The moral case for fossil fuels

There’s a lot of debate surrounding the use of fossil fuels, with many calling it immoral due to the impact on the environment.

But the Center for Industrial Progress doesn’t write off fossil fuels as inherently bad. Don Watkins, director of education, explains his organization’s views [12:40]…

Transcript

The Mike Alkin Show | 74

The moral case for fossil fuels

Announcer: Free and Clear, the chatter from Wall Street, you’re listening to Talking Stocks Over A Beer hosted by hedge fund veteran and newsletter writer, Mike Alkin, who helps ordinary investors level the playing field against the pros by bringing you market insights and interviews with corporate executives and institutional investors. Mike sifts through all the noise of mainstream financial media and Wall Street to help you focus on what really matters in the markets. Now, here is your host, Mike Alkin.

Mike Alkin: It’s Wednesday, October 2nd. Welcome to the podcast. I’d normally say I hope you had a nice weekend, but it’s Wednesday, not Monday. I was off the last couple of days as my wife and I took our kids up to Boston with a good friend of ours and their kids to go look at colleges. That was always fun, it’s always fun to be in the car for three and a half, four hours each way with my teenagers who seem to argue just for the sake of it, amongst themselves because they feel that’s what they need to do. It happens at any time. They could be calm, listening and my wife and I like to listen to audiobooks when we drive because the kids have their earbuds in. We try and do the, “Hey, let’s play a game, let’s have a family conversation” and you can imagine what teenagers are thinking about that. Like, “Yeah, okay.” They throw the air pods in and one’s watching a movie, the other is listening to music.

Mike Alkin: Of course, my teenage son, who, I think if you listen to the podcast, you know he listens to rap, which drives me out of my mind, because it’s not even music. But he puts his air pods in. That’s the deal, you can listen and of course, I’m always deleting songs from his playlist because some of them are just crazy. But, he and all of his friends listen to it. It’s not even music to me, but what do I know. But you can hear it so my wife and I are listening to our audiobook and we’re listening to Jack Reacher. This one is The Enemy, the Lee Child’s series, Jack Reacher and it’s fantastic. If you’re not, or haven’t read the Jack Reacher series, I think there is 24 of them now, from Lee Child, I would highly suggest it.

Mike Alkin: But when we’re driving obviously you can’t read so we listen to the audiobook and we love it, it passes the time and it’s captivating and of course my kids are saying, “Why are you listening to somebody talk? It’s so boring. Oh my God, it’s boring.” I’m like, “Okay.” We get to listen to, I think it’s about eight hours in the car, I got some good time. They are listening to their music, watching a movie, the occasional flare up amongst the two of them over who’s feet are in the way or something, but were relatively calm so it was not too bad. Got some good listening in to the Reacher series.

Mike Alkin: Got to Boston, I don’t know if you all have been to Boston or not, if you haven’t I really suggest it. It’s just a fabulous city. It’s charming, it’s got so much history. Downtown is just, the architecture, the churches, the cathedrals, you go up on Commonwealth Avenue around by Dartmouth and Boylston and Newbury, just beautiful. Then you’ve got the Boston Commons Park. We love going up there and so we went and visited colleges. Took my daughter, went and visited Tufts, and Harvard, and Boston College so she could get a feel. You do the tours, and we actually, we have a good friend of ours daughter goes to Harvard so we didn’t an official tour there, but we got the student tour. It was from a student. But BC is a beautiful campus. Absolutely stunning. The buildings are just gorgeous and it was nice. It’s good for the kids to get a feel for if they are comfortable on a campus or not. Do they like the look of it, do they like the students, or do they feel they have a lot in common?

Mike Alkin: So we did that. Went around, there were seven of us between my family and our friends, and getting around in the Ubers and the taxis and a lot of walking, so it was a really, really nice weekend. Outside of our hotel, we’re looking over the Charles River and you can see in the morning the University crew teams that are rowing down the river. I look to my left and I saw the Citgo sign, C-I-T-G-O. For those of you who are baseball fans, you’ll know the Citgo sign is what sits on top of the green monster at Fenway Park. We were about half a mile from Fenway, but they weren’t home and they weren’t home because this season, they had played, I think, a Sunday day game, but it was the final game. For the first time in forever, of course, the Sox are not in the playoffs. They had a tough year and sorry for you Boston sports fans, professional sports fans, you’re not familiar with what having a bad season is. Having the Bruins and the Patriots and the Red Sox, and at one point, the Celtics. Who knows what they will do this year.

