Tags: green energy | fossil fuels | capitalism | u.s. economy

Peter Morici: A Strong US Economy Is Necessary to Tackle Global Warming

Peter Morici: A Strong US Economy Is Necessary to Tackle Global Warming

Peter Morici By Tuesday, 03 January 2023 05:15 PM EST Current | Bio | Archive

Climate change, pandemics, Putin’s madness and China’s ambitions threaten humanity with droughts and floods of biblical proportions, nonnavigable rivers and disappearing island nations, fractured global supply chains and shortages of vital resources like commercial fertilizer, and famine and mass migrations.

Much of this has been enabled or exacerbated by industrialization and globalization.

Prior to the industrial revolution per capita incomes grew very slowly—perhaps 0.2% or 0.3% a year. Even with late Middle Ages innovations like the three-part plow and horse harness, aggregate economic growth was largely tethered to population increase.

Progress and growth

The degrowth movement is amorphous with contributions from both the physical and social sciences. But it appears unified by a criticism of modern economics, which tends to associate human progress with GDP growth.

The movement generally asserts that climate change and inequality could be better addressed by shrinking the global economy—perhaps, a modest 0.5% a year, which would imply average per capita incomes losses of more than 1% a year.

This does not stand up well against the record of advanced market economies. From 2005 until the pandemic, those enjoyed GDP growth and substantially cut CO2 emissions.

Green electricity will prove more expensive than fossil-fuel generation because even when it can be had cheaply, it requires expensive fossil fuel and battery backups to cope with severe cold and heat.

EVs are more expensive to produce because the batteries and electric motors require lots of lithium, copper, cobalt and other metals. Global capacity to produce those is often in politically and geographically awkward locations—the Congo, South America and China.

Progress means better lives

Without growth, adopting green technologies, building infrastructure to access vital resources and protecting against associated risks would require significant reductions in living standards and simply not be politically sustainable.

The pathogens that attack mankind are always mutating and posing new threats. Producing new vaccines and medicines—and making those transnationally available to rich and poor alike—is terribly expensive.

Even with NATO devoting over $1 trillion a year to defense, Russia, China, Iran and others are spending enough to create mischief that could end badly for democracy.

Unless we surrender to disease, capitulate to dictatorship, and let millions die or be enslaved, the United States and its allies must spend more, not less, money and manpower on health care and defense. That will require economic growth to be politically palatable.

Social and economic justice politicians are not buying into warnings about the dangers posed by rising autocratic power. While their views are not popular within the wider Democratic Party, if the United States and other rich countries undertook to shrink their economies to lower emissions, the left would likely seek concessions that imposed dramatically redistributive taxes on income and wealth to meet public health and security challenges to avoid impoverishing the bottom half of their populations.

Dividends of markets

The degrowth movement advocates smaller homes, eating less meat and more leisure to spend with children—all benefits simple GDP accounting does not capture. But indicators of well-being like infant mortality and leisure time improve as per capita incomes rise, and those are dividends of free-market dynamics.

Shrinking GDP without losing ground would require abandoning capitalism and markets for state planning. It’s doubtful personal liberty and democracy could survive all that. It bears mentioning autocracies and countries sympathetic toward them—like China and India—are burning more, not less coal these days.

The degrowth folks are remarkably silent on realistic policy prescriptions for downsizing advanced industrialized economies while simultaneously leveling up the poor in the developing world.

That process would require much more than a 0.5% per annual downshift in OECD GDP, while enabling developing countries to continue growing to improve the conditions of the poor, purchase CO2 abatement technologies, and mitigate against coastal flooding and unbearable heat.

We can’t go back

Developing country access to technology and growth are dependent on trade with and the growth of industrialized countries, but degrowth activists correctly point out that much North-South trade is based on resource extraction.

Weaning from that commerce would require fewer developing country imports of food from places like Ukraine, North America and prodigious developing country producers like Brazil, less dependence on commercial fertilizer produced from natural gas and mined potash from places like Russia and Canada and massive donations of CO2 abatement and mitigation hardware from richer countries.

With developed countries shrinking their economies, expecting such generosity would be naive, and alternative food supplies through sustainable local agriculture is a nostalgic fantasy.

Just prior to the industrial revolution the global population was about 1 billion. Today, at 8 billion, it is ludicrous to think developing countries could produce enough food relying on cow-dung fertilizer. Anyway, cattle exhale CO2, and the degrowth folks see virtue in us all becoming vegetarians.
Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.

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Climate change, pandemics, Putin's madness and China's ambitions threaten humanity with droughts and floods of biblical proportions, nonnavigable rivers and disappearing island nations, fractured global supply chains and shortages of vital resources like commercial...
green energy, fossil fuels, capitalism, u.s. economy
Tuesday, 03 January 2023 05:15 PM
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