karl-henrik pettersson


Filosofiska tankar om företagande och ekonomi

Vilket samhälle vill vi ha? Hur mycket marknad? Hur mycket politik? Varför dessa ekonomiska orättvisor?

U.S. political crisis (3): To effectively tackle global warming and other environmental threats is not the U.S libertarians’ “cup of tea”

A few weeks ago, on April 1st, my book, Dagbok från USA, came out in Sweden. It will also, sometime coming summer, be published in English (as an e-book for Kindle and for other readers with the title: “Diary from the United States – Notes on a society in crisis). As an appetizer for English speaking readers, I will the coming week publish three essays, excerpts from the book (chapter 4). The first essay you can read here, the second here.

This is the third, and last, essay. A political challenge the U.S. shares with all other countries, and it’s unavoidable in all discussions about the future,  is to address climate and environmental threats. It’s just that this particular challenge seems to also become a challenge to the ideologies that govern the Western world, ranging from libertarianism to social democracy. It will no doubt require rethinking in depth of current political ideas and political practice. It’s likely that the libertarians, and they dominate U.S. politics today, will have the biggest step to take if we want to effectively tackle global warming and other environmental threats. If that is true, and I think it’s, it concerns the U.S. fundamentally. I write about it in this essay.


Essay 3: About the need for the United States (and the world at large) to address the environmental threat

The fact that George W. Bush chose not to sign the Kyoto protocol was an important event. It confirmed what many non-American sensed, that the U.S. has decided to go their own way and disconnect itself from multilateral cooperation efforts. The Kyoto Protocol had its shortcomings, no doubt. Nonetheless, the fact that the world’s largest economy and foremost political power decided to stand on the sidelines of a joint effort by many countries to an agreement codifying their willingness to tackle climate change, was a big disappointment for many.

Since the Kyoto Protocol was about global environmental and climate change, it was surprising that the U.S. did not want to join in. It must have been as obvious to the Bush administration as it’s for everyone else that environmental and climate issues need to be resolved jointly by the countries of the world. Yet they chose to accept the political costs of stepping aside. It says something about “American exceptionalism”. It’s worth noting that Condoleezza Rice, according to an article in the New York Times in connection with her recently published memoir, considers the decision to abstain from signing the protocol, as a mistake, “a self-inflicted wound”.

In this essay, I will discuss environmental and climate change as a global political challenge, but do so with special emphasis on what is required of U.S. politicians. My hypothesis is that environmental and climate change is a political challenge of special distinction compared to what we have become accustomed to during the centuries of industrialism. It transcends that. The world will apparently not be able to cope with environmental and climate issues without “big government”, more joint investments, and more political involvement than we have today in the OECD countries, perhaps more than we ever had during the last century. This vision must look provocative to today’s American politicians. It runs counter to individual freedom and libertarianism that holds so much sway in contemporary American politics. Yet climate change is a threat that no responsible politician can ignore.

Let me start with the big picture

One could argue that Western man in modern times, say from the 1600s until the 1900s, on the whole has acted rationally, and has refrained from a too short-sighted behavior. This took place with the support of constitutional liberalism, capitalism and democracy, the three basic elements of Western civilization.

Constitutional liberalism came first in the late 1600s and was in many ways the most crucial element. As citizens, we gradually became free from monarchs and various institutions of unquestioned authority, and we acquired rights to control our lives and property: freedom of speech, freedom of religion, property rights, and so on. From the mid-1700s on, economic liberalism developed. It intellectually killed mercantilism and saw to it that government regulation and intervention in the markets were removed. Other obstacles to an efficient economy, such as guilds, were abolished. Furthermore, we as citizens acquired democratic rights, the right to vote, even if it took a long time as in the case of women’s suffrage. In the mid 1800s we had in the front-line countries, mainly Britain and Germany, an emerging democracy and a dynamic capitalism with large production capacity. But also many abuses and social problems, like child labor and extreme poverty. Those social problems led to political counter-movements, primarily socialism and communism. The Communist Manifesto was published in 1848. Conservatism, which was conceptually developed by Edmund Burke in the late 1700s as a reaction to the French Revolution, was also a kind of counterpoint. As ideologies evolved, we in the Western world achieved slowly but surely, at least in practical politics, a kind of consensus between liberalism and socialism (even though we speak of social democracy, the reformist variant of socialism). One of the reasons was that the economic and political model that has emerged during this process provided people in general with a materially better life, and eventually access to welfare resources such as health care, education, and social security.

