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Abstract
We must address the challenge of climate change through the prism of the knowledge problem and-no less important-from the perspective of the good life. When discussing our society's big problems, we tend to assume that we have the knowledge required to act on them. We also tend to assume that our intentions will translate seamlessly to the desired consequences. Knowledge problems are why both of these assumptions can be wrong-and why they can lead to unintended outcomes, some of them disastrous. This paper briefly outlines some of the problems with our knowledge of climate and energy systems, how these problems can affect planning and policies on climate change, and how these plans and policies come to bear on the conception of the good life. The case of biofuels policies illustrates these problems.
JEL Codes: B53, H23, Q01
Keywords: climate, carbon, emissions, biofuels, knowledge
"The curious task of economics is to demonstrate to men how little they know about what they imagine they can design."
-Friedrich Hayek
I. The Unknowability of Future Advance
Fifty years ago, the thought of seven billion people on earth seemed impossible. Another fifty years before that, the idea of three billion people on earth looked unimaginable. Two hundred years ago, the idea of two billion people would have sounded heretical to anyone-most of all Alfred Malthus, who gave more thought to this question than perhaps anyone else. And yet, the impossible, unimaginable, and heretical all came to pass, as the earth has supported these huge numbers and the population continues to rise. It has done so because humans have invented new resources and new ways of dealing with resources that were revolutionary and changed life as we know it drastically. These inventions include the steam engine, fertilizers, desalination, antibiotics, and immunization, to name but a few. They were not only revolutionary; they were fundamentally and completely unforeseeable. Even when they were invented, no one could have foreseen the incredible impact they would have on humanity. Who could have guessed that a little tinkering with a pump in northern England would launch the Industrial Revolution that would completely change the world?
At every point in history, we are ignorant of what humans' future actions and ingenuity will bring about....