Show host Gene Tunny delves into the concept of Degrowth: the idea of deliberately shrinking economies to avoid the runaway climate change, ecological collapse, and societal breakdown that degrowth proponents are worried about. Gene first discusses degrowth with Oliver Hartwich from the New Zealand Initiative, and then responds to questions about degrowth at a recent University of Queensland Politics, Philosophy, and Economics student event.
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About this episode’s guest: Dr Oliver Hartwich, NZ Initiative
Dr Oliver Hartwich is the Executive Director of The New Zealand Initiative. Before joining the Initiative, he was a Research Fellow at the Centre for Independent Studies in Sydney, the Chief Economist at Policy Exchange in London, and an advisor in the UK House of Lords. Oliver holds a Master’s degree in Economics and Business administration and a PhD in Law from Bochum University in Germany.
What’s covered in EP208
- [00:04:39] Degrowth to stop climate change?
- [00:08:00] Economic growth and adaptation to climate change?
- [00:11:53] How a threatened lungfish colony stopped a new dam in South East Queensland.
- [00:15:47] Are we rich enough already?
- [00:20:20] Democratization of wealth and prosperity.
- [00:24:05] Economic growth as a positive.
- [00:30:39] Carbon pricing.
- [00:34:10] Decreasing Antarctic sea ice extent.
Links relevant to the conversation
Gene’s September 2023 Centre for Independent Studies (CIS) paper on Degrowth:
https://www.cis.org.au/publication/debunking-degrowth/
NZ Initiative podcast from which part 1 of this episode was borrowed:
https://www.nzinitiative.org.nz/reports-and-media/podcasts/podcast-debunking-degrowth/
Transcript: Growth or Degrowth? w/ Oliver Hartwich, NZ Initiative – EP208
N.B. This is a lightly edited version of a transcript originally created using the AI application otter.ai. It may not be 100 percent accurate, but should be pretty close. If you’d like to quote from it, please check the quoted segment in the recording.
Oliver Hartwich 00:03
William Stanley Jevons in the 1860s actually predicted the word would run out of coal. This is general tendency to do linear thinking where everything is always continuing on a certain path. I mean, there was a letter right I believe, in the London Times in the early 20th century, predicting that London at some stage would be under six feet of bossman year from all the offices in the city. It is this tendency to always think we’re just continuing on the same path and it will never change.
Gene Tunny 00:41
Welcome to the Economics Explored podcast, a frank and fearless exploration of important economic issues. I’m your host, Gene Tunny. I’m a professional economist and former Australian Treasury official. The aim of this show is to help you better understand the big economic issues affecting all our lives. We do this by considering the theory evidence and by hearing a wide range of views. I’m delighted that you can join me for this episode. Please check out the show notes for relevant information now on to the show. To grow or not to grow, or indeed to D grow. That is the question. Do we need to rapidly shrink our economies to avoid runaway climate change, ecological collapse and societal breakdown? This episode features on my recent conversations on degrowth I speak with Oliver Hartwich from the New Zealand initiative. And thanks to Oliver for letting me reuse the recording from the New Zealand initiative podcasts that are recorded with him. This episode also includes a response that I gave to a question from Joe Christiansen at a recent event hosted by the University of Queensland politics, philosophy and economics society. Okay, let’s get into the episode. I hope you enjoy it. After you Listen, please reach out and let me know your own views on whether we should pursue D growth or not.
Oliver Hartwich 02:07
Hello, and welcome to the New Zealand initiatives podcast. My name is Oliver Hartwich, and today we are joined by our special guests from Australia we have gene Tunny, who is an adjunct Fellow at the Centre for independent studies, and also a director of ADAPT economics consultancy in Brisbane. Welcome to the podcast Gene.
Gene Tunny 02:24
Hello, Oliver, pleasure to be here.
Oliver Hartwich 02:26
Great to have you with us because we want to talk about a paper you just published last week with a centre for independent studies called debunking degrowth. Now, I thought we should start this conversation by just admitting freely that we are both economists. So degrowth is something that doesn’t come naturally to us usually, because normal economic theory, correct me if I’m wrong is all about trying to find better ways of combining factors to do more with less or to do more with the same, to find different combinations to create growth, to really find out what works and make an economy grow. And now suddenly, we’ve got a bunch of scholars turning this on its head telling us to actually try to not create so much wealth and not create so much prosperity, but really put the reverse gear in and go in the other direction. Is that a fair summary of what this movement is about?