So in summary, if we talk about the West’s development during the Industrial Revolution up until today, we have managed to find a workable balance between the short-term and long-term. The success of the Western model of society has in fact been so great that the political scientist and philosopher Francis Fukuyama some twenty years ago wrote the book The End of History. He said that now that the Cold War has ended with the fall of the Berlin Wall and the Soviet Union in shambles, it was time to ask whether constitutional liberalism, combined with democracy and modern capitalism, is the ultimate model of society. Not that it couldn’t be further developed politically and economically, but it would be difficult, Fukuyama said, to find any real alternative to constitutional liberalism, democracy, and capitalism. The question is whether Fukuyama is right. I would say that he is only partly right.

“Land is considered the inexhaustible gift of nature”

It’s thought-provoking that political ideologies, and that goes for everything from libertarianism to socialism, are based on a more or less implicit condition – that there are no limits to the possible and thus no limits to our prosperity. The resources we need to extract from nature are limitless. As it was declared in an old textbook, “Land is considered the original and inexhaustible gift of nature.” Classical economics does not see this as a problem: to the extent that we are using up more of limited resources, the market will ensure that the problem is addressed. Prices will go up, it will be more profitable to open new mines or whatever is required, and build new refining facilities. More goods go on the market, prices fall, and supply and demand eventually balance. But only for a short time. When the next disturbance occurs, the same process repeats itself. And so it continues.

If it’s finite resources we are talking about, such as certain metals or oil, there will sooner or later come a time when it’s economically and physically impossible to increase their extraction. We have probably reached the limit for some resources today. “Peak oil” has already occurred, or is about to occur, according to qualified observers. Besides, it’s far from the most severe part of the problem of limited resources. It’s rather that during the centuries of industrial development we have used nature as a garbage can, as a place where we, without thinking and at virtually no cost, can emit various wastes and substances that we do not need. The air, the land, and the seas have become developed Western society’s dumping ground. We have been doing it for so long and so widely that a majority of the scientific community with expertise in this area today have recognized, most clearly expressed in IPPCs reports, that the planet is getting overburdened, and that there’s an urgent need to address the problem. The global temperature increase is very likely a result of society’s emissions of greenhouse gases. Sea levels will continue to rise as the temperature in the Arctic increases.

At this point I think we no longer have the conventions and institutions and ideologies that are powerful enough to ensure that we humans do not act selfishly. Perhaps the evolutionary biologist Richard Dawkins was right when he concluded that sustainability is not something that humans have, as he puts it, “a natural talent for”. It’s another way of saying that humans are acting shortsightedly when it comes to the planet. To be sure, we are improving. We understand that natural resources are finite and that we must not pollute the environment. Ecological awareness is high, especially in children and young adults. And businesses and politicians make lots of gestures to improve the environment and to avoid additional stresses on nature.

However, it’s done a little with the left hand, gently, with the tacit understanding that Western democracies have historically shown an incredible ability to cope with major challenges, that capitalism is extremely adaptable, and good at developing new, more efficient technology. So probably things will work out in this case, too.

Can we count on what carried us through in the past?

Can our political system take care of the threat to the planet? The policy measures needed to save the planet, defined as the measures proposed by the IPCC, are so extensive that the current political system may not be able to handle them. Let’s look at what is almost certainly required, and let us observe it from an American perspective.

(1) We need to create high awareness among people in general about environmental and climate change. It may seem like a task that is already done in the West, but it’s not. As the reader knows, I spent much of the autumn of 2009 in the United States, just before the climate summit in Copenhagen. In Europe, the Copenhagen meeting was all over the media. In the U.S., you had to search for information about it. Furthermore, any broad environmental debate like the one in Europe did not exist. A year later, in autumn 2010, I was in Australia and New Zealand. Both of these countries, particularly Australia, are doing financially very well on the export of finite natural resources. Australia also burdens nature heavily through emissions. Almost all of Australia’s energy production is based on black and brown coal. All in all, it set the tone of the Australian and New Zealand environmental debates. There are few politicians in these countries who strongly pursue environmental and climate issues, and if there are some (for example, former Australian Prime minister Kevin Rudd who wanted to tax the mining industry), the risk of political backlash for that politician is apparently high.

(2) Economic growth is a must. At least for an economist, it seems self-evident that the market needs to work at full speed, and the economy needs to grow if the ecological challenges are to be dealt with. This is not, for example, self-evident to Tim Jackson, author of the highly praised book, Prosperity without Growth. He calls economists “ecologically illiterate”. They do not understand, he argues, that growth, the constant quest for higher productivity, and creative destruction, is a threat to environmental efforts and something that must be eliminated. For me, this is, to respond in kind, “ecological bullshit”. Tim Jackson, and all others who think that in order to save the planet we must strive for prosperity without growth, is simply wrong. How could we have any chance in the world to meet the planet’s sustainability challenges without having our economic system, the market economy, working at full speed? Economic growth is a must. On this particular point, I have a hard time seeing any Western country being better positioned than the U.S. where politicians are focused on creating the best possible conditions for economic growth.

