The Royal Academy made a clear political statement with this year's Nobel Prize in economics. Coming a day after the United Nations panel on climate change issued its dire warning on climate change, this award attempts to emphasize the long term impact of climate change on the economy and economic growth. In Mr. Nordhaus case, he emphasizes how climate change has a significant economic cost. In Mr. Romer's case, he emphasizes how government-stimulated research and technology can be used to address issues such as climate change while enhancing economic growth. They both believe government policy is the key.
The problem here is what we know and what we do not know. What we know is that the climate has always been changing billions of years before humans ever showed up. We know that the climate is changing and that it will continue to change. What we don't know much about is what causes the various changes, what the direction of change is, and whether that change will be good or bad for humans and the economy. We certainly do not know how to control the climate and some our futile efforts, such as electric cars and carbon taxes, have little conceivable impact on climate change and are costly. With President Trump relaxing environmental regulations and pulling out of the Paris Accord on Climate Change, this year's award should be viewed as anti-Trump statement by the Academy.