Mike Alkin: But I ate more clam chowder this weekend than I even know what to do with. I’ve got Fenway right down the street, and I’ve got the Charles River watching the rowing. We’ve got … Walking in a beautiful city, going to visit some nice campuses, but I love New England clam chowder and you try and get it here in New York and it’s awful. I think it comes out of a can. But I don’t know what they do up there, but if you are a seafood lover and if you like clam chowder, there is no better place. My son and I, he’s never really been a chowder fan, or [inaudible 00:06:53], as I should say, with the Boston accent, but he got into it this weekend. We would just stop along the way and just get a quick bowl of chowder somewhere just to, we’d try it, we’d taste it. Now we have a good sense for where in Boston we think has the best chowder. That was pretty much it. A nice long weekend. We were there Saturday, Sunday, Monday, Tuesday.

Mike Alkin: I was going to do the podcast, and my wife looked at me. She said, “Are you serious?” I said, “What?” She said, “We’re going to campuses today,” on Monday. I said, “I know, but I want to get it out.” She said, “I appreciate that and that’s great, but how often are we here going to campuses?” I said, “Oh, it’s only going to be two hours. I’ll just miss Tufts.” She said, “Yeah, but what if that’s the one she wants to go to.” I said, “Okay.” Occasionally that happens. I like to be consistent if I can on the timing, but it is what it is.

Mike Alkin: We got that. We are now heading into, it was a great week for Jets fans last week as you know, 0 and 3 and they had an off week, so we’re not 0 and 4. We can push that off for at least another week. For those Giants fans, Daniel Jones quarterback out of Duke, replaced Eli Manning. Looks like he’s … They are anointing him, it’s so funny. We talk about stocks, remember I talked a few podcasts ago about how sports radio equates to investing. In the first half of the season, the Mets, they finished the first half 11 games under 500, everyone, fire Mickey Callaway, fire Brodie Van Wagenen, get rid of this guy, trade this guy, trade that guy. Well, in the second half of the year, they were 46-22, I think, or 24, 46-20, maybe. Had a huge second half, not enough to qualify for the wild card or to win the division, but they had a great second half of the year. Great momentum building and I don’t even care that they didn’t make the playoffs. They played hard, they didn’t quit and they had a monster second half and that’s great. Games in September were meaningful.

Mike Alkin: But in the first half of the year, everyone was, “Get rid of them, get rid of them. Get rid of them.” But kind of like stocks, has a bad quarter or two, all of a sudden stocks down 20, 30, 40% or and all of a sudden, they are terrible. That’s where you could go in and pick up some good value. Conversely, you have stocks that have a good quarter or two or they are a new IPO and people like the growth and potential and upside and they bid these things up to crazy valuations. Well, Daniel Jones was the fifth pick in the draft, fifth, third, I forget, but he was the first round pick of the Giants, their third, fourth or fifth. I don’t know why I forget that, but Daniel came out of Duke. He’s a big kid. He looks like Eli Manning and they were coached by the same college coaches, David Cutcliffe, who coached Eli at Ole Miss, and Daniel Jones at Duke and looks like a real good kid. Smart, big, tall, athletic and he replaced Eli.

Mike Alkin: He came in and he’s had a good first game. Won the first game down in Tampa, had a great comeback. Brought the Giants back from the abyss in that game, and all of a sudden, the next week, all of a sudden Daniel Jones became the next Eli Manning. He’s become the next Peyton Manning. To sports radio, he’s the savior. It’s one game. It was one game. But immediately, his stock got bid up crazy. He was like an IPO with no earnings. May think of a [beyond-me 00:10:52] [inaudible 00:10:52] we pick it, you name it. All of a sudden, the stock’s going parabolic. That’s what it was here in Talk Radio. Whether it was the hosts or it was the people calling in. The second game, they won. They beat the Redskins. Had a good 24-3. He had a decent game. He did okay, but he had a decent game. Threw three picks, the giants had a pick six, so they defense scored. But they won, and it was good. But we don’t know what Daniel Jones is going to be. We don’t know who he’s going to be. He has potential, but the market, the talk radio market is bidding him up as though he’s the next Tom Brady, or Drew Brees.

