Today, I’m largely turning this blog over to Joseph Stiglitz, Nobel-prize winning economist who heads up economic research at the Roosevelt Foundation. Stiglitz recently testified before the Senate Budget Committee on what he–and President Biden–have both correctly termed an existential threat: climate change.
The following are excerpts from that testimony.The entire presentation is at the link.
Thank you for this opportunity to share with you some of my concerns about the large economic costs and huge risks of not taking strong actions now to deal with climate change, and the large benefits of doing so.
Some of the downside risks are already apparent. In one recent year, the magnitude of destruction associated with extreme weather events—which will inevitably occur more frequently, with ever more devastation as a result of climate change—was more than 1.5% of GDP, effectively wiping out more than 60% of the growth of that year.1 But this is only one dimension of what is occurring: Rising sea level will put much coastal property under water, destroying homes and property values. Forward-looking markets have already begun to price this in—but still far from adequately.2 3
Recent studies have documented the adverse effects of climate change on health.4 We pay for this in multiple ways, including higher health care costs and a less healthy population, which means a less productive workforce. But there is no way to accurately monetize the shorter life spans and the increased morbidity….
There are, of course, some sectors, some parts of our population, some locations that will be particularly hard hit. During the past year, we have seen the inequities associated with Covid-19. Those associated with climate change are equally severe, with people at the bottom of the income ladder often bearing the brunt of the costs, with fewer resources to respond. But there is an additional dimension of inequity that speaks to our future: While Covid-19 disproportionately affected older Americans, climate change is a risk that we impose on our children and grandchildren—on the future of our country….
Let me spend a few moments discussing the real risks our economy and society face if we do not take stronger actions than we have so far. We have been treating truly scarce resources, our environment, our water, our air, as if they were free. But economics teaches us that there is no such thing as a free lunch. We will have to pay the check someday. And delay is costly. Taking carbon out of the atmosphere is far more expensive than not putting it into the atmosphere. A smooth transition is far less costly than the one we will surely face if we do not take action urgently….
The longer we delay dealing with climate change, the larger the necessary adjustments will be, and the greater the potential for huge economic disruption—an economic disruption that could make the 2008 Great Recession look like child’s play by comparison.6 The danger of a crash is particularly acute for the U.S. economy, given that large U.S. banks are the largest financiers of fossil fuel….
Economics has, for good reason, been called the dismal science. The scenario of doom and gloom that I have painted is, unfortunately, all too real. But I want to end on a sunnier note. Doing something about climate change could be a real boon for the economy.
Too often, critics of taking action point to the job losses. Change is costly. But change provides opportunity. I am also firmly convinced that the opportunities afforded by addressing climate change are enormous. The number of jobs that will be lost in the old fossil fuel industries are dwarfed by those that will be created in the new industries. The value created in the new industries will also dwarf the value of the stranded assets in the fossil fuel and related sectors. As just two examples: the number of installers of solar panels already is a multiple of the number of coal miners; the auto company with the highest valuation today is Tesla…
The current focus on changing to a green economy is already stimulating enormous innovation, innovation that holds out the promise of significant increases in standards of living. The price of renewable energy has been plummeting, and in many areas outcompetes fossil fuels. The drive for a greener society is stimulating the design of new buildings and new ways of doing agriculture, which turn out actually to save resources, particularly if we value them appropriately….
Our country especially has much to gain, because innovation is a key comparative advantage. If we are ahead of the game—rather than a laggard—we will develop technology that will be in demand around the world. If we are behind the game, we will pay a high price. It is almost inevitable that other countries will demand cross-border adjustments that will put our companies at a disadvantage….
There is much more to be done to protect the economy from the risks I have described. For instance, we need immediately to end fossil fuel subsidies and require full disclosure of climate risks—both the risks of physical damage and the financial risks. Markets on their own don’t provide adequate disclosure, necessary both for the efficient allocation of scarce capital and for protecting investors. We need to change statutes governing fiduciary responsibility to mandate looking at these long-run risks, and especially where government is at risk, as in government insurance pension schemes…
There’s much more at the link, and it is definitely worth reading in its entirety.
16 thoughts on “Stiglitz On The Environment”
Now you are talking science and looking forward, something our current “conservative” republicans aren’t interested in since it may shave a few cents off the old Earnings Per Share statement in the short term.
A study from just a few years back indicated in the US outdoor recreation, which depends on a clean environment, had more jobs than all the extractive industries combined. When I hear repubs whining about job loss I know they are just quoting talking points fed them by republican TV .
