Environmental apocalypse now?

Have environmentalists' predictions of economic decline become a self-fulfilling catastrophe? That's the question economist Craig S. Marxsen pondered while reviewing several academic studies on the economic impact of environmental regulations.

For example, based on a study that concluded environmental regulations reduced U.S. manufacturing productivity by 11.4 percent below what it could have been by 1986 Marxsen estimates:

  • Regulations reduced U.S. output 22.35 percent below what it otherwise would have been in 1990.

  • Real gross domestic product would have been 20.65 percent higher in 1990, other things being equal.

  • Productivity stagnated from 1973 to 1995, but this was obscured by an influx of foreign capital and women into the workplace.

    What's the bottom line? According to Marxsen, "ecocatastrophism [his term for the environmental-doom viewpoint] dangerously weakens economic performance in several ways and therefore might bring about a persistently declining global standard of living that would create a debacle not unlike the very one of the catastrophists fear."

    Source: Craig S. Marxsen Prophecy de Novo: The Nearly Self-Fulfilling Doomsday Forecast, Independent Review, Winter 2003, Independent Institute.

    For text http://www.independent.org/tii/content/pubs/review/tir73_marxsen.html
    For more on Environmental Economics http://www.ncpa.org/iss/env/

    FMF Policy Bulletin\22 January 2003

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