George Rebane

There is a serious proposal (here) for Congress to get the SEC into creating additional friction in the conduct of the nation’s businesses, especially in an area where it has no established expertise and needs to set up additional bureaus/departments to monitor and adjudicate newly mandated company reports, all for the putative reason of reducing investor risk, is a bad idea (Ramirez says it all). To begin, there is no consensus science that we are suffering from preventable man-made global warming (PMGW), which is the climate controllers’ fundamental thesis – science does not speak with a single voice.  Most certainly, the series of IPCC reports, including the most recent one, make no such claim.  While most knowledgeable people admit that human activities can contribute to global warming, the quantitative sources and scopes of such activities impacting the earth’s temperature record (itself a very fuzzy concept) is totally unknown.

An important concept not reported on the heavily propagandized interpretations of the IPCC report is that the GCMs (general circulation models) have not gotten more reliable in either describing or predicting temperatures (among their other output parameters).  This science has made little or no progress and the output variance measures of the tens of competing GCMs currently in vogue/use have not declined over the last thirty years.  One reason is that the earth’s complete carbon cycle is not known – there are huge gaps in the cycle that today are still filled with various brown numbers. The transfer function for the earth’s atmosphere is unknown; the GCMs are based on heuristics – cobbled together submodels with constants adjusted to fit dubious temperature etc records from various epochs.  As we know from estimation theory, such fittings to past data give no guarantee of the predictive power of (heuristic) models based on limited science.

A litmus test of a maturing science/technology is that the models which embody and express the underlying theory continue to improve as witnessed by their diminishing output covariance matrices developed from experiment and field data.  The GCMs, on which both climate hysteria and public policies are based, have not satisfied this requirement, and about which the media, politicians, and the grant-consuming academics have been silent.  Perhaps a more dismal outlook for confirming the existence of PMGW is that the factors affecting climate are not sufficiently known, and that they also compose an amalgam of chaotic processes, the predictive modeling of which is something humans don’t know how to do, and which may well be that part of our universe that will not succumb to our level of intelligence and mathematics (there are a number of other such processes known to science where human knowledge appears to have hit an impenetrable boundary).

In the final analysis, even if we postulate that some day soon we’ll overcome all these unknowns about climate dynamics, we will most likely discover that global warming may not be feasibly preventable, even if mankind does contribute to it.  We are capable of putting in place draconian public policies that can pauper the world, but there is not a whit of science that says any of it will impact global temperatures, let alone allow us to control them to desired levels.  And here is where the politics and corporatist enterprises come to bear.  Corporatists, by their definition, partner with government to foster laws and regulations designed to limit competition by raising the cost of doing business to such prohibitive entry levels that smaller companies are stifled and venture capital takes a pass in investing in new enterprises wanting to take on the established Goliaths.  This is why you will see corporatists endorsing this new extension of SEC power to become yet one more arm of government’s expanding control.

(Corporatism is the desirable natural endpoint to a corporate growth cycle vs bankruptcy, acquisition, … .  Corporations that grow beyond an efficient organizational size cannot compete with smaller, more nimble, companies in minimally regulated markets.  They need to team up with the government gun to gain the level of regulatory security required by large inefficient organizations to stay in business.  And membership in the corporatist club is relatively easy, all it requires is money to buy politicians and unionists.)

Coda.  From my perch as a schooled technologist, sophisticated investor of some means, and a successful professional in assessing and quantifying risk, I have no idea how to evaluate the information in the SEC’s contemplated ‘climate-risk’ reports.  I doubt that the SEC will make available their ‘methodology’ that supports the new regulations companies will have to follow.  And retail investors, institutional investment advisors, and corporate CFOs will have no clue about the then reported climate risks.  All of them will learn to operate on the basis of a handful of slogans and shibboleths handed down from on high through an enthusiastically cooperating media.