  - dv_dt 7y ago
    Not requiring a company pay, in some form, the cost of their externality costs is an active policy decision. It's perhaps not a frequent point of policy discussion, but it's still a decision - particularly when we know the cost of climate crisis mitigation is so high.
    - astine 7y ago
      "Not requiring a company pay, in some form, the cost of their externality costs is an active policy decision." No, it's a passive policy decision by definition.
      - munk-a 7y ago
        Choosing not to make a choice is a choice itself - additionally this portion of policy has been heavily debated societally - it's not like we're talking about something so obscure that actually opening up a discussion on it will require a heavy expenditure of labour to properly research the topic.
      - rndgermandude 7y ago
        Why? What definition? The refusal to collect costs those polluters put on everybody is as active an decision as the decision not to collect taxes (tax breaks) that you'd otherwise use to keep the country running for everybody. It's an active policy decision to have the state stay passive and do nothing.
      - gnud 7y ago
        It's an active policy decision in any country where a proposed "polluter pays" type law has been voted down.
  - mikeash 7y ago
    Why do subsidies have to be an active policy decision? You’re right, when people talk about fossil fuel subsidies, that’s thinking of government gifts and tax breaks. My point is that this is a deeply inadequate way to think about it. If you only look at these, and compare fossil fuels to renewables, you’ll come away thinking that fossil fuels are far cheaper than they actually are.
- manfredo 7y ago
  The point is, a subsidy is when one entity possesses resources (money, equipment, etc.) and grants those resources to another party without expectation of a positive return on investment. Some argument can be made that a tax break is a subsidy, but I've often seen that framing used to mislead people into thinking that their tax dollars are actually being spent on the recipient of the tax break (e.g. Amazon in NYC). Trying to put speculative and indirect costs predicted to happen decades in the future under the label of subsidies crosses the line into intellectual dishonesty. It's not hard to make good arguments for decarbonization of energy production, so using rhetoric with questionable intellectual honesty is often counterproductive. Here's my reply to your comment below, HN is probably limiting a shared IP: Your question is self-contradicting. "What if an entity doesn’t possess those resources, but gives them anyway" If an entity does not possess those resources, it cannot give them away. So the crux of the question is whether taking resources from another entity is a subsidy and the answer is no. When the Romans enslaved their neighbors and took their land, it'd be ridiculous to say that the Gauls, Carthaginians, etc. "subsidized" the Roman Republic and Empire. They did not help the Romans expand, in fact they resisted their expansion through force. Affecting climate through greenhouse gas emissions is much less direct than military conquest, but the dynamic is the same. Good arguments can be made by pointing out that emissions are harmful and degrade our ability to live in our environments, even though carbon free energy production is more expensive. The consequence of people resorting to intellectual dishonesty to try and inflate the cost of fossil fuels make people think that proponents of climate change are naive to the economic reality that carbon free energy, especially renewables, are much more expensive to produce.
  - mikeash 7y ago
    What if an entity doesn’t possess those resources, but gives them anyway by taking them from someone else because they’re powerful enough to do it, does that count?
  - Qwertious 7y ago
    >The consequence of people resorting to intellectual dishonesty to try and inflate the cost of fossil fuels make people think that proponents of climate change are naive to the economic reality that carbon free energy, especially renewables, are much more expensive to produce. Except they're not more expensive. The sheer economic damage that greenhouse emissions produceare just as inherent as if your groceries are delivered by a truck that regularly smashes through people's houses on the way. You can't say the truck delivery is "cheaper" than taking the road route, just because the government hasn't forced the truck driver to pay for the houses that were wrecked. I mean you can, but it's an accounting trick. It only exists on paper. You could say "it's not subsidy", but semantics aside, what is it called when the government makes something cheaper through its deliberate choice to charge less than normal (or none) for a certain group? In common parlance, if EVs get 50% off their registration fees, people say "the government subsidises EV registration fees", even if technically they're simply not charging the money in the first place. How is this different to fossil fuels? You could say that they reduced the fees from historical pricing, but then Australia had a carbon price that was abolished (for purely political reasons, FYI) - does that count as subsidising fossil fuels?
clairity 7y ago
"subsidy" and "externalized cost" aren't mutually exclusive concepts (as you hint at in "...because subsidies aren't just externalized costs" [emphasis mine]), so your semantic argument rests on shaky foundations. an externalized cost can be considered a subsidy in many contexts, including legal/political ones. like most words, "subsidy" may have a more specific meaning in a particular context, but understood differently in a general context. so taking a stance that one definition is better than another is relatively futile (in the sense that it convinces no one who's not already sympathetic). so rather than relying on semantics, make the argument you're really trying to make, which, by context, seems to be that you don't think externalized costs should be used in the comparison.
- i_cant_speel 7y ago
  They were making the argument that the headline shouldn't use an intentionally misleading word when there is a much better suited word that accurately and clearly conveys the meaning. Using a "technically correct" word isn't a defense when the vast majority of your target audience isn't going to properly understand the true meaning.
  - underdown 7y ago
    It's also not technically correct. Externalities are externalities because they don't effect price while subsidies inherently effect price.
  - cat199 7y ago
    Pretty sure if anyone should be using 'technically correct' terms from the field of economics, it should be the IMF.
- astine 7y ago
  "so rather than relying on semantics, make the argument you're really trying to make, which, by context, seems to be that you don't think externalized costs should be used in the comparison." No, externalized costs are important to take into account when making policy decision. Obviously we should be worried about the costs of climate change. The point I really want to make is that this is the wrong context in which to include externalities in the definition of subsidy because we are already implicitly using a definition of subsidy provided by the OP which excludes externalities.
acchow 7y ago
> Any measure of the cost of climate change is to at least some degree speculation, whereas any attempt to measure the direct amount of money given to fossil fuel companies can probably be much more exact. It's dishonest to differentiate these and just opens up the agents to game your definitions. Which they of course are doing.