Gene Tunny 03:16
Yes. I mean, they certainly want us to go in the other direction. I mean, the two steel man, their argument, I think, how I describe it is that they think we’re breaching these planetary constraints. So they think that we’re at a level of consumption, whereby we are essentially, you know, we’re sacrificing the well being of our children or grandchildren. So they’re concerned that we’re, we’re going to destroy the planet, some of this degrowth literature is it’s apocalyptic. It’s, I mean, I think it’s catastrophizing. But you know, they, they’re worried about climate change. They’re worried about ecological breakdown. They’re worried about resources being exhausted. So yeah, look, I largely agree with you, but to to steal man their argument, they think there’s evidence to support the view that we’re consuming too much if we want to have you know, sustainable living standards for future generations.
Oliver Hartwich 04:18
Right. And in your paper, you then produce a reproduce their claims, and you’re debunking them one after the other. And you’ve got five claims in your paper. So I thought what we might do so much is go through the list, and try to figure out what this movement wants and your response towards so the first unproven claim you talk about in your paper is one that you already alluded to. We need to de grow to stop climate change. Why do they say that and why do you think this is wrong?
Gene Tunny 04:46
Oh, well, essentially they’re they think that we’re on these tipping points. I mean, you’d know that it appears that the planet is warming I mean, there’s scientific support for for co2 We were warming the atmosphere to an extent. So that’s difficult to contest. But they claim that they believe these real these tipping points sort of scenarios. Whereby, I mean, the permafrost melts. There’s all this methane release, you know, we have the, what is it one of those ocean currents that shuts down? And I mean, all sorts of apocalyptic scenarios. And I mean, just looking at it. I mean, I think that the evidence for that is, I mean, a lot of it comes out of computer modelling, there are all these computer simulations, whereby if you look at what they’re doing a lot of the conclusions, the apocalyptic conclusions are essentially assumed or built into the model. So I mean, my feeling is that the evidence isn’t, isn’t strong enough to justify that apocalyptic thinking. Sure, there’s some warming going on. But there are policy measures been introduced to try to address that, or, I mean, none of the credible modelling on climate change mitigation has degrowth. in it. I mean, we can still grow, we’ll still be wealthier in per capita terms. Maybe the growth rates less or more if we respond to climate change. I mean, now we’ve got people saying that if we don’t address climate change, we’ll have lower growth. So look, I think they’re making big claims about how we’re going to, you know, have this unsustainable runaway global warming if we don’t do something radical and massively cut back our consumption. So that’s essentially their argument. And I just don’t think the evidence supports that.
Oliver Hartwich 06:43
But of course beyond that, because we’ve already decoupled economic growth to a degree from emissions. Yeah. So just because you’re growing doesn’t mean you’re necessarily growing your emissions.
Gene Tunny 06:53
Yeah, yeah, exactly. And I think they’re ignoring a lot of the technological change. They’re, they’re ignoring our capacity for innovation. Yeah, that’s absolutely correct. So I guess not to not to necessarily defend them, but they do address that decoupling argument. And they do acknowledge that that, you know, the emissions intensity of GDP is declining. But in their view, I mean, we’re still increasing co2 emissions, or sorry, we’re still, you know, the co2 in the atmosphere is still growing. So they’re a bit sceptical of that whole decoupling argument.
Oliver Hartwich 07:31
There’s another aspect to the whole climate change debate. And that’s adaptation, of course. So I mean, if we’re comparing countries like the Netherlands and Bangladesh, Bangladesh is subject to flooding, but so is the Netherlands because they are mainly under normal sea levels. And yet, the Dutch build dikes and all sorts of infrastructure to deal with that, because they could afford it. And then Bangladesh, and they’re still waiting for that to happen. So actually, isn’t actually economic growth, the thing that saved the Netherlands from flooding
Gene Tunny 07:58
out? Yeah, look, that’s, that’s a good point. I mean, you wouldn’t want to de grow and stop emerging economies from getting wealthier, because that will decrease their capacity to actually adapt to deal with it. I absolutely agree with you there. And look, that’s one of the things that the degrowth movement misses in my view. I mean, there’s all of this, you know, it’s a lot of the standard sort of criticism of, of capitalism and, and economists that you get from people on the left, and yeah, I mean, it ignores the fact that I mean, since countries such as China and India embrace the market, right, China in the 80s, and things are paying and then we had the, the end of the licence, Raj and in India, I mean, they’ve they’ve had, you know, much better growth than previously and we’ve had over a billion people lifted out of poverty. So yeah, absolutely agree with you there, Oliver.
