Remember the last economic apocalypse? No? Of course not. It didn’t happen. It was going to be caused by the Y2K bug. We might have had sore heads on January 1 2000 – I certainly did – but global capitalism and our system of exchange hadn’t collapsed by the time I staggered out for a coffee late that afternoon.

Now former British Treasury head and World Bank chief economist Nicholas Stern is warning that we will face a bill of $9 trillion if nothing is done to stop global warming. If nothing is done, Stern says, we face economic failure worse than the Great Depression.

 

Cutting emissions and spending big on new fuel sources will put a whole new range of burdens on our economies when we’re already facing an unprecedented challenge – paying for the care and welfare of the baby boomers as they retire and reduce their own economic participation and productivity.

Green activists shun economics. Politicians can’t.

The Rightthinker blog has done some thinking on this issue:

[T]he general community does not understand the extent of the costs involved in becoming a more “climate friendly” community and the sacrifices that have to be made. A fundamental problem in western liberal democracies is that voters want gain nowadays without any pain. At this point of the debate, most of the population feels that if they get a hybrid car, maybe install a few solar panels in their holiday house, everything will be alright.

I admire the passion that green activists have for their causes such as climate change; however I am terrified by the economic ignorance and sheer illiteracy that is endemic in the movement. Recently at the UK Conservative Party Conference, when I questioned one green activist about the impact on the standard of living of making changes to the industrial base of western societies, he dismissively waved off my concern with a remark that if it necessitated a 1% reduction in GDP per annum then so be it. That 1% reduction in GDP inevitably means declining standards of living, it means less job creation, it means less resources for education, less foreign aid, reduced health expenditure and it means ironically less resources to be devoted to the issue of climate change. I’ve never seen a seen a politician elected saying he was for all of those things.

And Rightthinker adds this:

Despite the rhetoric of greens, putting up windmills, for instance, is not going to solve the energy demands of the West or for that matter the developing world, including countries such as China and India… The point is not to disparage the alternative energy industry but highlight that there needs to be a debate about whether this is realistic and what are the policy implications from urban design through to energy management.

While the green response on the costs for the developing world are often met with bizarre comments such as “the West can pay for the adjustment costs”, there is no thought put into this comment. If you have already reduced economic growth in the west and there are fewer resources for schools and hospitals, which Western government is going to help pay for the “adjustment costs” for over two billion people in India and China? There needs to be a real debate over the implications of climate change on economic policy.

And their conclusion is spot on – if we dismantle our economy in the name of the environment, where will the money to help the environment come from?

Peter Fray

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Peter Fray
Editor-in-chief of Crikey

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