by astine 7y ago

mikeash 7y ago

Gifts in kind aren’t subsidies? If the government gives equipment or resources or labor, rather than money, it’s no longer a subsidy? That sure doesn’t fit how I understand the term. What would you call those?

astine 7y ago
"Gifts in kind aren’t subsidies?" They can be but that's less common. The key difference is that a subsidy is direct and an active policy. For example, when people talk about subsidies for renewables, they aren't talking about any externalized costs of manufacture, which do exist, they are talking about direct government gifts and tax breaks deliberately put in place to encourage investment in renewables. When people talk about subsidies given to fossil fuels the same is true, especially when they are being compared to renewables as is the case in this discussion. Edit: removed word "decision" to clarify my meaning
- dv_dt 7y ago
  Not requiring a company pay, in some form, the cost of their externality costs is an active policy decision. It's perhaps not a frequent point of policy discussion, but it's still a decision - particularly when we know the cost of climate crisis mitigation is so high.
  - astine 7y ago
    "Not requiring a company pay, in some form, the cost of their externality costs is an active policy decision." No, it's a passive policy decision by definition.
    - munk-a 7y ago
      Choosing not to make a choice is a choice itself - additionally this portion of policy has been heavily debated societally - it's not like we're talking about something so obscure that actually opening up a discussion on it will require a heavy expenditure of labour to properly research the topic.
    - rndgermandude 7y ago
      Why? What definition? The refusal to collect costs those polluters put on everybody is as active an decision as the decision not to collect taxes (tax breaks) that you'd otherwise use to keep the country running for everybody. It's an active policy decision to have the state stay passive and do nothing.
    - gnud 7y ago
      It's an active policy decision in any country where a proposed "polluter pays" type law has been voted down.
- mikeash 7y ago
  Why do subsidies have to be an active policy decision? You’re right, when people talk about fossil fuel subsidies, that’s thinking of government gifts and tax breaks. My point is that this is a deeply inadequate way to think about it. If you only look at these, and compare fossil fuels to renewables, you’ll come away thinking that fossil fuels are far cheaper than they actually are.
manfredo 7y ago
The point is, a subsidy is when one entity possesses resources (money, equipment, etc.) and grants those resources to another party without expectation of a positive return on investment. Some argument can be made that a tax break is a subsidy, but I've often seen that framing used to mislead people into thinking that their tax dollars are actually being spent on the recipient of the tax break (e.g. Amazon in NYC). Trying to put speculative and indirect costs predicted to happen decades in the future under the label of subsidies crosses the line into intellectual dishonesty. It's not hard to make good arguments for decarbonization of energy production, so using rhetoric with questionable intellectual honesty is often counterproductive. Here's my reply to your comment below, HN is probably limiting a shared IP: Your question is self-contradicting. "What if an entity doesn’t possess those resources, but gives them anyway" If an entity does not possess those resources, it cannot give them away. So the crux of the question is whether taking resources from another entity is a subsidy and the answer is no. When the Romans enslaved their neighbors and took their land, it'd be ridiculous to say that the Gauls, Carthaginians, etc. "subsidized" the Roman Republic and Empire. They did not help the Romans expand, in fact they resisted their expansion through force. Affecting climate through greenhouse gas emissions is much less direct than military conquest, but the dynamic is the same. Good arguments can be made by pointing out that emissions are harmful and degrade our ability to live in our environments, even though carbon free energy production is more expensive. The consequence of people resorting to intellectual dishonesty to try and inflate the cost of fossil fuels make people think that proponents of climate change are naive to the economic reality that carbon free energy, especially renewables, are much more expensive to produce.