Mike Alkin: Things get out of whack sometimes. Kind of equated to stocks. But we’ll see where it goes. Interesting, at least a little bit of an exciting time. Baseball playoffs are here. Hockey season starts tomorrow night. I know you’re going to get sick of me talking about that, but hey, that is what it is. Controversy. Anyway, let’s get back to the show. We are, I’m going to talk about controversy. I’m going to bring on a guest now where we’re going to talk about somebody who is going to talk about the moral case for fossil fuels. What it is and why it matters. We’re going to bring on Don Watkins who is the director of research at the center for industrial progress. He edited that book, The Moral Case For Fossil Fuels, written by Alex Epstein, and has a very interesting take about fossil fuels and the role they play, and why they matter. I’m sure that’s going to rough some feathers, but let’s see what Don has to say.

Mike Alkin: Don Watkins, the director of education at the Center For Industrial Progress. Welcome to the podcast.

Don Watkins: Hey, great to be here.

Mike Alkin: You and I just met, we were just talking before we hit the record button that it’s always nice to have someone who’s not popular when it comes to dinner table conversations regarding the environment, as somebody who runs a nuclear power hedge fund, you can imagine that I have my share of people look at me with a frown. As the director of education for the Center For Industrial Progress, I would assume that who advocates the moral case for fossil fuels, I would think you find yourself in that same boat sometimes.

Don Watkins: Well, it’s funny, I have a lot of controversial ideas, but I very rarely find that it makes me unpopular at dinner. I think one reason why is because the way that we typically talk about ideas in this country, and probably the world, is that people tend to shout their conclusions at each other. One of the things that brought me to my conclusions is my interest in philosophy, which is all about how do you think about issues. I find that if you share with people how you think about an issue and share with them the process that lead you to your conclusion, if you start off in a very relatable place, and then show them step by step how it lead to your conclusion, then even if they don’t agree with you, they can really, they’re definitely more open to it and it’s more relatable how you could be lead to a conclusion that if you just heard it announced initially, they would lash out emotionally. But if you don’t do that and you share your thought process, I find you get a very different reaction.

Mike Alkin: That’s very interesting. I’m going to do that next time, because I try that way, and I start out that way but I don’t last that long. I’m going to have to use … I’m going to take that approach. Let’s talk about what you guys, explain what you guys do at the Center For Industrial Progress, and talk about what your goals are and what your view is, and what the issues are, and how you guys think about them.

Don Watkins: The Center For Industrial Progress is a for-profit think tank focused on energy and environmental issues that was founded by Alex Epstein, who’s the author for the Moral Case For Fossil Fuels. Alex’s background is in philosophy, and we actually worked at a non-profit together many years ago before either of us became interested in energy, where we were writing about every topic you could imagine. What happened was, I think sometime around 2008 or 2009, Alex was actually working on an article on Rockefeller and anti-trust. As part of that, he started researching the history of energy and just became really flabbergasted that like, he had gone to some of the best schools in the country that had never really been taught the value of energy, let alone the unique of hydrocarbons, and being able to provide affordable, reliable energy. That sent him on a journey that has led to the creation of organization, which really has one fundamental goal, which is to help people think more clearly about energy and environmental issues.

Don Watkins: I mentioned philosophy, that’s kind of our first love, and Alex’s view is if you look at the energy debate, the level of thinking, the quality of thinking, even by very, very smart people, is, let’s just call it not as impressive as you would want it to be. Let me just give you two examples. One is just think about how bias it is, that in our discussion, how often do we hear only positives about solar and wind, and only negatives about fossil fuels and nuclear. Then, even if you … Whatever your conclusion, you know that being biased is not going to reach, is not going to enable you to reach the right conclusion. Then if you think there’s an incredible amount of what you could call sloppiness in the discussion, so we’ll take something from nuclear, right? Nuclear has radiation. It makes a big difference what the level of that is, right?

Mike Alkin: Yeah.

Don Watkins: There’s background radiation that might even be generally be good for us, let alone contrast it with something very concentrated and then you would have to think, “Well, what kind of radiation does nuclear actually exposes us to?” I would feel completely 100% safe living right next door to a nuclear plant. If you think about in the fossil fuel realm, something like, “Are you a climate change denier? Do you believe in climate change?” That’s an incredible imprecise question because it makes a big difference between your view being that, yes, CO2 has a warming impact that we can adapt to and that will not be catastrophic, versus it is going to be runaway and catastrophic. Those are two very different views, and if you say that people who deny this catastrophic view are denying climate change, that is going to completely wreck your ability to think clearly about the issue.

