Inequality makes climate crisis much harder to tackle

For those perched at the top of the mountain, the view is perfectly clear. Climate change is the issue of the moment and has to be tackled without delay. Governments, companies and individuals are all going to have to adjust to the new reality.

Anybody who is not with the agenda – for example, Donald Trump – is either mad or bad. There was a big US delegation to Davos last week but it found itself isolated – in public, at least – on the climate emergency. The annual meeting of the World Economic Forum found Greta Thunberg’s call to arms much more compelling.

Later in the year there will be a much more important event than the World Economic Forum: the UN climate change summit (COP26) in Glasgow. In Davos it was hard to move without hearing the phrase “race against time”.

Almost 15 years ago Nick Stern, then head of the UK Government Economic Service, produced a report on the economics of climate change in which he called the failure to deal with a heating planet the greatest market failure of all time. He argued that the benefits of early action outweighed the costs.

Last week Prof Stern, now chair of the ESRC Centre for Climate Change Economics and Policy and the Grantham Research Institute on Climate Change at the London School of Economics, said the threat was now being taken a lot more seriously. There were four reasons for that. First there was evidence, after a 1C increase in temperatures since pre-industrial times, of the failure to act. “We are seeing some pretty nasty stuff already,” he said.

Second, the scientific evidence was now clear that there was a big difference – for example, in the length of droughts – between a 1.5C and a 2C increase in temperatures. Third, the education system was producing a generation of young people across the world well versed in climate, sustainability and environmental issues, and they were putting pressure on their parents to act.

Young people wanted to know why the economics profession had been slow to include climate risks into their models, which was a justifiable criticism, Stern said. Only a tiny fraction of the papers published in economics journals have related to sustainability.

Finally, Stern noted, an awareness was growing that there is a more attractive way of doing things. The days of the internal combustion engine were numbered, the cost of solar energy had collapsed and there had been dramatic advances in battery-storage technology.

Yet the chances are that Glasgow will not deliver as much as the scientists say is necessary. In part that’s because some important countries, including the US, Brazil, Australia and Saudi Arabia most prominently, will resist pressure to make the commitments that are needed.

But it is also because the view from the bottom of the mountain is hazier than the view from the top. Consider why Emmanuel Macron did not show up at Davos this year. The French president took precisely the kind of action deemed necessary to tackle the climate emergency – whacking up the cost of driving fossil-fuelled vehicles – only to find the country erupt into protest. The message to Macron from those on low incomes was clear: don’t talk to us about the end of the world until you have told us how to make ends meet at the end of the month.

Trump and his team see things through the lens of the yellow vest protesters. When Olaf Scholz, Germany’s finance minister, said his government was committed to taxing carbon emissions more heavily, the US treasury secretary, Steve Mnuchin, replied: “If you want to put taxes on people, go ahead and put a carbon tax. That is a tax on hardworking people.”

It’s easy to dismiss Mnuchin’s comments as those of a politician with his head in the sand, but he has a point. Speedy action to tackle the climate emergency requires political action. But political action will only be possible if governments can carry their voters with them. And that is not going to be possible if the measures enacted appear to be all pain and no gain.

The Stern report came out in 2006 and it is now 2020. In the intervening years there has been a whopping financial crisis, and a decade in which living standards for the majority of people have moved sideways. It is much easier to worry about the future of the planet if you are comfortably off and don’t have to rely on a food bank.

The problem – and this goes to the heart of what is wrong with Davos – is that nobody really wants to confront the issue of inequality. There was plenty of hand-wringing about the climate crisis, much talk about the need for higher investment in new technologies, and a lot of head-scratching about weak growth. What there wasn’t – as usual – was any willingness to adopt the obvious solutions.

Any sensible person observing the World Economic Forum annual meeting from the outside would come up with the following analysis: working people are going to be less terrified about new technology if they are represented by a trade union. Growth would be higher, and less dependent on debt, if workers were able to bargain collectively. Public support for more rapid action to fight global heating would be stronger under a more progressive tax system. Entrepreneurs would develop new green technologies more quickly if governments set more onerous targets for reductions in carbon emissions.

All these notions are anathema to those running multinational corporations. They hate the idea of trade unions, they are ideological in their opposition to stronger states, and they recoil from the idea that they should pay more tax. But if poor people are expected to make all the sacrifices, expect some resistance. And expect the battle ahead to be long and hard.

As the climate crisis escalates…

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