Oliver Hartwich 08:52
Okay, then let’s move on to your second unproven claim, we need to de grow to stop resource depletion, environmental degradation and biodiversity loss. That leads us straight into the debate around Julian Simon, or if we want to go back a little bit further. Thomas Malthus. Yeah, absolutely.
Gene Tunny 09:08
And I think history shows that I mean, we are able to address these issues. And a lot of the concerns came best addressed through the market through clear delineation of property rights. A lot of the problems we have in Brazil, for example, that there was a recent economist article I’ve mentioned in the, in the paper, which is essentially saying a lot of the problem with the rainforest, destruction of the rainforest is lawlessness, it’s bad enforcement. Right. And look, you know, there are efforts all around the world to, to conserve to the off the common Exactly, exactly. So it’s really just, yeah, they just seem to ignore that. You know, what economists know about the people who own a resource are going to, you know, protect it and conservator. So yeah, absolutely. And look, I mean, look, you have to acknowledge that there has been a loss of biodiversity over over decades. And I mean, I think we’re starting to address that we’re starting to arrest that decline. And certainly the so I’ve got a there’s some evidence there about the decline in biomass globally or number of animals. And, you know, that’s, that’s been arrested that decline, which, which is good. So look, I think, you know, it’s a lot of just negativity, and isn’t capitalism awful. Whereas, really, I mean, we can address these issues, they’re within our ability to control and look, just look what we’re doing in Australia. I mean, we’re a wealthy country. So we, and this goes to your point before all over that the wealthier countries are going to be better able to address these issues. I mean, we’ve got things like biodiversity offsets. Anytime you want to do a development that impacts the environment, you have to prove about how you manage those impacts. And we’ve even stopped, we stopped the dam in southeast Queensland, even though we need the water. Right, it’s good. We’ve got a hugely growing population. And we stopped a dam because we were concerned about a lungfish. So yeah, I mean, we are trying to address these issues. And I think, yeah, that that argument really doesn’t, doesn’t hold up. And the other point too, as you know, as an adopt a dam over length, yep. Travis didn’t dam. That sounds like an episode straight out of utopia. Well, it happened. It was Peter Garrett, who was environment minister here. So um, yeah, it was a huge issue, because we had a water crisis in the 2000s here in southeast Queensland. And so we built a desalination plant, which is hugely expensive. We built a recycled water plant. And then we were looking at a dam north of Brisbane in the Murray Valley, the travesty and dam and it got right to the point where the federal government had got to the federal approvals process and it was blocked by the environment minister, Peter Garrett, former lead singer of Midnight Oil. Yes, I have this man. He was the environment minister. It’s a burning blocked it because the lungfish was threatened. So yeah, apparently there was no way of, of looking after the lungfish if you built the dam. So yeah, that’s that’s just an example of how we do care about the environment in this country. It’s not as if we’re sacrificing the environment for growth.
Oliver Hartwich 12:31
The other idea of course, in all of us resource depletion seems to be one of these ideas that you simply cannot ever refute, keeps coming back. Going back to Morpheus, of course, that’s the starting point. But William Stanley Jevons in the 1860s actually predicted the world would run out of coal. It’s this general tendency to linear thinking where everything is always continuing on a certain path. I mean, there was a letter right, I believe, in the London Times in the early 20th century, predicting that London at some stage would be under six feet of horse manure from all the horses in the city, it is this tendency to always think we’re just continuing on the same path, and it will never change.
Gene Tunny 13:11
Yeah, exactly. So and the thing with the scarcity of resources, I mean, we know that as they do become scarcer, the price is going to increase. And that’s going to encourage conservation, or it’s going to encourage people to switch to two alternatives. So and you mentioned, you alluded to the Julian Simon Paul Ehrlich bet, which ended up losing because he thought we were in the 70s, they thought we were on a path to, you know, massive resource scarcity. And that
Oliver Hartwich 13:41
perhaps, just for the benefit of listeners who may not be aware of that, so can you tell us briefly what this bench was about?