(3) There must be financial incentives for structural change that enhances the environment and climate. This process is ongoing. The market simply sees to it that the incentives change. People and companies increasingly demand products and services that are good for the environment and ecological balance. From the supply side, it’s scarcity that pushes up prices. The problem is that the market left to itself apparently does not do enough. There’s a need for even stronger incentives for increased economy of energy and finite raw materials, for reducing harmful emissions and other sources of environmental degradation, and for even more rapid structural change in the way we travel, build, warm up and cool down, produce food etc. The problem with the market is that it’s rather myopic. Through the price signal, the market is really good at meeting demands in the short term. But for needs that are farther away than 3-5 years, the market operates poorly, if at all. This is the problem for the issue we are discussing here because the time horizon for the environmental and climate issues is much longer than 3-5 years.

Only through a political process can incentives for long-term behavior be created and implemented. Subsidies to enterprises for sustainable energy, waste management, and technological development are concrete examples. And there could be incentives for households to save energy and otherwise to behave in an environmentally friendly manner: in other words, much of what already exists but on a much larger scale. On this point the challenge for the United States is bigger. By American standards, it means “big government”. To intervene in markets to change the incentives, is as far from today’s dominant economic policy paradigm in the Western world, the post-modern classical economics, as one can imagine, and especially for the American version of the paradigm, the small-government approach, the libertarian policies we’ve had in the U.S. since the 1980s. Moreover, it’s not the only challenge brought on by environmental and climate threats. There is one further point.

(4) Investment’s share of what we produce must increase. This is basically the same as saying that consumption must be reduced. It’s most obvious for those countries that already have high consumption and at the same time have borrowed heavily. The United States is such a country. As we know, over 70% of what’s produced (GDP) in the U.S. goes to private consumption. This is 10-15 percentage points more than what other OECD countries consume and it suggests that the transition for the United States would be more profound. There’s another disturbing factor. Left to itself, the market cannot cope with many of these environmental and climate-related investments. The amounts are too large, the time horizon too long, and the risk too high. These investments can be realized only through political initiatives and public financing. Since the U.S. already has a significant national debt, and everyone agrees that it must be reduced, it follows that these investments cannot be realized without major tax levy – again, an expression of “big government”.

Cutting back on consumption and increasing investment for the purpose of protecting exhaustible natural resources and reducing emissions, and doing it in a relatively short time, perhaps in a few decades, is a huge political challenge for all countries. Politicians will try to protect themselves, perhaps making light of the challenge, and that probably goes for all the big, traditional parties regardless of ideology. The above four-point program goes much further than what Western politicians are used to. Not least, it extends further than what American politicians have been accustomed to.


PS. It may require a fifth point for the politicians to take environmental and climate change seriously enough.

(5) Everyone needs to be shocked. In the summer of 2011, Nobel Laureate Paul Krugman participated in a TV debate on the U.S. economy (Charlie Rose, Bloomberg, June 3, 2011). He argued, as the Keynesian he is, that much more vigorous political actions were needed to revive the U.S. economy and bring down unemployment. And then he added something like: “Think about the idea that we unexpectedly find out that there’s a threat to the planet by an invasion from outer space, of aliens. We would immediately take action with a very ambitious program. One thing we can be sure of, the current unemployment rate of 9% would be gone, at least very much reduced, in no time.”

This is probably correct. There are even real examples, such as what occurred in many Western countries when the Second World War broke out. From that, one can speculate about what the world today would need to “get on its feet”, to seriously address the climate and environmental threat. What would provide a sufficient shock, parallel to the threat of an invasion of aliens or a world war, for the planet’s vulnerability to become clear to everyone? One can only guess. Maybe an event that temporarily made global agricultural yields fall dramatically, and made it clear that the next time would be worse. Or maybe something entirely different.

In any case, politicians all over the world would immediately initiate a wide range of “green” investments and other measures to save the planet. There would be coordinated action across borders, much like what happened when the global financial crisis was at its worst in the fall of 2008. The funding wouldn’t be an issue (or rather, it would be resolved by printing money or via high-growth, or more likely a combination of both). Besides, the market would immediately raise the price of scarce natural resources like food, oil, metals, and forest products, which in turn would have profound structural consequences with less use of these resources in absolute terms as one effect. People would save more and consume less. Presumably, the public interest, and what we collectively produce and consume, would have more space in people’s minds. That has been true historically – when human beings meet a grave threat to society, the collective and communal get more of their attention and thoughtfulness.


Fukuyama, F., 1992. The end of history and the last man, Hamish Hamilton, London;

Jackson, T., 2009, Prosperity without growth: economics for a finite planet, Earthscan, London;


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