The Economy vs. The Climate

<p><span style="font-size: 9pt; font-family: ">Let me introduce myself: I usually blog for and occasionally for One-degree (, where I write about issues that I know well: climate science.&nbsp;&nbsp;<br /> </span><span style="font-size: 9pt; font-family: "><br /> Here at JustMeans, I will step outside my field of expertise, and ask questions about things that do not seem to make sense. There is a risk that things do not make sense because I'm ignorant about the issue. So, is it a waste of time to ask stupid questions then? On the other hand, if I don't get it, perhaps others feel that way too? Furthermore, it is important to dare asking obvious questions &ndash; sometimes there are matters that are taken for granted, but aren't true after all (they are called myths).&nbsp;<br /> </span><span style="font-size: 9pt; font-family: "><br /> One of the pillars of natural science is, after all, the continuous challenges and new ideas. Most new hypotheses turn out to be invalid, but those that turn out to be true become part of the drive that leads to progress. In theory, anyway.&nbsp;<br /> </span><span style="font-size: 9pt; font-family: "><br /> One observation that I find strange is the one-sided sniping at the climate science from the so-called 'climate skeptics'. You can read more about that on;<br /> </span><span style="font-size: 9pt; font-family: "><br /> But now it's time to swap roles for a while. I want to discuss matters that are related to climate, but extend into the dimensions of social science and philosophy, about which I have a lot of questions.&nbsp; But I'll try to be humble, because I don't know all the answers.<br /> #break# </span><span style="font-size: 9pt; font-family: "><br /> This time I want to look at the notion that mitigating anthropogenic global warming (AGW) &ndash; cutting CO2 emissions &ndash; will devastate the economy.&nbsp;<br /> </span><span style="font-size: 9pt; font-family: "><br /> So, let's think about it for a while... (The US has such a proud history of great thinkers, and we should try to keep that tradition going. The most important thing is to think about the things you read &ndash; especially so at the Internet. )<br /> </span><span style="font-size: 9pt; font-family: "><br /> So what is exactly 'economy', by the way? Money? A power-struggle? A structure for re-distributing goods and services? Or just a game?&nbsp;<br /> </span><span style="font-size: 9pt; font-family: "><br /> I believe that the economy is a necessity in a civilized society, and that it for all intents and purposes defines the world order; let's be brave and state that trade is a back-bone of our lives.&nbsp;<br /> </span><span style="font-size: 9pt; font-family: "><br /> But our ways of thinking about economy is perhaps a bit old-fashion, and the educational institutions are too conservative, looking more to the past than to the future. They also assume a stable climate &ndash; or at least more or less so. Let's dare to challenge the ideas about economy.<br /> </span><span style="font-size: 9pt; font-family: "><br /> My understanding is that our economy has one principal driver, namely profit, which frames supply and demand. Otherwise there wouldn't be many traders. There is also the constraint of scarcity &ndash; we do not have infinite wealth and resources, so it has to be shared among the individuals, and money is a means by which goods can be distributed.<br /> </span><span style="font-size: 9pt; font-family: "><br /> But profit cannot increase indefinitely, because profit is a claim to wealth &ndash; that being goods or services.<br /> </span><span style="font-size: 9pt; font-family: "><br /> I'll claim that central concepts in economic theory, such as 'economy of scales' and 'the law of diminishing returns', don't realize the physical (and mathematical) constraints, because they imply a 'pyramid game' solution for success; infinite growth is impossible with finite resources and in a finite space (our planet). I'll also challenge the idea that the consumers are well-informed and thus act in a way that optimizes the economy.<br /> </span><span style="font-size: 9pt; font-family: "><br /> If you look at it in a simplistic way, you could argue that there are two major sides to the economy: the producers and the consumers (hence supply and demand). There is a presumed desire for goods, but does it really reflect the real need?&nbsp;<br /> </span><span style="font-size: 9pt; font-family: "><br /> What about adverts that resemble brainwashing campaigns, meant to make people to think they need stuff? In this context, I'd love to point you to a thought-provoking and well-made website called 'The Story of stuff' (<a href=""><span style="color: #800080;"></span></a>) - please watch the video....&nbsp;<br /> </span><span style="font-size: 9pt; font-family: "><br /> The same goes with 'branding', lobbying, and taken together with the multi-national corporate business world domination, these start to look like manifestation of the failure of market economy, where the consumers are not intelligent and well-informed after all, and there is not really a great variety of goods that the consumers can choose from. The competition is so fierce that only the biggest survive.<br /> </span><span style="font-size: 9pt; font-family: "><br /> But all this is not really the 'economy', but merely outcomes of business practices. The economy of scale and law of diminishing return imply to me that if your business is too small, then others will take you over. I'll be bold and rephrase that as it being the survival of the biggest and richest. But perhaps I'm wrong?<br /> </span><span style="font-size: 9pt; font-family: "><br /> What seems to matter is the system that keeps the flow of goods and services from producers to consumers. The most important things are the basic needs: water, food, shelter, and energy. And it looks like that has worked for centuries before the modern multi-national corporations entered the stage.<br /> </span><span style="font-size: 9pt; font-family: "><br /> Now, let's get back to question of mitigating AGW should destroy the economy. I take it to mean that the economy collapses without oil. Or have I missed the point? If I'm right, then an economic collapse seems unavoidable if it's based on a growth that is physically unsustainable. Right? At some point, humanity will run out of oil, gas and coal. Keep in mind; you keep your car running on old dinosaurs and biological material that have stored the energy our sun shone on our planet over millions of years.&nbsp;<br /> </span><span style="font-size: 9pt; font-family: "><br /> You could ask: Were there not lively economies even before the petrol age? I think that rather than 'destroying the economy', the mitigation of AGW may have implications for our standard of living &ndash; that is in the rich part of the world.&nbsp;<br /> </span><span style="font-size: 9pt; font-family: "><br /> Or is the population here on Earth so large that a lack of oil would mean mass starvation? Or perhaps there is no way back? Actually, I think there will never be a way back because that is most likely not possible &ndash; but the future will see less energy-intensive societies. And these questions do not really concern economy as much as they concern leadership.<br /> </span><span style="font-size: 9pt; font-family: "><br /> On the other hand, an AGW is also likely to result in climate-related calamities, such as floods, droughts and hurricanes, that may have severely deteriorating effects on the local economy. The old theories, that take a benign climate as a given, may be seriously flawed. See what happened to the Great Dust Bowl!<br /> </span><span style="font-size: 9pt; font-family: "><br /> Keep in mind that modern civilization is to a large extent based on technology, a product of scientific knowledge and experience. Of which the same physical laws, when applied to the atmosphere, tell us that an increase in the levels of greenhouse gases leads to a disruption of the climate.<br /> <br /> Additionally, the economy seems to be 'sick': just look at north-south divide and the fact that most of Earth's population lives in poverty. I doubt that most could not maintain their standard of living in the rich part of the world, were it not for the poor who are willing to work for a pittance in the developing countries.<br /> </span><span style="font-size: 9pt; font-family: "><br /> The same thing goes for the empires in the old days, which waged war against those who did not provide the goods. This is not really pure 'economy', but suppression of the poor.&nbsp; Still this appears to be needed to maintain the high living standard in the North West, not?<br /> </span><span style="font-size: 9pt; font-family: "><br /> Climate change, however, unites everyone on the planet. It's mainly caused by the rich world (so far), and it's fossil-fuel-based energy consumption. We are all affected. We need to solve the problem together. In order to do that, the world needs great leaders and international collaboration. An unfair balance of wealth does not fit into this picture. And I doubt that we can hide behind economical arguments to delay actions.</span></p>