Gene Tunny 13:49
It was about prices of commodities, they selected, maybe a couple of dozen commodities, major commodities. And Ehrlich was betting that that increase in price over the the 80s by a certain percentage, amount across extreme people would run. Exactly because there was all of that modelling in the world. Ehrlich was infamous for that population bomb book in the late 60s, which forecast that you know, would, you know, even with, like, what was it 888 billion people which where we are now we’d end up with, you know, massive famines and the chaos and all of this. And
Oliver Hartwich 14:27
then we’ve got the Club of Rome, of growth and all of our
Gene Tunny 14:30
forests and meadows, and there was all of this apocalyptic thinking, you know, Doomsday was at hand. So I think what I found interesting looking at this old degrowth literature, is a lot of the a lot of the concerns or a lot of their arguments could could be questioned or rebutted, if you go back to just what sensible people like Robert Solow and then the Treasury here in Australia, what they were saying in response to the club Right, right. Yeah. So
Oliver Hartwich 15:03
we make made a very similar point in one of our publications. A few years ago, we had a little booklet published under the title The Case for economic growth. And we were talking about environmental Kuznets curve, where, first of all, when the economy grows, yet there is an impact on the environment, and it might be negative. But once you get past a certain point, people will demand action and clean it all up. Yeah. And actually, it gets better over time.
Gene Tunny 15:26
Yeah. And that’s one of the points that I made in the paper. Yeah, absolutely.
Oliver Hartwich 15:31
Your third point, your third unproven claim is perhaps even more interesting. We are rich enough already? Well, it would be harder to make that claim in New Zealand, because we’re 25% behind Australia. What’s the thinking behind that?
Gene Tunny 15:47
Oh, well, they make the argument that if you look at happiness, Carl, you know, correlations of happiness and GDP per capita beyond a certain level, it starts to flatten out. And so the argument is that countries such as Australia, and I mean, maybe New Zealand doesn’t qualify yet, but we’re wealthy enough already got a way to go. It’s all about you know, it’s it’s an issue of inequality. So there’s this sort of argument that I look, the West is rich enough already. It’s if you concern about the rest of the world, and it’s, you should redistribute that income. And you know, the people in the West were the ones who, of course, we’ve caused all the problems with climate change, et cetera, it’s all our fault, imperialism, and all of that. And so that we should redistribute our income and wealth, the problem is, that’s only going to go so far. Right? It’s not going to solve the problem. And it’s not good for, you know, incentives. Right. It’s not good for it’s not sustainable. So it’s just a really bad argument, I think. And, and it also, I mean, when you look at it, this, this is going to require authoritarian measures to introduce because at the moment here in Australia, we’re going to cost a living crisis, right? So you’re not going to be able to tell people, and we’ve got no shortage of housing, you’re not gonna be able to tell people, you’re rich enough already. Because a lot of people who don’t know when I’m What are you talking about this nonsense? You’d have to engage in really authoritarian measures to bring about D growth. So yeah, I think it’s a really bad argument of the D growth people.
Oliver Hartwich 17:20
Exactly. Right. I think there is another point actually, that we should consider. Sometimes it’s not so much the absolute wealth that you hold. It’s the direction of travel. So I’ve actually seen some really happy people and countries that are not that rich yet, but they’re travelling in the right direction, whereas you can be in a richer country that’s kind of stagnating, declining, and feel really miserable about it. So actually, people want to have hope they want to see that the future is better. And then it almost doesn’t matter from which starting point you come in just the direction of travel that actually determines how happy you are.
Gene Tunny 17:51
Yeah, that’s a good point. I mean, the the example of a country that was rich and started declining, everyone was miserable. It’s probably Britain in the 1970s. So yeah, I think that’s a that’s a good point. Yeah.
