The Earth is too hot and getting hotter. Last month was the warmest ever recorded. Greenland’s ice sheets are melting. The Arctic is burning. The far-right psychopath governing the world’s fifth-largest nation is rapidly replacing the planet’s lungs with cattle ranches. China approved six times more new coal production over the first months of this year than it did in all of 2018. Absent technological breakthroughs that provide developing countries a cheap and easy path to low-carbon growth, it is difficult to see how humanity will keep future warming merely punishing instead of catastrophic. And yet, annual global investment in clean energy adds up to only about half of what the United States spends on its military every year.
Economic growth is weak and getting weaker. Even as central banks the world over have set interest rates historically low, and national governments have run their debt levels exceptionally high, global demand for goods and services remains tepid. For a decade now, inflation has been below target across the developed world, and markets predict it will remain that way for another 30 years. Onetime apostles of established economic wisdom like Larry Summers are now calling for paradigmatic change. In a new paper co-authored with Harvard’s Anna Stansbury, the former chief World Bank economist argues that monetary policy has proven itself all but impotent in the face of “secular stagnation” — and that only profligate fiscal spending by national governments can rescue the global economy from its self-reinforcing torpor.
Donald Trump is economically anxious and getting more so. White House advisers recently notified the president that their internal forecasts project an economic slowdown next year, a development that could fatally undermine his prospects for reelection. The administration is toying with various ideas for juicing growth ahead of November 2020. But these consist largely of regressive tax cuts that would require Nancy Pelosi’s buy-in to pass. And House Democrats have no incentive to support regressive policies that would benefit Trump politically.
The challenges facing our planet, global economy, and president are all difficult to comprehensively meet. But there is a very easy way to mitigate all three of them at once: It would be in the interest of Donald Trump, the macroeconomy, and every human who intends to see the middle decades of this century, for the United States to launch a major, debt-financed investment in green technology.
Given the economic costs of underutilizing capital and labor — and allowing even marginal increases in long-term temperature rise — such an investment would quite plausibly “pay for itself.” In a context where U.S. inflation and labor-force participation are both undesirably low, adding new demand to the economy could bring more workers off the labor market’s sidelines, thereby increasing America’s productive capacity, while also putting upward pressure on wages for those at the bottom of the socioeconomic hierarchy. Meanwhile, there’s every reason to think a hefty investment in renewable energy would pay significant dividends for the climate. In the decade after Barack Obama signed a $90 billion green stimulus into law, the cost of solar energy rapidly declined, and its use massively increased. Finally, while a $1 trillion to $2 trillion fiscal stimulus would by no means guarantee Trump’s reelection, few things would do more to insulate him from the threat of presiding over an election-year downturn. And while Democrats might be able to find excuses for dragging their feet on other forms of stimulus, a party that claims to consider climate change a national emergency would have a very hard time rejecting a trillion-dollar investment in green technology. What’s more, in brokering such a grand bargain on climate, Trump would not only secure himself stronger economic tailwinds, but also rapturous coverage from a mainstream media that is aching to demonstrate its “objectivity,” and celebrate the sufficiency of the status-quo political order.
And yet, this scenario is not merely unlikely, but politically unthinkable. Despite the fact that a green stimulus is plainly in the president’s political interest, most American capitalists’ near-term financial interests (generally speaking, higher demand means higher growth means higher profits), and the human species’ long-term interests, such a policy is not even at the outer realm of political possibility. What does that say about the health of our political system? Or the priorities of America’s ruling party? Or the prospects of our government ever implementing the many, vitally necessary climate policies that aren’t free lunches?
If the Republican Party is more committed to abetting ecological catastrophe than Donald Trump’s reelection; if there can be no bipartisan agreement on green investment in a context of too-low inflation and near-zero interest rates, how on Earth are we going to get to a place where the U.S. Congress is willing to put a price on carbon, or send large sums of money to foreign nations to prevent them from destroying rain forests, or do any of the other politically difficult things that are ostensibly necessary for averting climate disaster?
The politics of climate change are brutally difficult. But the politics of handing out a bunch of free money for green energy, at a time when mainstream economists are begging for fiscal stimulus — and a Republican president is looking to juice the economy — should be pretty easy.
The fact that they actually aren’t is pretty alarming.