- mikeash 7y ago
  What if an entity doesn’t possess those resources, but gives them anyway by taking them from someone else because they’re powerful enough to do it, does that count?
- Qwertious 7y ago
  >The consequence of people resorting to intellectual dishonesty to try and inflate the cost of fossil fuels make people think that proponents of climate change are naive to the economic reality that carbon free energy, especially renewables, are much more expensive to produce. Except they're not more expensive. The sheer economic damage that greenhouse emissions produceare just as inherent as if your groceries are delivered by a truck that regularly smashes through people's houses on the way. You can't say the truck delivery is "cheaper" than taking the road route, just because the government hasn't forced the truck driver to pay for the houses that were wrecked. I mean you can, but it's an accounting trick. It only exists on paper. You could say "it's not subsidy", but semantics aside, what is it called when the government makes something cheaper through its deliberate choice to charge less than normal (or none) for a certain group? In common parlance, if EVs get 50% off their registration fees, people say "the government subsidises EV registration fees", even if technically they're simply not charging the money in the first place. How is this different to fossil fuels? You could say that they reduced the fees from historical pricing, but then Australia had a carbon price that was abolished (for purely political reasons, FYI) - does that count as subsidising fossil fuels?

clairity 7y ago

"subsidy" and "externalized cost" aren't mutually exclusive concepts (as you hint at in "...because subsidies aren't just externalized costs" [emphasis mine]), so your semantic argument rests on shaky foundations. an externalized cost can be considered a subsidy in many contexts, including legal/political ones. like most words, "subsidy" may have a more specific meaning in a particular context, but understood differently in a general context. so taking a stance that one definition is better than another is relatively futile (in the sense that it convinces no one who's not already sympathetic). so rather than relying on semantics, make the argument you're really trying to make, which, by context, seems to be that you don't think externalized costs should be used in the comparison.

i_cant_speel 7y ago
They were making the argument that the headline shouldn't use an intentionally misleading word when there is a much better suited word that accurately and clearly conveys the meaning. Using a "technically correct" word isn't a defense when the vast majority of your target audience isn't going to properly understand the true meaning.
- underdown 7y ago
  It's also not technically correct. Externalities are externalities because they don't effect price while subsidies inherently effect price.
- cat199 7y ago
  Pretty sure if anyone should be using 'technically correct' terms from the field of economics, it should be the IMF.
astine 7y ago
"so rather than relying on semantics, make the argument you're really trying to make, which, by context, seems to be that you don't think externalized costs should be used in the comparison." No, externalized costs are important to take into account when making policy decision. Obviously we should be worried about the costs of climate change. The point I really want to make is that this is the wrong context in which to include externalities in the definition of subsidy because we are already implicitly using a definition of subsidy provided by the OP which excludes externalities.

acchow 7y ago

> Any measure of the cost of climate change is to at least some degree speculation, whereas any attempt to measure the direct amount of money given to fossil fuel companies can probably be much more exact. It's dishonest to differentiate these and just opens up the agents to game your definitions. Which they of course are doing.