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Episode 6 – 12 Years with Dr. Steven Hail
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Dr. Steven Hail teaches economics at the University of Adelaide, Australia. He and host, Steve Grumbine, unpack the IPCC report on the global climate threat and discuss ways to advert the coming crisis. Policy & technology wonks are in for a treat as Dr. Hail talks of the possibility of pulling carbon dioxide from the atmosphere and adverting solar radiation. Hail insists on the need for public investment in renewables. Not only do we need green electricity, we need to actually use it. He suggests radical measure like confiscating or nationalizing all coal production. Both Dr. Hail and Steve Grumbine are proponents of Modern Monetary Theory. As they imagine the ideal society, considerations of fiscal balance and the GDP are the least important measures of success. Their focus is on prosperity and sustainability. They pose the big question: can the scale of economic activity continue to grow without destroying the planet?
@StevenHailAus on Twitter
Check out Steven’s book “Economics for Sustainable Prosperity” www.palgrave.com/gp/book/9783319909806
Special Thanks to Geoffrey Ginter for the excellent intro song! And of course special thanks to our guest Steven Hail, the donors of Real Progressives and our excellent staff of volunteers
Macro N Cheese – Episode 6
12 Years with Dr. Steven Hail
March 6, 2019
Steven Hail [intro/music] (00:04):
The next US presidential election is the most important democratic election in the history of our species. We have not started to cut greenhouse gas emissions globally at all. We need a massive research effort. This is World War II. It’s the space race. It’s the arms race all rolled into one.
Geoff Ginter [intro/music] (00:41):
Now let’s see if we could avoid the apocalypse altogether. Here’s another episode of Macro N Cheese with your host, Steve Grumbine.
Steve Grumbine (01:33):
Hello, my friends. This is Steve with Real Progressives. Tonight we’re going to talk about the 12 year window that the IPCC report put out with Dr. Steven Hail. He’s been a frequent guest of ours and he’s a big part of what Real Progressives is. He’s also someone who I trust very, very much to really keep it real and keep it within the lines of truthfulness to give us some bearing.
So, but what I want to do to start this show is kind of talk about what some of the key findings of the IPCC report were and Dr. Hail and I will go through them both from an economic perspective in terms of what it would take to mobilize in order to help us survive and thrive; and also just sort of talking about maybe some of the misnomers that may have come out in this as well.
But at the top, a key finding of the IPCC report is the dramatic difference that restricting warming to 1.5 Celsius above pre-industrial levels would have on the global environment. I think this is really a very important. The scientists found by 2100 global sea level rise would be 10 centimeter lower with global warming of 1.5 Celsius compared to two degrees Celsius.
Extreme heat waves will be experienced by 14% of the world’s population at least once every five years at 1.5 Celsius; but that figure rises to more than a third of the planet if the temperature rises to two degrees Celsius. Arctic sea ice would remain during most summers if warming is kept to 1.5 degrees Celsius, but at two degrees Celsius, ice-free summers are 10 times more likely leading to greater habitat losses for polar bears, whales, seals, and seabirds.
If warming is kept at 1.5 degrees Celsius, coral reefs will decline by 70 to 90%, but if temperatures rise to two degrees Celsius, virtually all the world’s reefs would be lost. So with that astounding set of features, I’m going to go ahead and bring on my guest, Dr. Steven Hail. Welcome to the show, sir.
Hail (03:54):
Thanks for having me on again, Steve.
Grumbine (03:57):
I mean, this is, this is pretty, pretty big stuff if you’re paying attention at all. And for the average person that’s both watching here and reading these things coming out, this has gotta be either terrifying or they go, yeah, we’ve heard this a million times before. Nothing’s going to happen. What is your take on the IPCC report?
Hail (04:19):
It’s easy to be terrified by it. And it’s easy to be terrified and end up being despondent and just not wanting to listen to anymore when you listen to the sort of things you just read out, all of which are entirely realistic.
I wouldn’t overly dwell on that 1.5 degree figure either, which although it is what the recent report was all about and was focusing on, a positive way of looking at it is that if, if, if we go to two degrees warming above what they call pre-industrial levels, which is really what the average global temperature was in the late 19th century, then we’ll get more . . . .
