Drastic economic reform needed to address climate change

Feb 6, 2023
Honeycomb world map.

Realisation is dawning that the climate and environmental crises will not be solved by current national policies. The reason is that the current market economy based on everlasting growth is the prime cause of these crises.

At COP15 the UN Biodiversity Conference UN Secretary General António Guterres commenced the conference by noting “With our bottomless appetite for unchecked and unequal economic growth, humanity has become a weapon of mass extinction.”

Conversely climate change and environmental degradation are a threat to economic growth.

National budgets are being eroded by a rapid increase of environmentally and economically damaging extreme weather events; five billion dollars in damage from the Eastern Australian floods and much more expenditure to come from remediation. Add to this the current floods in WA, Queensland and SA and the national budget, still paying for past bushfires, is increasingly spent on reparation; real growth is diminishing.

Consequently, under the current economic system there is less and less money for basic living and health and housing needs. The Economist writes “Excess deaths are soaring as health-care systems wobble” in the rich world, Canada, UK, USA, Australia and parts of Europe.

Health, social services and housing are the basic requisites for a civilised society and happiness; they must be the priority in a reformed economy. The workers poorly paid over many years are now refused pay rises in the UK despite inflation. Even today in our rich country the RBA governor Phillip Lowe wants workers to accept pay cuts to save economy; the sanctity of the economy is central to our thinking; we are its worker bees.

Indeed, the market economy can be likened to the autonomy of the bee hive totally committed to production. The Queen bee is the omnipotent neoliberal economy and its dutiful servants, industry, commerce, banks, most of the media, governments with their economic advisors, all are devotees. We, the worker bees produce and enjoy the honey but we cannot exist outside the hive unless as an indigenous person living on country.

Poor countries with Western growth economies, subject to extreme weather, such as Pakistan, are already at the end point of suffering from hunger and deaths with little hope of recovery. Pakistan’s health service was at one of the lowest levels around the globe before being hit by extreme flooding.

Currently there is little hope of reducing world emissions quickly enough to slow temperature rise. In recent times the only blips in the yearly rise in world emissions have been caused by the US recession of 2007-2009 and the 2020 Covid crisis. Both reduced consumption as well as emissions

No doubt some of this is understood by an intelligent Treasurer but it would be political suicide to come to an election promising a contraction in the economy to solve the problem. Besides, economic contraction would require equality to ensure cooperation and we remain one of the most unequal nations in the world.

However it is encouraging to hear the Treasurer musing on happiness, a concept outside the hive, and expressing the intent to build this into economic management.

In his recent essay in The Monthly the Treasurer recognises the hive: ‘The entrenched systems and institutions that dictate and drive public and private spending are so complex and vast, and powerful economic interests have so much at stake in keeping them in place.” He says this requires a values added capitalism instead of a neoliberal one. It involves collaboration and co-investment. A sustainable finance architecture will be created, a strategy which begins with climate finance incorporating the climate impact of new investments “but over time I see it expanding to incorporate nature-related risks and biodiversity goals”.

This is a tiny step forward by considering these risks, but the big step, the question of economic growth itself, remains to be taken.

Economists and environmental scientists outside the beehive calculate that it will not be possible to transition to renewable energy or to EV cars because the world doesn’t have enough of the required resources and the task becomes more difficult each day as the growth economy produces more emissions and the remaining biological resources are consumed by the growth economy.

Consumption of goods is a driver of energy consumption. If and when the world is powered entirely by renewables, continuing growth in energy needs will still drive more consumption and more environmental impacts, for example the energy needs provided by the Snowy 2.0 pumped hydro project will damage the environment, biodiversity, ecology and river flows.

In Australia increasing consumption causes progressive damage to our now remaining ecological systems which determine our food supply. Land clearing continues for grazing, cropping, cotton farming, urban expansion and logging, and many of the procedures for intensive cropping damage soil and its ecology. Consumption and population growth are responsible.

We have a choice, to allow climate change and environmental calamities to indiscriminately wreck the economy, or plan a reduction in our economy to prioritise the essentials of life. This contraction has been called “Degrowth”. Degrowth involves a planned and equitable contraction of rich economies, until it operates steadily and within the capacity of the planet’s resources.

Why should a doctor who has practiced in western countries for a lifetime write this article with considerable anguish? Over decades the many advances we made in treating disease and delivering efficient and caring health services are now crumbling and with diminishing economic ability to retrieve them. Nurses in the UK cry at their plight and are forced to use food banks. Australia is currently following in this path.

We now recognise the climate change health impacts on all aspects of our lives but we are failing to act on their fundamental cause. Outside the economic hive are countless dedicated economists who have researched a Degrowth economy; they cannot breech the citadel of economic ethos. Governments must start talking about the issue- you can now see the consequences if they don’t.

Treasurer, just imagine children running care free in woodlands instead of inhabiting the shopping malls of consumption clutching their tablets.

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