Don Watkins: Our view is that we want to help people think more clearly about energy issues, and then the people with whom we agree on our views, we want to help them be more persuasive. A lot of what we do is work with companies when we agree with them on policy conclusions, and help them be more persuasive to their stakeholders.

Mike Alkin: It’s interesting you said earlier, Alex had gone to all great schools, but never really learned about energy, right? I, for years, and years, and years, in my business, in the hedge fund business, very occasionally would look at energy companies, oil and gas companies, coal, you name it, but without really thinking about the impact of energy, it was more analyzing a company and an industry, but over the last several years, I really started to think about energy. When you think about it, it really is the foundation for everything we have, everything we do, and how impactful it is on our daily lives, and how it brings billions of people out of poverty, and it brings … Look at China, look at India as an example where it brings them out of poverty, brings them into livable standards. Yet, the means by which they’ve done so is not something that environmentalist would applaud. Because they’ve gotten there because of coal generating power.

Mike Alkin: When I was reading what you guys do, when I think about the environmentalists, and the issues, and how they think about it, it seems their goal is to really minimize human impact, whereas it seems with the way you guys come about this, and think about energy, is how to maximize human flourishing. Can you talk about your reviews on that?

Don Watkins: Yes. In any human activity, you need to be clear on your goal. What are you actually trying to achieve? If your goal is to help human beings flourish, that is to live in the best way possible, then one of the things you’d think about is, “Well, how do we do that? What distinguishes places in the world, or times in the world where we have done that, where human beings have flourished from times, and they haven’t?” Historically, human beings have had an average life span of about 30, incredibly low economic standard of living. Starvation was a regular feature of human life. For much of the world today, that is no longer true. What changed? Well, it was precisely our ability to harness energy. Because if you think about energy, it is really … One way to think about it is machine calories, that it powers machines who will do our work for us, therefore, making us many, many more times productive than we would otherwise be, and therefore, far, far better off than we otherwise would be.

Don Watkins: Another way to think about it, that Alex would often put it, is energy is the industry that powers every other industry.

Mike Alkin: Yeah.

Don Watkins: When you get energy right, you make everything else in life better. If you get your choices wrong, you make everything else in life worse. Now, if you look at the people involved, the leadership of the green movement, and think, “Well, what are they trying to achieve?” That everything practical form of energy, every form of energy that has actually been proven to power a civilization, and essentially that is fossil fuels, and then to a lesser extent, nuclear and hydro, nuclear, I think a large part, just because it hasn’t been given a chance politically.

Mike Alkin: Yeah.

Don Watkins: Of course, it has certain limitations in terms of you can’t drive a nuclear car. It’s not [crosstalk 00:21:51]. But in any case, they oppose every practical form of energy, and you would think, that would have devastating consequences. Why are they ignoring those devastating consequences and just brushing the science, saying, “Don’t worry, these speculative forms of energy like wind and solar, don’t worry, we can ban every form of energy, and these ones that have never been proven to run a society, they’ll be there to pick up the slack.” It’s because they’re not really focused on human flourishing. This is not a conspiracy theory, or it should not be a real surprise, because they say it openly in the major works of environmentalism, that their view is, that what nature gave us is this perfect planet that if we just didn’t interfere with it too much, would take care of us like the garden of Eden, and then we trampled on it, and it impacted it, and therefore nature is coming back to punish us.

Mike Alkin: That’s assuming nature is predictable.

Don Watkins: Yeah, well I mean, but they treat nature in effect as this sentient God that we owe allegiance to. Therefore, yeah, that’s your view of what nature is, then you would think that, “Well, we shouldn’t impact it.” But what nature actually is, is it has a lot of potential, but that potential has to be tapped through human transformation. What I support is our freedom to transform nature, and the number one thing that you need in order to transform nature on the scale that allows human beings to flourish at the greatest level is the freedom to produce and use energy.

Mike Alkin: It’s interesting. When I look at the issues, and I think about the green movement, and I think about how so much of the growth in renewables, wind and solar, is driven by government subsidies. Government interference, if you will. The government trying to put its will on the people. It’s interesting to me, because instead of letting it grow organically through technological improvements and through just change, and through innovation, it’s being fed almost like GMO is being fed, GMO seeds, right? It’s inorganic. You don’t have innovation. I look at countries like Germany who after Fukushima, decided they were going to do away with nuclear power, and now they’ve spent on three quarters of a trillion dollars on a renewable project that has done nothing but a costly price of electricity, they’ll increase four times. Their CO2 emissions are the same.