There’ll be all sorts of major costs around the world, which are obvious already having just gone one degree above what used to be the average temperature on the, on the planet; but we can deal with them. I mentioned this because that report made some assumptions.
It made, particularly made, assumptions about the development and scaling of negative emissions technology, or an ability to suck large amounts of carbon dioxide out of the atmosphere, which are optimistic because that technology is unproven or unproven on any scale as yet.
If you read through the summary for policymakers you’ll, you’ll see that they’ve made assumptions about that. The European Environment Agency earlier this year published a report, which indicated that in the, in the absence of that technology, we’ve basically already gone past 1.5 degrees.
They said that to keep a 50% chance of keeping global warming within 1.5 degrees Celsius – I’m just looking at where we’ve written down on the wall – above the levels of a 150, 200 years ago, we needed to keep atmospheric concentration of carbon dioxide equivalent gases to 430 parts per million if that’s not bamboozling us, a statistic like that.
Now, they also reported earlier this year that we exceeded that in 2012. They also estimate that to stay within two degrees Celsius with a 50% confidence, we need to stay below 530 parts per million. Now we’re now at 450 parts per million. We’d be going beyond 530 parts per million on current trends in about 18 years from now.
So it doesn’t change the story really. If you want to take the IPCC report, you could say we’ve got sort of 10 years to act to stay within 1.5 Celsius. If you want to take a less optimistic view about the development of technology to suck carbon dioxide out of the atmosphere, we’ve maybe got about that same amount of time to keep it within two degrees; but I don’t mean to be negative.
I think we should be as positive as we can be. If we don’t do anything at all, then the climate, by the end of the century, is going to be three to four degrees hotter. Maybe even more than that.
Grumbine (07:32):
What I want to talk to you, I guess, about is, you know, as, as a project manager by trade, and I’m oftentimes looking at timelines, key milestones. And what do they mean when they say 12 years? Are they saying that we have our act together? I mean, obviously you just said we’ve already passed the 1.5 anyway.
Hail (07:50):
Well, that’s not me saying that. That’s the scientist that worked for the European Environment Agency . . .
Grumbine (07:54):
Sure, sure, sure. No, no, no. I didn’t mean to put it on you like that, but with that in mind though, as we present that, you know, what are the milestones? What is it, what does that 12 year represent that we bring the emissions down, which would mean we have to start way sooner than 12 years. It’s not like something that we got 12 years to wait.
There’s intermediate steps that get to that point, that event horizon. Can you describe some of the steps or some of the milestones we might be concerned about in that process? I mean, I mean, they’re just kind of putting this 12 year, 18 year or whatever, the amount of time out there. There’s, I’m not seeing, and maybe I just didn’t read it. I’m not really seeing a plan for intermediate steps or, or whatever that would take place to mitigate such a thing.
Hail (08:43):
Well, there are lots of ways to bake a cake . . . am I supposed to crack an egg? I don’t know what the expression is. There’s lots of paths you can take, and they model various scenarios within that report. But if you’re going to be realistic about it, technologically, it’s something that we can do, but the, in order to do it, you need at least two out of three political entities fully engaged.
One of those is the US government. The other one is the European Union. And the third one is China. And I think it’s unreasonable to expect China, although China is the biggest emitter, but because of the stage of its economic development, to take the lead. So then it has to be the US and the European Union, probably with the US in the lead.
So I, that’s why I said on another podcast I did recently, that I think the next US presidential election is the most important democratic election in the history of our species.
Grumbine (09:49):
It’s terrifying to think that when you look at the people they’re trotting out already from the neoliberal Democratic Party, you’re looking at people like Kamala Harris who are true Wall Street people. You’re looking at Cory Booker, who has already sold out several times whenever there’s been an opportunity to take a legitimate Progressive stand.
You’re looking at people that are veneer of Progressivism with a whole bunch of very, very neoliberal background that, first of all, are absolutely economically illiterate; and secondly, they are truly on the hook for somebody’s paycheck if you look at the donations they receive.
Hail (10:26):
They are going to change their mind though, Steve. I don’t know whether by the time the election comes around, but in five to 10 years time, everybody’s going to change their mind. That’s what I think, which is kind of, I think, hopeful because it may be that by that stage, extraordinarily severe actions need to be taken.
