Wake up, America: Your economic citadel is driving you to oblivion

When President Biden’s term in the White House began two years ago, it seemed the U.S. had remerged to offer world leadership on climate despite resistance from the Republican Party.

To date, U.S. leadership has not eventuated, and UN Secretary-General António Guterres recently issued harsh words to the international community for failing to act. “I have a special message for fossil-fuel producers and their enablers scrambling to expand production and raking in monster profits: If you cannot set a credible course for net-zero, with 2025 and 2030 targets covering all your operations, you should not be in business” and he added “your core product is our core problem.”

At a time of massive profits, it is unconscionable that some major oil companies are reducing their planned reductions in emissions.

In Biden’s recent  State of the Union Address, he extolled the Inflation Reduction Act as “the most significant investment ever to tackle the climate crisis.” Yet, new fossil fuel development is being approved in Alaska and the Gulf of Mexico.

Similarly, in Australia, several massive gas projects are also about to be approved. Yet, both countries need to set an example to others even if modest world emission targets for 2030 are to be achieved.

It seems likely that the U.S. will fall further behind with its commitment now that the new chair of the U.S. House Natural Resources Committee is expected to oppose limits on fossil fuel development, indicating likely future obstructions by the Republicans.

In the president’s State of the Union speech, there was little to indicate a serious understanding of future economic trajectories as the costs of climate change and environmental degradation accelerate. The Inflation Reduction Act will operate within the existing growth economy — which is now recognized by many scientists and some economists — as the prime cause of the climate and environmental crises.

The current market economy is entrenched in a citadel supported and defended by governments, industry, banks, commerce and by all citizens who fail to understand the implications for the future of humanity.

As one would expect, therefore,  a recent essay from Australia’s Treasurer Jim Chalmers, titled “Capitalism after the Crises,” has caused a hullabaloo from the media but no insurrection, whereas if uttered by Treasury Secretary Janet Yellen, his equivalent in the U.S., the Wall Street devotees might have marched on the Capitol! One opinion article described the essay “as an incoherent assortment of kumbaya capitalist thought bubbles.” Another critic said that business chiefs “wake in fright” at Chalmers’ ideas.

By contrast, many in the community were encouraged that the treasurer could have thoughts beyond the current confined thinking.

What did he say to upset those in the economic citadel?

“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 wrote. He noted that this requires a value-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”.

The Australian treasurer made one small step for man, but it could lead to a giant leap for mankind.

Every year the gap widens between our meager efforts to reduce world emissions and what is necessary. The U.S. is on the Wilderness Road, with settlers traveling to the West on foot and wagon, whereas the speed of air travel is now required.

As world emissions continue to rise steadily, the only significant blips in the yearly figures have been caused by the U.S. recession of 2007-2009 and the 2020 COVID-19 crisis. Both reduced our profligate consumption that causes rising emissions. The Inflation Reduction Act’s transition to clean energy will reduce emissions but not sufficiently if the economy continues its expansion.

The U.S. has had visionaries who, for decades, have made this giant leap of understanding for humanity.

The late Herman Daly, a Nobel Prize winner and ecological economist, said, “We have lived for 200 years in a growth economy. In this time, we have come to believe that all our major economic ills — from unemployment and poverty to overpopulation and even environmental degradation — can be solved by more growth. And if the global economy existed in a void perhaps that would be true. But it does not.”

In fact, “The economy is a wholly owned subsidiary of the environment, not the reverse,” he said.

To arrest environmental destruction it is vital that we all come to understand the need for a steady state economy, as espoused by Daly and pursued by the Center for the Advancement of the Steady State Economy. This would be a prelude to a “degrowth” economy that addresses the fact that both the U.S. and Australia are currently consuming the resources of four to five Earths.

When the end-of-day bell rings at the New York Stock Exchange, it tolls for environmental demise and the ultimate collapse of civilization. Those clapping on the balcony must begin to show concern on their faces instead of self-serving entitlement

David Shearman (AM, Ph.D., FRACP, FRCPE) is a professor of medicine at the University of Adelaide, South Australia and co-founder of Doctors for the Environment Australia. He is co-author of “The Climate Change Challenge and the Failure of Democracy” (2007) commissioned by the Pell Centre for International Relations and Public Policy.