Time again for all hands on deck

Record-low interest rates provide huge scope for investment in green technology. Photo: Reuters
Record-low interest rates provide huge scope for investment in green technology. Photo: Reuters
The future of industry has seldom been clearer. It must respond to the threat of climate change, writes Peter Lyons.

The local MP from a fringe political party talked at a senior school assembly the other day. It led to a heated discussion in my economics class afterwards.

His central message was that young pupils should not concern themselves too much about climate change. Advances in human technology would resolve the issue. His faith in the efficacy of free markets and the pursuit of profit to solve climate change was apparently less than reassuring.

He told the pupils the mainstream media tends to dwell on the negative. The 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 the 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.

But the author is clear that climate change and nuclear weaponry could destroy us as a species. Yet mainstream economic thinking provides few solutions. Centralist politicians are unwilling to make the radical changes necessary to address climate change. Centralist politics is largely a choice between market full strength or market lite. National self-interest continues to trump meaningful global action on climate change.

I would liken the state of the global political economy to that of the late 1930s. The appeasement policies towards Nazi Germany led to catastrophic 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.

World War 2 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 beachside property is little defence against storm surges and extreme temperatures. Less so for our 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 St Peter's College in Epsom and has written several economics texts.

-This article is part of the Otago Daily Times' contribution to Covering Climate Now, an international campaign by more than 170 media organisations to draw attention to the issue of climate change ahead of a United Nations summit on September 23. To read more of our coverage go to odt.co.nz/climate

Comments

“It was collective political action that defeated Hitler and his allies. Not free markets”
Wrong ! It was the squad that was given objectives and autonomy of action that overcome the adversary.
When there is elitist leadership, they want to micromanage everything and everyone. That is why socialist societies don’t work.

“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.”
Here Peter Lyons tells us, he believes an elitist globalist socialist government, that micromanaged every aspect of production and social life is the only way to save the planet because you’re to dam selfish to look after your own families.
Wrong again!!!
Look after the small things and the big things look after themselves.
Individuals are less stupid, do less harm, than ideology possessed governments.
That is an historical fact !

Yet, you cannot deny the economics. Climate is about Science, or meteorology.

Climate change deniers have made it ideological. The idea of Socialist engineering is risible. It is a label to discredit those with whom you declamatorily disagree.

The answer to government is No Government; anarchism.

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