Even if we can develop a technology to suck carbon dioxide out the atmosphere and to deflect some of the solar energy in geoengineering to try and limit the consequences of what we’re faced with. It’s not all, all doom and gloom. I’m not sure how to, I could go through a series of measures that might be part of a path to a sustainable future that we could step back a bit.
Cause, um, this is all, if you look at this in the face, it’s almost so scary as to be off putting. And I remember in Kate Raworth’s book, “Doughnut Economics,” which I recommend everybody to read at some point even though Kate is not well, she may know about Modern Monetary Theory, but she doesn’t write as though she does. She’s a great ecological economist.
When she was first asked by Oxfam to do some work on whether green economic growth indefinitely was a possibility or not, and she started investigating, it was almost too scary an issue to take on, to look in the face. So she sort of approached it from the side, kind of.
Let’s suppose, suppose you were elected president at the next election, and you’ve got a Treasury Secretary who’s Stephanie Kelton, and your Chairman of the Federal Reserve is Warren Mosler. And you’ve got Randall Wray in charge of the Congressional Budget Office.
And just like Roosevelt was regularly in contact with a foreign economist, John Maynard Keynes, you’re regularly in contact with a foreign economist, William Mitchell, and you’ve got on your cabinet or as advisors, you’ve got Scott Fullwiler and Fadhel Kaboub and Mat Forstater and all sorts of other economists that we respect.
Now, what sort of society would you want to create? That’s where I want to start from, I think. What is it that you’d be looking to do?
Grumbine (12:50):
Well, I can tell you from my perspective, I would like to see us taking a more sustainable approach to not only production in society, but an equality-based thing that would allow our cities to flourish without having so much poverty in them, without having so much pollution in them.
To elevate all ships, if you will, to ensure that everyone has their basic needs met, and to prevent, you know, people making decisions based in a desperation that, I mean, that would be the kind of society I would want based on an ecologically friendly, you know, scientific build of our country, of our world.
Hail (13:33):
Well, yeah, I agree with you and, and neither you or I, in setting all those things out have said anything about gross domestic product.
Grumbine (13:43):
Not a bit.
Hail (13:43):
It may rise. It may fall. It’s not the point really. It’s just like the fiscal balance is not the point. And we need to take the focus away from worrying about what the government budget balance is. I mean, it’s not that it’s not important. It’s just that it may be appropriate to run a fiscal deficit forever. And if it is appropriate to run a fiscal deficit forever to balance the economy, to manage the economy and the environment, then that’s fine.
And as far as real GDP is concerned, as far as the scale of economic activity in the country is concerned, I would like to be similarly agnostic because even once we do all the things that I’m about to suggest, I’m not sure whether the scale of economic activity, the quantity of goods and services we produce over time can continue to grow indefinitely.
So that that’s one form of agnosticism, even if it could sustainably without destroying the climate and our natural environment, I’m not sure that it would be optimal for it to because economic activity, however it’s organized has both benefits and costs.
And if the social and environmental costs of additional economic activity ever come to exceed the benefits, then even if you could do it without destroying the planet, it’s not necessarily the case that you’d want to.
So what I would want to do over time, and this would involve increasing real GDP in the short term, it would involve using up some of our limited carbon budgets, too; because it would involve making investments now to make things better in the future.
But I’d like to build a society where people had economic security, where there was full employment, where there was no involuntary unemployment or involuntary poverty, where there was a much higher level of equality of income and wealth than is the case at the moment, where there was a free access to good quality education and healthcare for all.
And of course, above everything else, there has to be ecological sustainability. Climate change is not the only issue there, but it’s the most pressing issue.
So once we’ve got all those things in place, then if you want to target something, target something like Phil’s (Phillip Lawn) Genuine Progress Indicator, but otherwise we’ll still measure Gross Domestic Product, we’ll measure the monetary value of what’s been produced in the economy in a year, but like the fiscal balance, it should become something of no interest because it is not a goal in itself.
It is a means to an end, right? Having said all that, let’s go back to what you could do. One thing you could do is you could confiscate or nationalize all coal production. It may be that you don’t want to confiscate coal production because of the impact that has on the savings of people that have invested in fossil fuel companies.
