[Vision2020] The Market and Mother Nature

[Art Deco]

 [image: The New York Times] <http://www.nytimes.com/>

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January 8, 2013
The Market and Mother Nature By THOMAS L.
FRIEDMAN<http://topics.nytimes.com/top/opinion/editorialsandoped/oped/columnists/thomaslfriedman/index.html>

Whenever I hear the word “cliff,” I am reminded of something that President
Obama’s science adviser, John Holdren, used to say about how we need to
respond to climate change because no one can predict when it might take a
disruptive, nonlinear turn. “We are driving toward a cliff in a fog,” said
Holdren about the climate, and that’s always a good time “to start tapping
on the brakes.” Indeed, when you think about how much financial debt we’ve
built up in the market and how much carbon debt we’ve built up in the
atmosphere, the wisest thing we could do as a country today is to start
tapping on the brakes by both emitting less carbon to bend the emissions
curve down and racking up less debt to bend our debt-to-G.D.P. curve down.
Unfortunately, we are still doing neither.

Indeed, we are actually taunting the two most powerful and merciless forces
on the planet, the market and Mother Nature, *at the same time*. We’re
essentially saying to both of them: “Hey, what’ve you got, baby? No
interest rate rises? A little bitty temperature increase? That’s all you’ve
got?” I just hope we get our act together before the market and Mother
Nature each show us what they’ve got.

Let’s look at the huge carbon and financial deficits we’re amassing. For
thousands of years up to the dawn of the industrial age 200 years ago, the
Earth’s atmosphere contained 280 parts per million of the heat-trapping
greenhouse gas carbon dioxide. Today, that number is nearly 400 p.p.m.,
with 450 p.p.m. routinely cited as the tipping point where we create the
conditions for out-of-control acceleration. Melting the permafrost in
Alaska, Canada and Siberia, for example, would release massive amounts of
carbon that would further increase global warming. Permafrost is packed
with CO2 and frozen methane, which is 25 times more potent a greenhouse gas
than CO2. “If the tundra continues melting,” says Hal Harvey, the chief
executive of Energy Innovation, “we could basically release the equivalent
of all the carbon that all humanity has emitted from the start of history
to now.” That would really send temperatures soaring, ice melting and sea
levels rising.

We’re on a similar trajectory with our debt. Mounting deficits have driven
America’s debt-to-G.D.P. ratio from 36.2 percent in 2007 to 72.8 percent
today. In their widely hailed book on credit crises, “This Time Is
Different,” the economists Carmen Reinhart and Kenneth Rogoff argue that
countries that allow their debt-to-G.D.P. ratios to exceed 90 percent
experience slower growth and greater instability — much like hitting a
climate tipping point. Indeed, they note, those who would point to low
interest rates today as some kind of “all-clear” for more debt “should
remember that market interest rates can change like the weather.”

There is another striking parallel. At some point, when we allow so much
carbon to build up in the atmosphere, our mightiest efforts to cut
emissions through energy efficiency, conservation and new technologies will
only enable us to stay in place. They won’t be able bend the curve downward
anymore. And 450 p.p.m. is not a place we want to get stuck. And, at some
point, the debt will get so large that big tax increases and spending cuts
will simply go to pay interest. We also won’t be able to bend that curve
anymore, and spending on infrastructure, education and the poor will
vanish.

I am struck by how many liberals insist on reducing carbon emissions
immediately, but, on the deficit, say there is no urgency because no
interest rates rises are in sight. And I am struck by how many
conservatives insist we must reduce the deficit immediately, but, on
climate, say there is no urgency because, so far, temperature rise has been
slight. (Although 2012 was the hottest year on record in the continental
U.S.) One reason interest rates are so low is that they are being
suppressed by the Federal Reserve’s quantitative easing. That won’t last.
As for the climate, well, “Mother Nature doesn’t do quantitative easing,”
said Harvey. Beware of nonlinear moves in both.

We can’t go off coal overnight, and we can’t go into recession by cutting
spending overnight, but we need to start tapping on the brakes in both
realms by agreeing on spending cuts, tax increases and new investments that
would be phased in as the economy improves, as well as higher efficiency
standards for power plants, buildings, vehicles and appliances that would
be phased in, too.

A carbon tax would reinforce and make both strategies easier. According to
a September 2012 study by the Congressional Research Service, a small
carbon tax of $20 per ton — escalating by 5.6 percent annually — could cut
the projected 10-year deficit by roughly 50 percent (from $2.3 trillion
down to $1.1 trillion).

What would you rather do to help solve our fiscal problem: Give up your
home mortgage deduction and wait two more years for Social Security and
Medicare, or pay a little extra for gasoline and electricity? These will be
our choices. I’d rather pay the little carbon tax, especially since it
would clean up the air for our kids, drive innovation and make us less
dependent on the most unstable region in the world: the Middle East.

How could a carbon tax not be on the table today?


-- 
Art Deco (Wayne A. Fox)
art.deco.studios at gmail.com
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