Mike Alkin: There seems to be, and there seems to be this great will, I think it was UN climate week here not too long ago, and I was with a friend of mine having breakfast the other day, who is in the electric utility industry, and he’s a senior executive. He said, “You know, it’s fascinating when you think about how everything is being pushed down people’s throat.” He said, “Rather than letting it just naturally occur.” People wanting to go to, by 2040, we’re going to go 100% renewable. He said, “On no planet is that possible. It’s just not there because of the intermittency, and the cost involved.” How do you think about, when you think about the green movement and companies now, there’s this ground swell and countries are doing it, I mean, yes, it makes sense. We want the environment to be as clean as possible, but with this interference, how does that impact, helping human beings flourish? Is it more hurtful than it is impactful?

Don Watkins: Well, politically, the number one thing that lets people flourish is freedom. Because what freedom does, is allows each of us to act on our ideas, and therefore, try to prove our ideas on the market, and show they’re valuable, and then people will, if we’re right, people will voluntarily choose them. If we’re wrong, then we fail, we’re free to try again. Part of what you have to keep in mind is that the leading people on the green movement, this is really a splinter of the larger anti-capitalist movement that if you look at the whole scope of history, there’s been people who have been hostile towards freedom and capitalism since the beginning. What they used to argue is that, “Well, if we have the government take over everything and own everything, and control everything, we’re going to out-compete capitalism because it’s wasteful.” That didn’t really work out too well for them.

Don Watkins: People had a choice. Well, maybe we need to embrace capitalism or they could oppose prosperity. A big portion of the, what had formally been, whether socialist, Marxist, some form of collectivist, in large probably became the modern environmental movement, which is really hostile towards freedom and capitalism. That’s not to say that all of the people who call themselves green today are Marxists, but there’s an underlying hostility towards freedom, and if you think about something like the green new deal, this is a totalitarian takeover over energy economy where we’re going to have central planners tell us the kind of energy we’re going to use. As bad as that is, it’s just a more consistent form of what we’ve been doing in the energy space for a long time, which is there is a lot of government deciding what forms of energy should we be using, should we not be using. Now, I think that should be left up to individuals.

Don Watkins: Then, there is a real legitimate concern for every form of energy as side effects, including pollution, so you need to be able to have laws that protect people from pollution. I totally think that each state or locality should be able to set certain pollution thresholds. Climate, I think, is more complicated because it’s not a local issue, it is a global issue. But setting aside laws that actually restrict and protect people from harm, I don’t think the government should be selecting what kinds of energy we should be using, because you can end up in a really catastrophic … I don’t think the whole world will try to go in this journey of 100% renewable, but I do think that it’s possible that some places will. It can be catastrophic, it will be catastrophic because you cannot power civilization on reliable forms of energy. That’s precisely what’s so called 100% renewable would do.

Mike Alkin: I mean, there’s a reason fossil fuels are what, 75, 80% of all energy production. The only scalable energy sources have been, like you said, it’s hydro, it’s nuclear, and not to the scale as fossil fuels have been. When I started out in my nuclear journey several years ago, I wanted to understand the role of nuclear versus wind and solar, to really see where it stood. One of the things I noticed, and you guys touched over, Alex touched upon it in the book, the book that you edited, The Moral Case For Fossil Fuels, the catastrophic predictions that were occurring in the 70s and 80s from [Avery Levins 00:29:26], and Bill McKibben, and Paul Ehrlich, and John Holdren. That widespread flooding and disasters around the world, that were two already have taken place. Yet, none of that occurred, and instead you saw fossil fuel usage increase by 2x, and standards of living around the world for billions of people coming out of poverty.

Mike Alkin: Yet, many of these people still have a voice, and that’s widely listened to and quoted. Where do you think, when you look back at these predictions, what were they missing? What went wrong?

Don Watkins: Well, we touched in a little bit of it, right? You have a certain view of nature, and of human being’s relationship with nature, that is they view human beings as essentially polluter parasites, so that they way that human beings survive is we just gobble up what we find around us, what’s handed to us from nature, and that is seen as unsustainable and therefore it has to lead to ultimately devastation. It’s in-effect, one way to think about it is like it’s a human being taking cocaine or methamphetamine, right? It’s like, “Oh, you guys, yeah you feel great now, but you can’t keep going like that. Eventually, you’re going to have to fall down your natural level and it’s going to be a complete crash. But that whole model of human existence is totally wrong. The way human beings are, are thinkers and producers. That as we discover ever better ways to transform reality and to use the raw materials of nature in ways that improve human life.