Not much new if any. Most has been known for more than 40 years. Consumption Capitalists have prevented progress.
Time to move forward. Imagine how far ahead America would be if we had started it during the Carter administration. Imagine what we will look like in another 40 years if we do not act now. The longer we put off the inevitable the moser costly it will be.
One thing he did not go into (at least in this excerpt) is the report issued a few years ago by a British team, headed by Nicholas Stern (The Economics of Climate Change; the Stern Review), which compared the cost of dealing with climate change now, with that which will be needed to deal with it in a generation. It should cost about 2% of the world’s GDP to do something now, whereas the cost to the next generation was estimated to be about 20% of the world’s GDP. The numbers depend on the discount rate applied, but the difference is substantial for realistic values of that rate.
The obstructionists have been working for decades to prevent the necessary changes to society and our economy. We signed treaties and economic agreements benefiting corporations without the necessary tools and reskilling at home. We went from manufacturing with livable wages to service at low wages where people aren’t even offered benefits.
This is what happens in an oligarchy that controls the industry, politicians, and the free press. Our ability to ascertain the problem and execute the solution is stymied by the profiteers who are short-sighted and must consider Wall Street analysts and shareholders or else lose their profits.
Thanks to the oligarchs owning the government, they’ve allowed Big Energy to delay the transformation from dirty to clean energy because it’s a small group of players. If our commerce people restricted giant monopolies, and let the markets dictate, we would have at least a fighting chance, but they can’t even do that. The free press needs to point this out 24/7 by the oligarchy owns that too.
Our systems are inefficiently clogged with dead weight because the mechanisms have been neutered or rendered ineffective to make the changes.
Einstein told us to begin central planning in 1949 for the benefit of man and the planet since globalization was inevitable. He told us to end the predatory phase of capitalism. We didn’t listen and still aren’t listening. We told the world we are the leaders this week but the world screamed back that you are too inconsistent. They just experienced 4 years of Trumpism. Why would they jump on board when we are threatening war against Iran, China, and Russia and could be led by another Trump in 2024.
Who would trust the USA to be the leader in anything at this point? All our rankings show us as laggards except military spending and obesity. We have 72 million Americans who don’t even believe that wearing a mask should be mandatory and that science is ruining America’s greatness.
Investing in companies that are green energy companies stimulates their growth and causes this sector of our economy to grow. Thats putting money to work while you get gains, but some companies are there to simply receive dollars from the government as start ups. Research is needed to see if they’ll grow. Solaredge and NEE are suggested by some analysts to be viable for long term growth. Also there are companies that use salt water to create drinkable water. These ccompanies have a slower growth curve but are better investments than bonds over a ten year period.
The US creates 15% of carbon in the world and is on board but dirty politicians give China a pass which creates 28% of carbons. These dirty politicians are truly dirty as they get elected while receiving money in off shore accounts etc. Jobs in the US are displaced where the US has made significant strides to reduce carbon and politicians reduce energy jobs here while the same jobs expand elsewhere.
Are you on board to fight climate change? Are you simply supporting dirty politicians who use it to their benefit?
You have to conserve the climate to stop climate change, think accordingly, plan your day out so you make one large trip to different stores. Home deliveries are popular, but Amazon and other companies that send fleets to deliver single item products may be quick actually put more carbons in our atmosphere when you shop with them.
Below are just a few Hydrogen fuel cell stories. Some BIG American transportation firms are finally moving towards Hydrogen. It is way past due, but I am so glad to see it start to move forward. The ONLY output of a hydrogen powered vehicle is PURE WATER. How great is that? Trucks, Buses, Trains, Ships – all spewing CLEAN WATER. YAY
The crucial shift needed isn’t as hard as people think: move everything we do from working against nature to learning from and working with nature. As they say in biomimicry, nature already has millions of years of field testing for pretty much everything we could want! Both the Prince of Wales and Pope Frances have advocated for this, and Regenerative Economics puts it at the center.
Once upon a time, I, tongue firmly planted in cheek, started my own church. I called it the Church of Immediate Gratification. I called for no sacrifices. The congregation would gather together to eat, drink, and be merry. It was truly the quintessential American Church. If we have to work, or if there is a cost to pay, we don’t want to do it. We aren’t disturbed by what might face the next generation. That’s their problem.
“When will they ever learn?” (from “Where Have All the Flowers Gone?” written by Pete Seeger a few generations ago.)
Republicans tend to see too many things in a short-run perspective, and those they see in a long term perspective have to do with their long run control issues.
