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Again, found in my in box but intriguing enough for me to go and find out something about the people who sent it to me

Changing the Conversation

Economists and finance professionals still promote free market fundamentalism, shrinking from drawing even obvious conclusions about the dangers of unfettered markets. Fiscal austerity and deficit reduction continue to be watchwords of both policymakers and theorists, even as global inequality increases exponentially and unemployment equals or exceeds levels of the Great Depression in many countries. Politics chokes reforms that could bring growth and relief to millions, while the many challenges of sustainable development and environmentally friendly innovation are brushed aside.

Neoclassical economics fails to address these challenges, but the resistance to change is substantial — both inside the discipline and in the world at large.

So that in itself recommended the article to me, but there are other things right now that need my attention. So I am going to simply cut and paste the text (with the links) from the email – and expect to get some reaction in the comments below.

I will say this. During my career there was initially a sort of consensus (known as “Butskellism“) about the need for public sector investment and social programs. That was overturned by the arrival of Thatcher – and a lot of people I found myself working for, who were genuinely convinced of the integrity of the intellectual underpinnings of neoclassical economic theory. I was at best skeptical, but over time became convinced that it was simply the same old reactionary attitudes of the privileged. Yes communism collapsed, but that does not mean that Marx was entirely wrong, and anyway Leninism – and later Stalinism and Maoism – were some distance away from Marxism. Not only that but I was sure Keynes was right since I had grown up during the period when people from my background were at last seeing some benefit from his policies. At least, once we had paid off the huge US dollar loan, which the rest of Europe had escaped due to the Marshall plan. What I also saw was the sheer greed of the people who always yacked on about the Dutch “problem” (of gas revenue being spent on social welfare programs) while they gleefully stuffed their own pockets with the profits from oil and gas drilling in the North Sea and the increasingly dodgy Private Finance Initiative.

In the wake of this fall’s IPCC report on the growing dangers of climate change—including to the economy—a new paper and supplementary analysis from the Institute for New Economic Thinking (INET) find that the conventional wisdom of the dynamics between climate change and the economy actually understates these dangers. It finds that, contrary to popular belief, we cannot have it both ways: We cannot have carbon emissions reduction while also maintaining current levels of economic growth. There is instead an inexorable tradeoff between economic growth and preventing climate catastrophe. The paper is from leading economists on climate change, Enno Schröder and Servaas Storm.

Among its highlights, based on original research and a new set of data regressions:

• “Green growth” is an illusion: Contrary to optimistic claims by Barack Obama and a host of others, you can’t grow your way to a better climate; consumption growth necessarily drives increasing CO2 emissions. The research finds that outsourcing production to other countries may hide this relationship between economic growth and emissions, but it’s not possible to de-link the consumption that accompanies rising living standards with rising emissions.
• To stabilize the climate, future economic growth must be well below the historical income growth rate of 1.93% (1971-2015)—even with unprecedented reductions in carbon and energy intensity. The hard truth is that, based on even optimistic assumptions concerning future reductions in energy and carbon intensities, future global growth will be compromised by such climate constraint.
• The present fossil fuel-based socioeconomic system, which was built over two-and-a-half centuries, now must be comprehensively overhauled in just 30 years, and not in a few countries, but globally.
• To avoid a climate catastrophe, a radically different strategy—a concerted policy shift to deep de-carbonization—is needed. That means a dramatic shift from current practices: a fundamental disruption of hydrocarbon energy, production, and transportation infrastructures, a massive upsetting of vested interests in fossil-fuel energy and industry, and large-scale public investment.

The supplementary analysis I mentioned is the full debate INET is hosting on the topic. It includes analysis by Gregor Semieniuk, Lance Taylor, and Armon Rezai that reinforces many of Schröder and Storm’s findings, as well as a comment from Michael Grubb, professor of energy and climate change at University College London, who offers a more optimistic view of growth during decarbonization, and subsequent response by the aforementioned scholars.

Like I said I hope that others will take a hard look at this, particularly since I am immediately concerned about issues like climate justice – fair and equitable climate action. Plus, of course, reversing the recent rapid growth of inequality.