Don Watkins: What has actually happened, because we can intelligently transform nature, rather than just gobble up a bunch of resources that are dumped into our lap, is that not only is our standard of living increased, not only have the length of years, our life expectancy increase, but if you look at our resource availability measures, we have more oil available today than we did 100 years ago. Now, if you think, “Well, how could that be true?” Is because we’re discovering more and more potential oil that we can develop more and more economically through different forms of technological innovation. I mean, the same holds true for other resources. If you look at measures of pollution in developed countries, they’ve gotten better and better and better as we’ve used more and more energy, have a greater population, have more and more wealth creation.

Don Watkins: That is we have the ability to transform the earth in increasingly superior ways because of the power of the human mind, and part of what we can do then is we can mitigate the side effects from that transformation. We get better at that over time. What they, the green movement does not view human beings as intelligent transformers, they’re irrational, emotional, greed-driven, cocaine addicts essentially.

Mike Alkin: When you think about the green movement though, and environmental issues, it really is two separate things. You have the climate impacts and then you have pollution. Sometimes, I think people get confused and they think of them all as one. When you think the use of coal, the use of oil and gas, and natural gas to generate electricity, there are pollution concerns. Can you think about how you guys think about separating the two issues between climate impact and the … How you view the climate impact of rising CO2 levels, and how you would view the pollution impact. Because one of the things I’ve noticed when I was looking at nuclear, obviously, and what’s driving the big nuclear push in China is the desire for cleaner air. Asthma, for instance, is a big issue there. The central government is concerned, they want to keep people happy. Obviously, they want to bring people out of the farms into the cities, and then you can do that by burning coal, and you’re seeing huge coal growth there. But you do have to control pollution. How do you guys separate the two when you’re thinking about it?

Don Watkins: Well, I mean one way that we separate it is that you want to always distinguish between demonstrated and speculated impacts. We have demonstrated negative health impacts from certain kinds of pollution. Whether that’s certain levels of mercury, certain levels of particular matter. Now, I think that actually a lot of the science that were given about those, is exaggerated, but they’re nevertheless real established threats, and one of the things that we’ve been able to do in developed countries, is very effectively reduce those as we use more energy. If you look at the coal industry, it’s gotten increasingly good at reducing those side effects. One of the things that’s happened that we’ve seen in China is there’s a reason they use coal, and the fact … Because they’ve used coal, because it’s so affordable, they have, despite the pollution, increased life expectancy dramatically over the last few decades.

Don Watkins: Now, you want to search for what’s the most affordable healthy way that you can do things, and I don’t think China, I think China had more affordable options to use coal in more intelligent ways, but it’s an authoritarian government, not one that was really concerned with the wellbeing and its citizens, and so I think it made a lot of mistakes. But that’s very different from the issue of climate in this respect. The issue of climate, you often hear carbon pollution, which is a completely nonsensical term if you’re going to attach precise meanings to things, because CO2 is an inherent part of life, that is something we expel and that is beneficial to something that we depend on, which is plants. The real question is, when we give off CO2 through the burning of hydro carbons, that has a certain warming impact on the planet, and the question is, what is the magnitude of that impact and how does that overall influence human life?

Don Watkins: One part of that formula means looking at how it actually influences the physical climate. But a part of the formula that is left out of the discussion is, what is our ability to cope with the climate using affordable electricity, or more broadly, affordable energy. It turns out that if we have access to affordable energy, we can cope with any climate. If you think about just the United States, we have some parts that are essentially arctic. We have Alaska, all the way down to Florida, which is basically like a human swamp, to California, to New York, everything. We have every possible climate that you could imagine, and people all have standards of life expectancies close to 80. It’s not the climate that you find yourself in, it’s in the civilization that has the ability to cope with climate that really counts. That is, we live in a civilization that is able to build very sturdy buildings, that is able to deal with flooding, that is able to have early warning systems for storms, that is able to bring water from where it is to where it’s needed, that is able to heat and cool different locations.