But you could do something like a swap very long-term government securities, or perpetuities paying a very low rate of interest forever for shares in companies involved in, in coal production or fossil fuel production generally. And you could just lock them up, eventually. You couldn’t do that overnight. But you were talking about having 12 years to deal with climate change crisis.
And roughly speaking, given what scientific scientists say about our carbon budget, which is the total amount of carbon dioxide and other greenhouse gases that we can safely emit if we are going to stay below, say two degrees Celsius above pre-industrial levels. Yeah, that’s something like that. Maybe a little bit more 12, 15 years, perhaps a little bit more than that is the amount of time we have at the current level.
If everybody was using up the same amount per head of greenhouse gases as an Australian or an American, it would be five or six years. It’s no time at all. And we free ride off everybody else. You know, we free ride off all those African people who are not using anything at all at the moment. Or to put in another way, like I said on a podcast that people really don’t like you saying this.
I’m reluctant to come on and talk about this because even in New York I felt uncomfortable because it’s easy to misinterpret what you’re saying. I am in favor of economic development. I’m in favor of improving the quality of what we provide over time. If we end up with a steady state economy in the sense that real GDP isn’t growing, it doesn’t mean the quality of things won’t be increasing.
It doesn’t mean that the quality of people’s lives can’t be increasing. I’m not even saying now that that’s necessarily going to be essential; but when you start saying these kinds of things, people find them a little bit shocking. As far as the US is concerned, people say that the economy needs to, or the economy, we need to reduce our greenhouse gas emissions by 10, maybe 10 to 15% a year between now and the 2030.
And we need no net greenhouse gas emissions at all by 2050. That’s what they say. Now, let me just ask you a couple of questions. Which year do you suppose had the highest ever level of greenhouse gas emissions for the world economy?
Grumbine (19:19):
I should know this, but I don’t. You to tell me.
Hail (19:21):
Well, I do – last year.
Grumbine (19:23):
Oh, wow. Ok.
Hail (19:24):
We have not started to cut greenhouse gas emissions globally at all. If you look at the US, you’ll see greenhouse gas emissions falling somewhat, but there are two reasons why the figures fall somewhat in recent years – not nearly enough, even if it were not for these two reasons, but two reasons.
The US basically has, because of its net imports, has exported its greenhouse gas emissions to the countries that it imports goods from – they’re taking place somewhere else in the world.
And something else, which is often left out, when you look at national statistics is civil aviation and merchant shipping, which is just treated like it’s an act of God and not actually allocated to particular countries.
So we have to reduce our greenhouse gas emissions by 40% by 2030. And we have to eliminate, at some point by the 2030s anyway, and we have to have no net greenhouse gas emissions by 2050. Now we are getting better at creating real GDP, at producing goods and services with monetary value per unit of greenhouse gas emissions that we per ton of carbon dioxide that we put into the environment – this is called relative decoupling, relative decoupling is happening. It’s happening in the US. I
t’s happening a bit faster, perhaps in Europe. It’s happening around the world. It’s happening in China. We need to go beyond that though. Of course we need absolute decoupling. We need, in other words, if the economy is going to keep growing, we need our greenhouse gas emissions to fall, and to fall quite quickly.
That once you take into account, the things that I just mentioned is perhaps happening in one or two countries like Sweden, but virtually nowhere, really. At the moment, there’s no evidence that we are doing a sufficient amount of absolute decoupling so that the the gross greenhouse gas, the carbon dioxide we put into the atmosphere, we have any significant chance of canceling that out so that we have zero net greenhouse gas emissions by 2050.
So we’re placing at the moment, a big bear on research and development, on technological change, on being able to organize economic activity and the generation of power in order to minimize the amount of greenhouse gas we put into the atmosphere, and also the development of negative emissions technologies to suck it back out again.
So, but having said all that, at some point, we need to lock up fossil fuels; and coal we need to lock up quite quickly. 30% of US electricity generation at the moment is coal. In the year 2000, I think it was something like 50%. So there is progress being made. We need a massive public investment in renewables.