Climate can’t vote them out, but the results of ignoring “inconvenient” climate change just might.
Agree with comment: “there’s nothing new here”. So what to do in our “federalist” country?
– Each and every piece of the Federal budget and new legislation should require consideration of climate change and account for it in public
– All Federal money to states should have material incentives for aspects mitigating climate change. States who don’t “believe” in climate change get less or no funds
patmcc @ 7:59 am, I had read many years ago about the promise of hydrogen powered autos and trucks. It would take a commitment politically to make this transition. It would probably need to be an Apollo program type of commitment.
I simply do not see electric powered vehicles as the future. A few days ago I filled up my car. It took about 10 minutes. How long would it take to recharge if I had an electric car?? Electricity at this point is generated mainly by fossil fuels.
The GOP is already on the attack against the Biden’s Green Plan with stupid accusations, i.e., Republicans falsely claim Biden wants to restrict meat in climate crisis fight. https://www.theguardian.com/environment/2021/apr/28/joe-biden-climate-crisis-republicans-meat
For the modern version of the GOP there no longer has to be even the pretense of accuracy or truth.
Stiglitz is one of my favorite economists and I note in passing that he is a Hoosier born and raised in Gary. Now to the point > Todd is right on with his observations with the caveat that we already have “central planning,” that is, planning by the rich and corporate class with their handmaiden financiers, predatory capitalists deluxe, where policy decisions for all of us are made by the profit and loss statements of the few, a faulty system to say the least.
Stiglitz’s observations and recommendations and what to do about it are spot on. There are many externalities he did not discuss for want of space and time, of course, but he tells us enough to define the coming environmental onslaught as an existential threat to human habitation, and that should be enough to warrant a global response to such threat which, according to scientists and what we can see with our eyes, is real, though predatory capitalists and their handmaidens interested in extracting the last cent from a collapsing economy will deny there is a problem.
I have written elsewhere that I am thinking of investing in raw land in the Colorado Rockies and that I will make a fortune as Americans retreat to high ground and enjoy good fishing in Lake Kansas, but it’s hard to make fun of existential threats such as this one, and since as a practical matter a collapsed economy would not provide for buyers of my mountainous subdivisions in any event. Existential means existential. If the worst happens greed will have won and humanity and reason will have lost. While there is still time (though fleeting) we best listen to and quickly act on the recommenations of Stiglitz and science. When? Yesterday.
The American Sweetgum tree absorbs 380 pounds of carbon each year when it is mature.
Trees are one of the best ways to reduce carbon output. Tree Sisters plants trees around rain forests internationally . They work at the grassroots level and employ local people to do the planting which in turn helps those individuals and the local economy. Anyone can donate to them.
Once upon a time much of America was covered in trees.
Want to do something positive to reduce global warming? Plant trees or donate to those who do.
State Senator J D Ford is giving away trees to his constituents on May 1st. There are also documentaries on trees and how they communicate with each other on Amazon prime.
In the meantime, Fox News is falsely claiming that Biden’s infrastructure plan includes not allowing us to eat Beef. That’s false. If we eat less beef and pork voluntarily, we can contribute to a healthier enviroment and can possibly reduce our LDL cholesterol.It’s our choice. Herds of cows do contribute to global warming due to their release of methane and the amount of feed that must be grown to feed them.
I will not wait for the government to act. There are too many in Congress who deny climate change. I want to use my freedom to care for Mother Earth and to ensure that those who are born in the future have an earth that sustains them.
“Please don’t take more than you need, love your Mother Earth today.” That’s the hook line in a song I wrote several years ago.
Democracy requires the consent of the governed. If the governed are so deluded that they can’t understand why they are better served by truth than by lies, what hope is there that they can comprehend a slightly more complex issue like climate change? Previous generations of Americans felt an obligation to build something better for their progeny – they committed to a better future. Today the only acceptable form of gratification is the immediate variety. Add that to the dominant moral philosophy – greed – and we have a potent combination of values guaranteed to destroy us.
In an earlier generation the most ignorant among us were not addicted to Kool-Aid that instilled a belief that they were fit to govern. That addiction is now widespread and must be cured if politicians are to return to an era when logic and common sense played roles in high -level decision making. Governance is not the joke that many politicians take it to be. the Rand Pauls and Josh Hawleys and Marjorie Taylor Greenes and Ted Cruzes need an intervention to reprogram them in a way that forces them to simulate adult behavior.
Today’s post fits perfectly hand-in-glove with Heather Cox Richardson’s newsletter of today as well. You can find it here if you’re interested:
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