Oliver Hartwich 18:03
unproven claim number four, we need to de grow to reduce inequality. What about well,
Gene Tunny 18:11
yep, I mean, I guess this is this is related to that previous point. So and this is part of their whole critique of capitalism that capitalism makes the rich richer and the poor, poor? And look, I think that’s a really silly argument. And there’s not a lot of evidence for that. And, and if you look at just the huge gains we’ve had in living standards in emerging countries, emerging economies over the last 30 years, since we’ve opened up to the market, and it’s just extraordinary, over a billion people taken out of out of poverty, there are a few stats that I use, or that the World Bank’s produce, which shows that I think, around 1990, it might have been 70% of the world was living on $6 us a day or something like that. So not the diarist poverty of $2 a day, but And now that’s under 50%. Right. So if you look at the numbers living on $2 a day, then you have, you know, a big decline there, too. So we’ve got huge gains, so that in relative terms the world is becoming more equal, but we are seeing in some countries that, you know, there is an increase in inequality, particularly in the United States. But I think you don’t want to then conclude that our the market systems terrible isn’t, because a look I mean, that’s associated with new technology. I mean, we’ve gone through a period of, of huge technological disruption and I mean, America, America is the leader in that and so therefore, the people who are responsible for that are doing doing very well. And look, you probably you’re better off having a more productive a wealthier economy. And you know, having In the pie bigger and then sure you can then have a debate about the, the shares of that pie. But you want to have the biggest pie possible, I’d say,
Oliver Hartwich 20:09
because in the end, what capitalism and what economic growth? Does it actually share us? The wealth with more people, it’s the democratisation of luxury, if you like. Yeah, I remember actually speaking as an event, and quite a few years ago, under the headline, people with flat screen TVs should stop whinging about capitalism. One of the arguments I made was actually, if you teleport at someone who was really, really rich a few 100 years ago, so you take the Sun King Louis Catorze, and you kind of get do rica tours and visit 21st century Australia or New Zealand? What would Luca tours be really impressed about? Well, that you could switch on the light with a switch, or that you could read your newspaper from a foreign country on your phone, or that you could just call someone in a distant city. But I think what he would really be surprised about was that this was available not just to his modern day equivalent, but to everybody. And so we have actually completely democratised wealth and prosperity to a degree that we had never seen it before in the history of humankind. No, absolutely.
Gene Tunny 21:13
I mean, indoor plumbing is one of the great innovations and better sanitation. I mean, the world today is clearly much better, even even if you’re a king and seventh eighth 13th centuries, and yes, you’d much rather live today I’d say yeah.
Oliver Hartwich 21:30
Yeah. Even if you’re not a king. Which then leads us to the combination of all these unproven claims. Number five, we need to de grow to avoid economic and social collapse. So listening to you, it seems obvious, it is the opposite. If we want to avoid social and economic collapse, we need to grow.
Gene Tunny 21:50
Yeah, well, this is part of that whole, apocalyptic or catastrophic line of thinking. And you know, that there was that study a few years ago by she was a consultant. And she wrote this, I should have I’ve got the I’ve got the reference in the in the report, but she reproduced the the meadows analysis, or the the Limits to Growth analysis from the 1970s. And she’s saying, Oh, if you look at the data, we’re on track for societal economic and societal collapse, which is what the limits to growth model was predicted. So she had an update to limits of growth. Harrington is a surname. But I mean, it just, it’s part of this, you know, catastrophizing, when you look at these models, and this is a point that solo made back in the 70s, when he just tore apart the, the whole Limits to Growth analysis in his great challenge article he wrote is the is the end of the world at hand that are referenced in the paper. And I mean, they just build in the fact that we’re going to hit some point of no return, and then everything’s just going to collapse. So there’s a in their simulations, they have eventually population industrial output, reach some peak and then just collapse. But it’s just built into the model that programme that into it. And you can’t say that because we’re or maybe some variables are tracking with what the model forecast, you can’t then conclude, oh, here, well, then we’re gonna hit this peak, and then we’re going to suddenly collapse because there’s no evidence that that’s going to happen. And any person who does forecasting knows that these tipping points, these turning points are the most difficult things to actually forecast. So yeah, it’s just, again, it’s just catastrophizing.
Oliver Hartwich 23:42
Absolutely. So, in conclusion, you have saved conventional economics, you have actually demonstrated that what economists have been telling us all along is basically Correct. Actually, economic growth is a positive. And by finding better ways of combining economic factors of production, we are improving prosperity, we are making societies return that’s a good thing.