So scientists tell us maybe 3% of GDP should be going along these lines at the moment, which is about seven times as high as the current investment. And we actually need to electrify power. So we can’t go around driving petrol driven cars in the future. We need to have green electricity. And then we need to use that electricity to provide more of the total power that we use around the world.
I think less than 50% of the power that’s used comes from the electricity grid. And it needs to be more like 90%. We need a massive research effort. This is World War II. It’s the space race. It’s the arms race all rolled into one. Now, I don’t know how you do that. There isn’t one way of doing it. The research can take place in the private sector, or it could be people working for the government.
I actually think that all the world’s governments should be cooperating. We should be bringing together the greatest expertise in the world, and making sure it’s well-funded – having these people work together. And then the results of the research they do should be freely available to everybody everywhere on the planet. That’s what I think ought to be happening there.
Reducing inequality will be great. Inequality has kept growing in the US and in Australia, too, and not to the same extent. We need to get back to 1960s levels of inequality. At least if you want something else to target, a climate scientist that I have been, forgotten his name, that I’ve been reading a lot by recently, provided some by this statement with some evidence to back it up that 10% of people are responsible for 80% of emissions around the world.
And that would be true within countries, too. Maybe it’s not 10% and 80%, but, um, by reducing inequality, you reduce greenhouse gas emissions quite significantly. We need either a fee and dividend system, like in, like they’re talking about in Canada, but with a higher fee or a global emissions trading system with a very tight cap to be introduced sooner, rather than later.
We need to focus on what matters. That’s what you and I were talking about before, because a lot of the things we want to do actually are consistent with addressing this problem. It would be a big help if we all went vegan, but I’m afraid I’m not likely to do that, and neither are most people.
I greatly respect people who do for whatever reason, and I’m not going to deny that it would be a – helps with 10 or 15% of the problem would go away if we all stop eating meat and dairy. It would be a big help if we all stopped having more than two children, that’s not going to happen either. I think we have to ask some quite difficult questions, too.
I am not certain about whether renewables can be rolled out quickly enough at scale, and whether we have, whether there will be sufficiently efficient and reliable batteries available, and we’ll have the resources to build them quickly enough to deal with all this without thinking again about nuclear power. So, because for all its downside nuclear power does not generate these greenhouse gas emissions.
Grumbine (26:24):
You know, it’s funny, I was talking to a friend the other day and obviously, you know, there we see the outcome of Fukushima and we see the outcome of several other reactor problems that we’ve had, uh, you know, in Russia, et cetera. And, and there’s nothing good to be said about it, but yet at the same time, though, we see clearly that nuclear power provides tremendous environmental good as well.
Hail (26:50):
If we got 10 or 20 years, what I worry about is whether we’ve actually got time to do all those other things without it being too late. It’s just a question. I don’t have the answer to that.
Grumbine (27:03):
Who does? I think that the real, the real issue for me is, and this is as, as Joe Q public, right. I’m not a scientist. I’m not an economist, but I straddle both worlds asking questions. And as I look around at the people that could drive this, if there was enough empirical data, obviously we could get behind it and push, but we also have an incredible amount of special interests even within our own movements, forget the establishment and all the money interests.
We have balkanized ourselves into little teeny cubbyholes with ‘this is my special thing.’ And it doesn’t matter about the big picture. This is the only thing that matters. And this is the only thing that matters. And this is the only thing that matters.
And we are not going to work together unless my little thing that matters so much to me is addressed by everyone. And then we end up deadlocked, and then we end up with full inertia and that’s why you’re going to probably not see the kind of drop in our greenhouse gases, because we’re never going to actually push for it.
And it’s going to come to a point where you say, “Hey, can we even do anything about it?” And it’s, you know, I don’t know if you’ve ever been around people that see calamity coming and they just pretend like it’s not coming and they just hide their eyes and then it comes and gone.
Hail (28:19):
I think we’ll always be able to do something about it. It’s just a question of how severe the consequences will be. I think it is important that people realize that carbon dioxide and some of the other greenhouse gases, once you put them into the atmosphere, they are there for so very long that you might as well just assume they’re there forever.
They’re around much longer than radiation from using nuclear power. That’s how long they’re around. So the carbon dioxide we’re putting into the environment at the moment will be there, much of it, in a thousand years from now.
