Part 1 was
published on September 16, 2024, and Part 2 was published on November 13, 2024.
I like to highlight articles from the Breakthrough Institute since they are usually
insightful and I usually agree with their arguments, from a number of different
authors. In Part 1 Brown argues that capitalism enables climate adaptation. In Part
2 he argues that capitalism also enables the energy transition to lower carbon
intensity.
Part 1 – Capitalism Enables Climate Adaptation
In Part 1, Brown
first argues that the environmental left has continued to pursue degrowth as a
strategy, something inherently anti-capitalist and difficult to reconcile with economic
realities. Brown argues that degrowth studies are mostly bogus, citing a recent
paper in Ecological Economics that draws eight conclusions about these
questionable degrowth studies. The abstract of the paper points them out:
“(1) content covers 11 main topics; (2) the large
majority (almost 90%) of studies are opinions rather than analysis; (3) few
studies use quantitative or qualitative data, and even fewer ones use formal
modelling; (4) the first and second type tend to include small samples or focus
on non-representative cases; (5) most studies offer ad hoc and subjective
policy advice, lacking policy evaluation and integration with insights from the
literature on environmental/climate policies; (6) of the few studies on public
support, a majority concludes that degrowth strategies and policies are
socially-politically infeasible; (7) various studies represent a “reverse
causality” confusion, i.e. use the term degrowth not for a deliberate strategy
but to denote economic decline (in GDP terms) resulting from exogenous factors
or public policies; (8) few studies adopt a system-wide perspective – instead
most focus on small, local cases without a clear implication for the economy as
a whole. We illustrate each of these findings for concrete studies.”
He argues that it
is the opposite, economic growth, that enables greater ability to address
climate issues, which include adaptation to climate impact threats. He uses
data from ‘Our World in Data’ to show that higher GDP per capita correlates
very well with higher life expectancy, lower child mortality, higher
educational attainment, fewer working hours, and higher self-reported life
satisfaction. He then shows that higher GDP per capita also correlates to reduced
vulnerability to climate and higher capacity to adapt to it, as the graph below
shows.
Brown goes on to
show the vital role of capitalism and private enterprises in enabling climate
adaptation. He also shows that economic freedom enables economic productivity
as well as climate adaptation, as the graphs below strongly suggest.
He cites a 2018
paper ‘The Critical Role of Markets in Climate Change Adaptation’ in the National
Bureau of Economic Research. The abstract concludes:
“Urban, coastal, and agricultural land markets provide
effective signals of the emerging costs of climate change. These signals
encourage adjustments by both private owners and by policy officials in taking
preemptive action to reduce costs.”
Brown relates these benefits to something known as the ‘Ricardian
comparative advantage.’ As Brown states it:
“…capitalism naturally facilitates the efficient
distribution of production across the globe, allowing regions to specialize in
the goods and services for which they are best suited.”
It also relates to a basic simple common-sense
acknowledgment that improvements in technologies (spurred by capitalism) lead
to improvements in climate adaptation.
Brown explains how
innovations in agriculture and materials manufacture (concrete and steel) also
help us adapt better to climate. In particular, he cites improvements in air
conditioning technology which enable lives to be saved in a warming world. Competitive
private business “supports the large tax base that produces nominally
government-supported adaptation efforts like public infrastructure, early
warning systems, and disaster response efforts.” He argues that capitalism
does not leave the poor behind as some suggest but ends up helping them the
most.
Part 2 – Capitalism Enables the Transition to Lower
Emissions
As geologist
Scott Tinker once noted, we are not in an energy transition but an emissions reduction
transition. It costs to reduce emissions, and private capital is vital to
success. Stifling economic growth and general prosperity in order to transition
energy to low emissions would actually impede our ability to succeed as private
funding would dry up. Private funding has already contributed a massive amount
of capital to that transition. Capitalism allows us to make the transition
while maintaining our standards of living.
Brown invokes the
‘Kaya Identity’ as a framework that depicts four factors that influence carbon
emissions:
1)
Human Population
2)
Economic productivity (typically
represented by GDP per capita)
3)
Energy efficiency of the economy (energy
use per unit of GDP)
4) Carbon intensity of energy (CO2 emissions per unit of energy).
Brown notes that only number 4 could theoretically go to
zero but that lowering economic growth drops the other three as well. In the
graph below it can be seen that energy intensity and carbon intensity (as
CO2/energy and as CO2/$).
Brown addresses
each of these factors. Population is expected to stabilize at some point in
the not-too-distant future. He shows a graph correlating more economic freedom and
lower fertility rates. Technology and innovation continue to increase the
energy efficiency of the economy. Efficiency is nearly always a good investment
since it can lower costs. We are always getting ‘More for Less’ - he invokes
Andrew McAffee’s book of the same name. I enjoyed reading that one. It was
mainly about just that, decoupling. Brown shows that energy use per capita has
dropped the most in wealthy countries. He invokes McAfee’s four factors of the
environment that foster doing more with less: 1) capitalism, 2) technological
progress, 3) an informed public, and 4) responsive government.
“Ultimately, however, the technological progress
necessary to offer low-carbon energy at affordable prices is and will be driven
by capitalism.”
Carbon intensity reduction
is driven by capitalistic and decentralized countries. Global carbon intensity has
been dropping since the 1960s. Greater economic freedom correlates with lower
carbon intensity as shown below, the second graph shows the decoupling of
economic growth and carbon intensity in many countries.
“Once a technology has been invented, it can be widely
adopted without being invented again. Thus, groundbreaking ideas and
innovations have widespread and lasting consequences, and it is in humanity’s
best interest to maximize our collective ideas.”
Brown makes an interesting argument that freedom from
poverty frees up people to focus more energy and develop knowledge about
solving economic and emissions problems. He shows the progression of economic
growth as GDP per capita in countries with different levels of income in the following graph.
Finally, he notes that greater GDP per capita allows us to work
fewer hours, perhaps sacrificing some pay for leisure time. It also lowers the
amount of work or input necessary for similar profit, or output.
He notes the advantage
of decentralized economies rather than centralized controlled economies:
“When control of the economy is centralized, efforts of
the ambitious and talented tend to go towards gaining political power or favor
with those in authority, rather than on out-innovating competitors in the
marketplace.”
‘{Capitalism} channels natural human self-interest in a
way that is socially beneficial.”
He is preaching
to the choir (me) in both parts of this article.
References:
Defending
Economic Productivity and Capitalism for Climate Adaptation and Mitigation.
Patrick Brown. September 16, 2024. Breakthrough Journal. Defending Economic Productivity and…
| The Breakthrough Institute
Defending
Economic Productivity and Capitalism for Climate Adaptation and Mitigation –
Part 2. Patrick Brown. Breakthrough Journal. November 13, 2024. Defending Economic Productivity and
Capitalism for Climate Adaptation and Mitigation - Part 2
Reviewing
studies of degrowth: Are claims matched by data, methods and policy analysis? Ivan
Savin and Jeroen van den Bergh. Ecological Economics. Volume 226, December
2024, 108324. Reviewing
studies of degrowth: Are claims matched by data, methods and policy analysis? -
ScienceDirect
The
Critical Role of Markets in Climate Change Adaptation. Sarah E. Anderson, Terry
L. Anderson, Alice C. Hill, Matthew E. Kahn, Howard Kunreuther, Gary D. Libecap,
Hari Mantripragada, Pierre Mérel, Andrew Plantinga, and V. Kerry Smit. Working Paper 24645. National Bureau of
Economic Research. May 2018. The
Critical Role of Markets in Climate Change Adaptation
No comments:
Post a Comment