Gene Tunny 24:05
Look, yeah, I largely agree with that, Oliver. And what I would say is that, just as we degrowth, like targeting negative growth would be silly, or not, when I’m not necessarily advocating that we target a specific rate of economic growth, because ultimately, that’s going to be the product of, of the market of people making. Yeah, and I don’t want to be, I’m not saying that look, unfettered capitalism is what we want. I mean, we need some regulations, we, you know, there are some market failures we may need to address but what I’m saying is that, you know, this whole degrowth thing is rather silly and, and there’s no evidence to suggest that we can’t continue to grow and really, I mean, growth is a solution to a lot of problems. So particularly if you’ve got a shortage of housing, you know, if we want to lift living standards in emerging economies, where they’re still much lower than, than here in Australia and New Zealand,
Oliver Hartwich 24:58
and of course for the last few years we’ve had a movement, trying to make the case that actually it’s not about growth. It’s not about conventional economic measures, it should be something bit fuzzier, something like a well being budget. That’s what we pay on it here in New Zealand. And I think your minister of finance or whatever he’s called an Australian federal, Jim Sharma has has bought completely into that narrative. And, you know, also on to wellbeing budgets, but that’s not really compatible with and with a growth mind or growth. Focus.
Gene Tunny 25:27
Yeah, I mean, that’s, that’s a separate thing. I mean, I don’t necessarily have a problem with looking at a broader range of indicators than than GDP per capita, but you just don’t, I mean, look at a lot of that. The well being or to
Oliver Hartwich 25:42
me, it always sounded as if they were trying to find an excuse for not having to deliver GDP per capita increases. And so they’re looking for something fire and quality well being. Yeah,
Gene Tunny 25:51
quite possibly. And, yeah, I mean, it’s another thing that the treasurer couldn’t launch and, you know, makes them look like they care about different concerns of the community. So look, yeah, I think it’s a bit, you know, a bit of a waste of time, the whole well being budget, because, yeah, a bit of a distraction. But yeah, take your point. Maybe that is what they’re trying to do that it’s a, it’s a cover for not actually achieving a decent rate of economic growth.
Oliver Hartwich 26:19
Well, that could be a topic for your next paper. And if you’re looking for materials, you’ll find them all in New Zealand. Very good. Okay. Sounds good. But, but for now, can I just thank you for sharing your thoughts with us on the podcast. And just for all our listeners, genes paper is called debunking degrowth, you can find it on the Centre for Independent Studies website in Australia sets ci s.org.au. But for now, thank you, gene for being our guest. And good luck for your future papers, we look forward to seeing them.
Gene Tunny 26:50
Okay, we’ll take a short break here for a word from our sponsor.
Female speaker 26:55
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Gene Tunny 27:24
Now back to the show.
Joe 27:29
You mentioned the environment there and sort of political movements and value judgments obviously very, very important. For everyone alive, yeah. But especially with the sort of younger generation. And one idea that is sort of gained popularity in recent years has been this idea of D growth as a way to sort of solve the ongoing climate crisis. And you wrote an article, I think recently, the Centre for independent studies about about D growth. And you said that any attempt will like to sort of implement this idea that we need to have negative growth will greatly reduce the living standards and cause significant unemployment. We have a question here that says, if it is as severe as predictions suggest, then is not some form of dramatic economic structural change necessary to prevent continued pollution, mass production, carbon emissions, environmental degradation. So yeah, it seems that either this change will be voluntary, in that we will decide to do it, whether that be D growth or some other sort of economic restructuring, or it will be forced by the nature of the crisis in that our economic system will collapse?
Gene Tunny 28:46
Well, I hope that’s not the case. You talk about prediction. So well, this is where it’s difficult. Like this is a very difficult area to actually talk about, because there’s so much complexity going on there. And in terms of predictions, there are projects, some predictions that have catastrophe of permafrost melting all this methane being released to the atmosphere, this Supercharged global warming, ocean currents shutting down in Arctic melting. And I mean, horrible scenarios. Now, that’s not generally what we think is going to happen. I mean, that suppose look, there’s anything really could happen, right? I mean, I’m not a climate modeller or an expert on climate change. But if you look at what the IPCC has been, what it’s been modelling or projecting what our own governments have been doing, they do show that there is a path to get into net zero by 2050. There will be warming of one and a half to two degrees, probably two degrees Celsius on average. There seems to be an acceptance that by many that, okay, that that’s something we can adapt to it’s there will be a First consequences of that, but it’s not going to be catastrophic or lead to that Armageddon scenario. Now look, the question, if that is the case, if it is the case that we are in that situation where the worst predictions do come