Intermission (29:11):
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Grumbine (30:01):
So, so let me ask you, you know, we’re talking about finding things that work as a filter to get rid of carbon from the air, carbon dioxide from the air. You know, and then you read the comments coming through and everybody is saying, “Oh, what about nuclear waste, nuclear waste?” And you’ve already stated that it’s simply not going to be the long term solution, but it may be a bridge while we try to buy time.
Hail (30:22):
I’m not saying that. I don’t know the answer to that question, Steve. That’s what I’m saying. I think nobody should react to any suggestion from anywhere using what Daniel Kahneman will call System One Thinking. System One Thinking is where, “Oh my God, it’s a shock. I’m not even gonna think about it.”
Grumbine (30:39):
Right.
Hail (30:40):
Where it’s just instinctive. You don’t think through the issue.
Grumbine (30:44):
That’s what the modern money world, too, the economic system folks tend to just knee jerk and reflexively respond. Same with the political dynamic as well.
Hail (30:55):
I hate the idea. I really hate. And I would die in a ditch to stop them building a nuclear power station anywhere near Adelaide. We have here ‘bound use renewable energy’ in this part of the world. I’m just putting the question out there; and it may be that it is possible to roll out around the world, renewable energy quickly enough with storage capacity so that it’s not, this is not necessary.
There are people that I respect who tell me that they know about these things that are skeptical about that.
Grumbine (31:29):
Sure. I mean, I mean the political will. I mean, I heard you saying earlier that you believe that, you know, we’re going to have no choice, and the people are gonna change; they’re going to have no choice but to change. That, see that’s where I’m, I’m, I’m stuck. I don’t have a belief.
I really am not telling you that doom and gloom here, I’m telling you straight up that I believe the establishment lemming mindset is so powerful that the ability to stay stuck in another world and LA LA LA, I can’t hear you is stronger than any drug I’ve ever seen in the world. I’ve never seen anything come close to the power that the party sycophants hold to. It is the strongest drug ever.
And so when I think about what it would take just to you stack rank this. The United States has gotta be the lead because China is not economically developed enough, even though they’re trending in the right fashion.
Hail (32:27):
Well, the US can’t do it on its own either. I just think two of those three. You have to get two of those three on side.
Grumbine (32:34):
Right. But we see that Donald Trump took, you know, took the presidency and this is people who are recalcitrant. They don’t want to hear anything about government doing anything. They’re more than happy watching them burn it down. And, and unfortunately this is a large part of America. And if we’re looking for America to lead in anything, that’s what you got. And, and I’m not giving you . . .
Hail (32:57):
But most people are going to change their mind. I think.
Grumbine (32:59):
I hope you’re right. I’m just . . . what I’m telling you is as much . . .
Hail (33:04):
I’m optimistic. I’m not pessimistic.
Grumbine (33:06):
I want to be with you there. I want to be with you there, but, and obviously social media is, but a very, very small microcosm of the real world. Okay. But there is a large subset of people that you would have considered allies that can’t stay focused for two minutes on a subject.
They can’t stay focused on anything important. And if this is as important . . . I mean, Kelton just came out the other day in her Stony Brook speech and said it was the number one issue – climate change.
Hail (33:35):
And you have to be, you have to be, how am I going to say this? Yes, you have to be stupid not to see it as the number one issue. I think it’s obvious now, or dishonest – one of those two, there are plenty of dishonest people. And we . . . there are plenty of people who don’t care about your grandchildren because the worst consequences of this . . .
Well, first of all, the worst consequences, these are not going to be felt in the US or in Australia anyway. They’re going to tend to be felt in lower income countries and already are. But secondly, the worst consequences of this, if we don’t, if we don’t deal with it are going to be felt from early in the next century., We’re not going to be around anymore.
So there is, there is that temptation to just ignore the issue. However, of course, some of the consequences of global warming are already obvious. We are seeing more frequent, extreme climate events in the world than previously. And a scientists who was the German government’s chief advisor on climate change called Joe . . . shell Hooper, Schnell Hooper (Josef Schnell Hooper).