Don Watkins: This whole infrastructure that allows us to make every climate livable, and as a result, if you look at that over the last century, climate related deaths have gone down by 98%. It’s not because the climate has become so friendly all of a sudden, it’s because what really drives our ability to flourish is our ability to take an inherently dangerous climate and make it safer. Then, if you think, “Well, what would be the consequences of making energy more expensive and harder to use?” It’s you reduce our ability to cope with climate. I think if you are concerned with climate, and we can talk about how concerned should we be, but even if you think, “Yeah, there is a potential problem on the horizon,” the last thing you would want to do would be to make energy more expensive. You would want to try to get every human being that have access to energy, and the wealth and technology that it makes possible.

Mike Alkin: Is it, I’m over simplifying, but because of coal burning power plants, or nuclear power plants, it enables you to be able to have the equipment to build the hospitals, and the roads to get to those hospitals that are, and doctors and you name it, that are able to take care of people, that are able to help them flourish in more of a way, and to improve their physical wellbeing, improve their health, versus if you were to rely on an economy that was solely, say, renewables, you couldn’t produce that type of infrastructure that’s required to do that? Is that a way along the line that you guys were thinking about it?

Don Watkins: Yeah, definitely. As true as that is for us, I think it’s infinitely more true to people who live in nations that haven’t yet developed.

Mike Alkin: Yeah.

Don Watkins: Like a rich civilization can tolerate, although it shouldn’t have to, and it suffers a lot for it, it can tolerate a lot of burdens, and a lot of controls, and a lot of expensive indulgences by people who feel guilty for freedom and capitalism, and being human beings. But poorer countries cannot. They, more than anybody, need to have access to the most affordable forms of energy, and they need to have the freedom to use those forms of energy. That, I think, is the real risk going forward. Not that it’s going to be a few degrees warmer.

Mike Alkin: I’m always intrigued by people in sitting in ivory towers who are talking about energy poverty, or climate changes throughout the poorer countries. I kind of think about it as the energy poverty, and I wonder about the resentment those in those poor countries might have to say, “Who are you to tell me we can’t, or shouldn’t put in a coal burning fire power plant, when we’re burning cow dung?” I think of the people you lift out of poverty by doing that. It seems as though it can, at times, be an intellectual ivory tower debate when the people in the ground in these countries are the ones who are suffering by not having that coal burning fire. Coal burning power plant, or natural gas power plant.

Don Watkins: Yeah, absolutely. I think the major thing is just that this issue doesn’t get talked about. How often do we talk about how many polar bears there are, and I like polar bears. Don’t get me wrong. I think they’re pretty adorable creatures, as long as you’re not having to live next door to one. Compare that to how often we read stories about energy poverty, and about what has been curing energy poverty over the last few decades. It’s virtually never. In fact, the only people who bring it up are the people who are trying to rescue affordable, reliable energy, and expand that to the globe, which is very small minority of people. Yet, that is the real, if what you’re concerned with is human flourishing, what could be more important than the fact that there’s billions of people with barely any energy? Because that means that’s barely any capability. Capability is what allows us to flourish.

Mike Alkin: Yeah. Tell us how you guys, at the Center For Industrial Progress, give us your day-to-day, what you guys do to help change the conversation. How do you get out there and spread your message?

Don Watkins: Well, I think there’s a view that people’s views on these issues are more or less unchangeable. That is not our belief and it’s not our experience. Our experience has been that if you give people an empowering framework to think about these issues, you can achieve a really rapid change in their conclusions. I talked a little bit about this idea of how we have a biased and sloppy energy conversation, one of the things we try to do is make people more self-conscious of like, I demand that when you’re engaging with thinkers in the energy space, or engaging in your own thinking in the energy space, be even-handed, be precise. Then we’ve talked a little bit about what I think is the more fundamental issue which is this, are you for … Is your goal human flourishing, or is your goal to reduce human impact in the planet? If you are self-consciously focused in this idea of how are human beings going to flourish, and then to answer that question, we have to look at the positives and negatives of the alternatives very carefully, in an unbiased way, then the way that you’ll process the facts is going to be very different from a person who just plunges in and says, “Oh my gosh, fossil fuels have side effects, therefore we have to be against fossil fuels.”

