Stern argues that responding to the financial crisis requires substantial fiscal expansion. Where should all this public money be spent? A priority is in R&D in technology to effect transition to a lower carbon economy. The sort of expenditure required in the short term will need to be labour intensive and needs to have long term positive impacts so that the global economy comes out of the crisis with low carbon growth — the only growth that is sustainable and won’t kill itself off in the medium or long term.
Garnaut also sees opportunity in crisis. While there is a real risk that attention will be diverted from climate change, the recovery from recession the world will experience is a good time to invest in new infrastructure for lower emissions, he argued.
Garnaut said that before the current crisis Australia was at full employment and full capacity in the mining and energy sectors making it difficult to free up resources for investment in new technology. The current crisis has the silver lining that inflationary pressures are not so much of a worry now as resources are being freed up by contraction.
The current financial crisis is not an excuse to water down or delay a global deal on climate change mitigation. With a new US Administration, political circumstances in America will be more favourable to moving forward. Europe has held the line on Its emissions targets, despite the pressure, It will be important that Australia do likewise build momentum towards a global deal through Copehagen.
Qin Dahe said the climate problem was real and had big environmental consequences for China. Cai Fang detailed the effect of dealing with it on Chinese labour markets.
Garnaut encouraged China to join the process actively as it needs to be part of defining a global deal that can work.
Well, I suppose we could employ people to dig ditches and fill them in again.
Seriously, is there not some confusion here? Full employment can indeed be achieved by mandated or tax-funded make work projects (be they security guards to save us from terrorists or people working on methods of making electricity at twice the current cost). However, there is a real cost in terms of declining living standards as an hour’s wage buys less and less of what people really want. Economic progress is measured not by employment figures but by rising real wages (falling not rising costs for goods and services).
It seems that there is still a heavy onus of proof on those who would impose these burdens upon us to prove the “human caused” adverse climate change thesis. If one looks at how well financial modelling has fared recently why would one quickly believe either climate change models or economic modelling projecting events and costs out 50 or 100 years?