I can’t get his name right. . . . as amongst the people to look at this statistically, and to say that it is that there is a link already demonstrably, a link between global warming and a greater frequency of extreme climate events around the world.
Assuming these people are right, and this can only become more obvious as, as the years go by; and, it’s then it’s just a question of how far we go before we start taking serious action. It does need to be quite dramatic. It needs to be a progressive Donald Trump type character, really, in a way, somebody that comes to power and just says, “Well, you know, this is what I want to do.
This is what we’re going to do.” And because when you look at the charts in the IPCC report, if you look at the summary for policy makers, they have a chart where they’ve got a greenhouse gas emissions rising year after year after year.
And then they say, “Well, this is what we’re forecasting if we’re going to avoid it, they say 1.5 Celsius,” but they probably mean two Celsius like that. It’s going up like that. And from now it has to go like that. And then they say, “Well, we can do this. It’s technically possible.” Well, that’s a good thing. It’s good that they say it’s technically possible.
It’s then just a matter of how many years has to go by before there is elected in the major European governments and in the US and elsewhere in the world. Australia is the worst emitter per head of the OECD countries. We’re just not important because there aren’t many of us.
That doesn’t mean, I’m not saying we shouldn’t take responsibility for that, but there are just, there are a lot of Americans – that’s part of the reason. We’re rich, too; and we create more damage per head in this respect than you do, but there just aren’t many of us.
How long has to go by before we get a president of the US who a bit like, not that I’m the greatest fan of Justin Trudeau, but that is able to stand up and say, “Look, this is a major problem. We have to deal with it.” We can try and deal with it through the market, by having a high price on carbon.
And you can do that in a revenue neutral way to make it more palatable and to protect those on low income from the consequences of a rising cost of living. But if you go through the market, you provide the private sector with signals, which should help to reduce emissions over time, but that’s then is not enough.
You have to do some other things as well, which is why I was listing the other things I went through. As many of the people that watch this podcast know, Phil Lawn is a very good friend of mine. And I think he is Australia’s leading ecological economist and very well versed in Modern Monetary Theory for longer than me. So I defer to these people. I listened to them. I read what they’ve got to write.
I read the scientists that they recommend to read. And none of these people are saying that it’s impossible and that we are bound to have a climatic catastrophe. It is possible to limit global warming and to avoid an ecological catastrophe.
Part of that is going to be technological, but part of it is behavioral, too; and changing the things we focus on, changing our priorities and to an extent changing our way of life. Imagine a New York that was largely pedestrianized, for example.
Grumbine (38:31):
Yeah.
Hail (38:31):
It’s difficult to imagine now, but that’s the sort of future . . . big cities, big investments in mass transportation, green mass transportation, less car ownership, or at least less car use. And the cars that we use, they should be running off, powered off the electric grid, and electricity should be generated 90% plus by renewables.
That’s the kind of future. And I think if you get the right people in positions of power, that they really could start to move in that direction quite quickly.
Grumbine (39:14):
I want to ask you a quick question. It’s probably not quick. I mean, the question will be quick, but the answer may not be. For folks that are here because they like to talk about climate change, and they’re concerned about the environment, this is one component of this, but the fix is not going to be done just by a bunch of people making decisions to change how they live.
That you, you had said that’s part of it, but there is a massive infrastructure/mobilization effort that’s going to require the ability to mobilize not only people, but resources to address this. And we understand that to be economic in nature. And it’s not just a tax. It’s not just . . .
When I think about what it would take, you know, first of all, the political will aside, let’s just pretend like everybody’s on board with this. You know, I think to myself, we have so many answers for green energy already in place today.
You know, we have solar highways, we have all kinds of things that could be deployed and how quickly, whether we have enough human resources to actually deploy them, I can’t say that, but let’s just say we did even – the economics behind it. Folks, if you can get ahold of this, the idea that we can afford to do the changes that need to be done, it should tip you off on a whole bunch of other things.
Here’s something that it’s like do or die to some degree. You know, not being an alarmist here, but saying, let’s just say that we keep this in the red zone so we’re not backing off. If you understand the way the economy works, we can take these steps. It’s not an issue of affordability. This is not an issue of carbon taxes paying for things.