Don Watkins: Instead, you’ll be thinking about energy the way that you tend to think about something like antibiotics. People, when they’re considering whether or not to take antibiotics, they don’t say, “Oh my gosh, antibiotics have side effects, I’m not going to take them.” Most people think, “Yeah, they have side effects, but the benefits outweigh the costs.” That’s really the attitude that one should have, I think, once one explores the issue of something like fossil fuels, or nuclear, and hydro where it’s available, is that these are vastly superior, take into account the benefits and the cost. Through our public work, which are things like Alex’s book, The Moral Case For Fossil Fuels, and then our work with energy companies, a lot of what we’re trying to do is get people focused on, let’s agree on a framework for thinking about these issues. Let’s agree on aiming at human flourishing and being even-handed and precise, and then let’s discuss the facts. That has been transformative and much more effective than just shouting conclusions.

Mike Alkin: It’s interesting, with climate week here, you have a lot of the big oil companies in town, in New York, and you’re seeing a lot of discussion come out of them, talking about how renewables are so important. How are they handling this metamorphosis? Because look, they had a deal with coal, going with natural gas, and at one point in time, way back when they were in the nuclear power industry, but they’ve had to go through changes, how are they typically dealing with these changes? Because it’s a big threat obviously to that they do, and they’re such a strong push against what they do. How do you advise them, or what do you advise them?

Don Watkins: One thing I would say is stop doing what they’ve been doing. Because if you think about, for decades, solar and wind, and then their partisans in the green movement is saying, “We want to ban fossil fuels, and we want to replace them with this other form of energy,” and it’s a form of energy that would be catastrophic if we had to rely on it, because you cannot power civilization through unreliable energy. What has the fossil fuel industry done? Well, I mean, take an analogy, imagine you’re Steve Jobs, and you created the iPhone. It’s the best phone ever, and then you have a bunch of people saying, “No, we need green phones.” They break out their paper cups with these string attached to them, and they say, “We’re going to ban phones, but don’t worry, you can have a communicating society with paper cups and string.” Imagine if Steve Jobs said, “Well, hey, you know what, yeah, we’ll transition to that but it’s just going to take more time and like …” You would say, “No, you’ve created the best product, and these people are trying to destroy the product that you’ve created, and replace it with a complete embarrassment of a failed source of energy or a failed means of communication.”

Don Watkins: Then you need to be at the forefront of coming out there and letting the public know that no, these are not successful forms of energy. But when people hear the hydrocarbon industry itself saying, “Yeah, the future is solar and wind, and they’re pretty good, and not pointing out that these are unreliable forms of energy, they make energy more expensive, they make the grid more dangerous and more unreliable, and susceptible to black out, when they don’t hear that even from the competitors, then I mean, what are people supposed to conclude? Then yeah, I guess the green movement is right, that we can just rely on wind and solar. I think that hopefully this latest election will be a real wake-up call because I think there has been this kind of dismissive attitude of, “Well, people need us so we don’t have to say anything.” But the fact is, if you don’t say anything, people don’t know that they actually need you. We are months away from the real possibility that there will be people in this country who want to outlaw fossil fuels, and even throw fossil fuel leaders in jail.

Don Watkins: That is what people who could be president are publicly committing themselves to. That has to be taken seriously, and you can’t be afraid to say, “Our so-called competitors cannot compete, and the only way they can compete is by making it illegal for us to compete.”

Mike Alkin: Fascinating. We could talk all day, Don. It’s really interesting stuff. I appreciate you coming on. It was nice meeting you, and I really recommend reading Alex’s book. It was very enlightening. I’ve been reading it. Looking at your website, and you guys did some very thoughtful work. In the least, like you said, it opens it up for debate. Those who want to listen to the other side, you guys make some very strong arguments. Thanks for taking the time to visit with me.

Don Watkins: It’s been a pleasure.

Mike Alkin: All right, we’ll speak soon. Well, I hope you enjoyed my conversation with Don Watkins. First time I spoke with Don, somebody reached out to me randomly via e-mail, and said, “Hey, do you know him?” I said, “No.” “Are you familiar?” “I think I was familiar with the Center For Industrial Progress.” I think. My research along the way, there are some things that you just don’t remember. But we got connected. I read Alex’s book. It makes you think about certain things, and then I was reading some of the stuff Don did, and I listened to some interviews, and I thought he would be somebody that you guys would enjoy listening to. I hope you enjoyed the podcast. I’ll be back next Monday. Have a good weekend. Thanks.

Announcer: The information presented on Talking Stocks Over A Beer is the opinion of its host and guest. You should not base your investment decisions solely on this broadcast. Remember, it’s your money, and your responsibility.

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