Sunday, September 22, 2019


While they aren't exactly similar, an analogy can be made between climate concerns and finance. One can think of the greenhouse gasses that are being released into the atmosphere as a sort of "climate debt" that, at some point, is going to need to be paid off. And if that debt is not properly managed, it's possible to imagine a "climate default," a scenario in which the changes to the climate create enough upheaval that it's no longer possible to continue to borrow against the climate.

And I do think that it's possible to make the case that currently, world economic activity borrows against the climate, mainly because of scale. For a certain population size, all manner of wasteful, polluting practices are sustainable, because the local environment replenishes itself faster than it can be used up. One could conceptualize this as being similar to the tax revenue of a nation-state, where that revenue is consistently greater than expenditures. While the level of services it supports may be extravagant, it can go on forever. But as population rises relative to tax receipts, it comes to pass that to maintain that level of services requires more money than current income, and the state resorts to borrowing to make up the shortfall. Now, there's nothing inherently wrong with borrowing. But if one is borrowing to fund consumption, there may eventually be a problem, as that consumption usually doesn't create the extra resources required to service the debt incurred.

And so to return to our climate analogy, a case can be made that the current world economy is consuming, rather than investing, the resources borrowed from the biosphere, and so the duration over which this can be sustained is finite. And at the end of that duration, as with a point at which a nation my no longer borrow, things are going to have to change.

I make this analogy because it occurred to me that many climate activists have set their sights on Congressional action as a means of heading off the metaphorical "climate default." But the United States Congress is a body that doesn't seem to understand that "kick the can down the road" isn't a viable solution to dealing with the currently mounting fiscal debt that the nation is incurring. So why expect that they'd treat "climate debt" any differently?

After all, the same set of incentives are in place. Just as with fiscal expenditures, climate expenditures have constituencies that rely on them, and therefore lobby for them to be maintained. And as a general rule, "fiscal restraint" isn't put forward as: "I'm willing to forgo this, that or the other in order to lessen the need to borrow." It's more commonly phrased as: "Those people over there should have this, that or the other benefit removed in order to reserve capacity for me." The climate discussion often isn't any different.

Whether it's simply doing without what is otherwise perceived as a necessary good or service, or making expensive (and perhaps risky) investments where the payoff is far in the future, the current set of incentives is not conducive to either fiscal or climate management. And that likely needs to change before policy will.

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