He told the students that mainstream media tends to dwell on the negative. Media seldom acknowledges the huge progress in human prosperity in recent decades in virtually all parts of the world. He is correct. There is a wonderful book called “Factfulness” by late Swedish researcher Hans Rosling. Rosling lays bare the facts about global advances over the past few decades. Few people appreciate these global advances in life expectancy, literacy rates, healthcare and access to basic necessities in most parts of the world. Most of us are living in the best of times, in a material sense.
I would liken the state of the global political economy to that of the late 1930s. The appeasement policies towards Nazi Germany lead to catasphrohic outcomes. The appeasement policies to the threat of climate change will do likewise.
Yet collective international action will likely necessitate serious global destruction and unrest before real action occurs. The message will need to be rammed home.
Ironically, climate change may offer the solution to the current economic malaise of many developed economies.
The Second World War effectively ended the Great Depression. High rates of unemployment disappeared overnight as countries mobilised their resources to confront fascism. Budget constraints were quickly dismissed in the face of an existential threat. There were massive investments in research and development of new technologies. Jobs were created and incomes generated. It was all hands on deck. Nazism was the existential threat then. Climate change is the existential threat now.
The speaker at the school assembly was right. Humans may have the technological ability to confront and defeat, or at least mitigate, the effects of climate change. But free markets and the pursuit of profit are unlikely to provide the required solutions. It was collective political action that defeated Hitler and his allies. Not free markets.
Unfortunately humans have several evolutionary traits that limit action on climate change. We are myopic in our thinking and we are herd animals in our behaviour. National self interest is herd behaviour writ large. Myopia means we are generally short term in our thinking. We respond to immediate threats and concerns rather than the long term.
The Reserve Bank recently cut interest rates to record lows. It is trying to get us to borrow and spend more, despite private debt levels being at record levels. This monetarist approach to managing the economy is losing its effectiveness for obvious reasons. John Maynard Keynes referred to this situation as like “pushing a piece of string.”
Record low interest rates in recent years have meant those with assets have done very well. But a healthy share portfolio or a million dollar weatherboard is little defence against storm surges and extreme temperatures. Less so for your grandchildren.
With interest rates at record lows there is huge scope for investment in green technology. The future of industry has seldom been clearer. It is responding to the threat of climate change. But it is unlikely that entrepreneurs driven by short term profit motives will make a significant difference. Smart government initiatives, in partnership with the private sector, are crucial. Many jobs and incomes would flow as a result. Money has never been cheaper. The required direction is very clear. What is needed is the political vision and leadership.
Peter Lyons teaches Economics at Saint Peter’s College in Epsom and has written several Economics texts.