Naomi Klein on the Politics and Economics of Climate Change: Hit and Miss

Klein got her start, at least outside her native Canada, as a cultural critic in the wonderful book No Logo.  Since then, with each project she has dipped further into economics, with a weird bifurcation: her political and cultural analysis has become even more insightful, but her understanding of economics has not kept pace.  This was a problem in The Shock Doctrine, and it is a problem in her missive on climate change on view in the current Nation.


She is right that climate denialism has its roots in politics and psychology, not science, and that trying to make a serious response to the impending crisis look like business as almost usual (or even better than usual with green jobs for all) is misguided.  No one really believes this.  Dealing with a threat on this level means large-scale collective action, and its global ramifications require redistribution.  I think Klein is exactly right that climate activists should accept the reality of the cultural divide and cook up effective strategies to deal with it.

But the economics is a mess.  She rails against globalization, but this is a false target.  The fundamental driver of carbon accumulation in the atmosphere is burning fossil fuels, and humanity has done this in ever greater quantities as the technology for extracting and converting these energy sources has developed.  We have been doing it when there was less trade, more trade, and in-between trade.  If we took the carbon-intensive industries in China that export to the US and moved them to North America, there would be hardly any difference in the planetary carbon trajectory.  The bit about how much fuel is used to move goods between countries is a red herring.  (I have been eating a lot of herring recently, but none of it is red.  What gives?)  Distances between countries are not necessarily greater than distances within them, and modes of transport matter more than kilometers.  The carbon footprint of goods on a container ship chugging from China to the US west coast is less than short haul by truck.  In any case, price carbon properly and the fuel/distance thing will sort itself out automatically.

Railing against economic growth is even more misguided.  (1) The investments we need to make in a post-carbon future are enormous.  A shrinking economy will not be able to afford them.  (2) We also need to make investments in adaptation, since a lot of climate change is already baked in—literally.  (3) There are billions of poor people around the world, and redistribution alone is not going to do the job, nor would there ever be a political base for such a level of collective sacrifice.  (4) Our quality of life can be improved by doing much of what we do better: better food, better health care, a better built environment, even better gizmos.  (5) Economic growth is measured in value, not stuff.  Teaching someone how to play a musical instrument or a new language adds economic value.  A well-crafted good that lasts a lifetime but costs more than a string of knock-offs that keep breaking down adds economic value.  (6) If enviros denounce economic growth while the actually existing economy is stuck at stall speed and unemployment is rampant, they are clueless and deserve to lose.

Finally, she misses the key economic shift that has to take place for fast and effective reduction in greenhouse gas emissions: there has to be a permit system for taking fossil fuels out of the ground.  Taxes are a start, but as I’ve argued in the past, they are weak tea compared to permits.  (1) The debate over what’s the “right” tax takes us to the quagmire of calculating the social cost of carbon; the “right” number of permits is a matter of setting a quantitative emissions target for stabilizing the climate.  (2) Tax increases will almost certainly overshoot: the level of tax necessary to get to a quantitative target will likely have to go beyond it.  But because this increases the political problem of getting the tax approved, it makes reaching the target less likely.  (3) Taxes can be gamed just as readily as any other kind of policy—perhaps more so because the link between the tax level (and all the loopholes and exemptions and credits) is obscure.

In any case, put a serious price on carbon by auctioning off permits, and the other policies, which are absolutely necessary, will follow.  It is difficult to convince taxpayers to finance mass transit because driving is cheap.  If driving becomes expensive, trains will look sexy.  The same goes for the other investments we need to make in energy efficiency, urban redesign, infrastructure, R&D, etc.  What’s so annoying about the Breakthrough Institute is that they have it exactly backwards: it’s not that there’s a groundswell for spending on economic redesign, but that we need a serious price on carbon to generate support for that spending.

Finally, I don’t see how mobilization to combat climate change will require more “planning”, at least in the economic sense.  The uncertainties, qualitative factors and tacit knowledges that killed old-style planning are not going to disappear because we are struggling to decarbonize; if anything, in this transitional world they will be even greater.  We will need more coordination, but that is a different matter.  This calls for more participative institutions and less centralized, unaccountable power.  That sounds “left” to me, but it has almost nothing to do with the vision of a planned economy.  Yes, a public agency building a passenger rail system needs to plan, but so does a private corporation doing the same thing.

As I reread what I’ve written I fear I’ve come off as a curmudgeon, defending the sacred turf of economics against unlettered interlopers like Klein.  That’s not it at all.  I welcome everyone, whatever their background, to these issues, and I appreciate the new ideas I’ve picked up from people with vantage points different from mine.  But Klein has remained stuck on a popular distortion of economics and uses her well-deserved influence to reinforce them.  If political activists follow her down this road they will not just be wrong in some academic sense—they will waste the opportunities history is now handing them.