to come, you know that they do occur, then we will have to do something radical, it won’t be a matter of trying to get that change gradually over time. And the idea of having a carbon price is to send that signal to the market to, in an efficient way, reduce your emissions, invest in new technology to get to net zero. So that’s what the policy’s been now, governments are finding it very difficult to do that. Okay. So we’ve got an implicit carbon price in Australia, we’ve got these Australian carbon credit units, we’re going to market for that. We’ve got a safeguard mechanism, which is going to be requiring big emitters to reduce emissions. And so we’ve got an implicit carbon price. But you could, you know, there’s arguments about what that should be, are we are we doing it fast enough, there’s the how many we’re gonna have to keep coal going coal fired power stations going for a lot longer than we expect. We wanted to because we’re worried about the reliability of the energy grid. Unless we can get the hydropower stations on on schedule. And then that’s pretty difficult to see what’s happening with snowy 2.0. They’ve had one of the tunnel boring machines stuck. So it’s, it’s a big challenge. Now, I don’t know if you saw what Rishi Sunak has done in the UK, they’re delaying their transition to net zero. So Boris Johnson had committed to stopping the sales of petrol powered vehicles by 2030. Rishi Sunak, push that back to 2035. And there are a few other things to do with I think, gas in the home. So I think the push push that back when I have to stop having guests in the home, because these policies are they’re challenging to implement, or politically, they’re difficult. And as we we really need American leadership, we need China, America and China, the EU and Japan. They’re the major economies we need them to come up with a binding global agreement. And we go along with that. Yeah, it’s, it’s a big challenge. So we’ll get my opinion there. And I’m, I’ve got to admit, I’m not an expert on the climate. So for what for what it’s worth, my opinion is those predictions. There’s apocalyptic predictions, I like to think of them as catastrophizing. We’ve had predictions of doomsday for as long as I’ve been alive. And before then Malthus were Club of Rome. I mean, this is the latest. And in that sort of line of thinking, I’d like to think that there though, those horror stories, I mean, look, if that if we if it does come to be that that is the situation, we will have to change very rapidly. And that will require very strong measures. And it may be that yeah, there is a big hit to GDP. But at the moment I my sort of judgement, the judgement of I think practically all the people in governments around the world is that that’s not the situation we’re in. Could they be wrong? It’s very possible that I sit? I hope not. But look, I admit there, there are certainly concerning signs out there. I mean, and, you know, I’m a lot older than than you are. So you’d have to live with it more than I will. So maybe that’s something to that. I know that I understand why young people are concerned about it, for sure.
Joe 33:24
Yeah. Yeah. Awesome. Thank you. For that perspective, we have John Quiggin. Yes, he teaches still, he teaches one of the PPE courses, and that’s sort of his, like the the environmental economics perspective on climate change is very much up his alley way. So it’s, it’s good to hear your perspective as well. But not
Gene Tunny 33:45
having John here. So we can get you on the question, but I’m not. I don’t imagine John Wooden is there’ll be arguing for degrowth would eventually be arguing for a high carbon price to bring about that transition as rapidly as possible. And to try and encourage innovation. And the great thing about him is that we’re proven is that we are great innovators when there’s a challenge. So be maybe there’ll be people we did have to have that that radical policy shift because the Antarctic starts, you know, I mean, we know that the sea ice is the extent of that is not as great as it has been. It looks. You look at that chart. Okay, that’s a bit of a worry if that continues. And if we do have all of these record heat waves, I mean, we’re currently in El Nino at the moment here. So that’s driving as the lot of the heat. Yeah. If things get really bad, then yeah, sure. We may have to act rapidly. There may be a hit in the short term, but I expect we’ll solve it somehow. Humans are great innovators, loose. That’s the hope maybe that’s naive optimism.
Joe 34:48
No, definitely. Definitely something to cling on to at least with hope. Yeah. Awesome.
Gene Tunny 34:56
Righto, thanks for listening to this episode of Economics Explored If you have any questions, comments or suggestions, please get in touch. I’d love to hear from you. You can send me an email via contact@economicsexplored.com Or a voicemail via SpeakPipe. You can find the link in the show notes. If you’ve enjoyed the show, I’d be grateful if you could tell anyone you think would be interested about it. Word of mouth is one of the main ways that people learn about the show. Finally, if your podcasting outlets you then please write a review and leave a rating. Thanks for listening. I hope you can join me again next week.
35:43
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Credits
Thanks to Obsidian Productions for mixing the episode and to the show’s sponsor, Gene’s consultancy business www.adepteconomics.com.au. Full transcripts are available a few days after the episode is first published at www.economicsexplored.com. Economics Explored is available via Apple Podcasts, Google Podcast, and other podcasting platforms.