This is a matter of us incenting good behaviors, discouraging bad behaviors through the role of taxation, but it’s also about marshaling real resources that we could to provide those filters, to provide those technological solutions, to change the way we do production, to alter the various means by which we store energy, to which we use energy, to which we dispose of waste, et cetera, that the money is not the issue here.
Correct, Dr. Hail? I mean, this is something that I want people to understand. Because if they can take this very concept here about money not being the object, then we can translate that to other areas later, as well, with healthcare and . . .
Hail (41:46):
Yeah, money’s never the object. You’re quite right as far as monetary sovereign government is concerned. I think a lot of your viewers know that already. They’re probably very familiar with Modern Monetary Theory. The US government is not going to run out of US dollars. The US can run out of things to buy with those US dollars. There are what we often call real resource constraints.
So there’s a limited stock of labor and skills and capital equipment and technology and infrastructure and natural resources. Now the ecological constraint is a little bit different and in a sense, that’s the problem because it’s a loose constraint. So it doesn’t bind us this year. We can eat into that carbon budget as much as we like this year, but it will bind us in the future.
And the more we eat into that carbon budget now the greater the constraint, the real constraint is going to be in the future. But again, it’s a real resource constraint. It’s not an issue as far as the money. You can pay for these things. There are many jobs, millions of jobs, future jobs, in a greening the US economy, in moving towards decentralized solar power or other renewables.
Anything that is technically possible can be paid for. This is technically possible. That’s what the scientists tell us anyway. Yeah, it’s not a simple task and it’s a multipronged task. I suggested some things already that need doing over time. That’s just not the only ecological issue that we need to deal with, too. We’re putting too much at the moment in our food system, we’re using too much in the way of nitrogen fertilizers.
We’ve used up and we continue to use up around the world too much land that should be forested or wetlands, we’re losing over time. We are gradually poisoning the oceans and killing the fish as well. All of these things have to be addressed. These are the important issues. What the US government’s fiscal balance is taken out of context of these issues and the state of the economy and, and, and inflationary pressures is not.
So the role of taxes, yes, there is that macroeconomic role, which is to limit inflationary pressures. And there is a, the, there are those other roles bringing about a more even distribution of income and wealth. The US has amongst high income countries the most uneven distribution of income and wealth by some margin, if you could just deal with that – and that does involve taxation.
It involves, well, it involves other things, too, but a big part of it, I think you need to tax rich people because they’re too rich, not because you need their money. And we really don’t need people flying around in private jets. If they want, if they want to go into outer space on one of Richard Branson’s rockets or Elon Musk’s, then fine.
I’m okay with that as long as they only have a one-way ticket. They’re using up, they’re using up far more than their fair part of the carbon budget. We don’t need their money. We need them to consume less and consume different things, less of some things anyway.
And then the other issue is for many purposes in the most efficient way of limiting not just emissions of carbon dioxide, but the use of nonrenewable resources and the generation of waste generally is to, is to price those resources and a carbon tax or a fee and dividend system, or a cap and trade system where businesses or people have to pay a price if they’re generating additional greenhouse gas emissions. That’s part of that as well.
Grumbine (45:51):
Very, very good. All right. So Dr. Hail. With the closing here, I just want to ask you one final question.
Hail (45:58):
Could I just apologize to all your viewers about one thing?
Grumbine (46:00):
Sure.
Hail (46:02):
I am, to the extent that I know about anything. I know about money and banking and macroeconomics. So we’re talking here, Steve and I, about a really important issue that we should all be talking and thinking about, but please don’t imagine, that I imagine that I’m the world’s greatest expert in it or anything. I’m not. I don’t have any particular expertise in this area. I’ve just done a little bit of reading as you have as well.
So there will be people who are viewing this at the moment that are better informed, much better informed than I am. I just wanted to bring it to everyone’s attention. And I’ve mentioned it at the two International MMT Conferences we’ve had so far. Each time I’ve said, “I’m not an expert in this, but I know there are experts around and we should be discussing it.”
Grumbine (46:50):
Absolutely. I think, I think you give yourself too much burthen and downplaying what you do know, because just what you know . . . let’s just say you’re a citizen of the earth. I believe you qualify for that. And within that sphere, you know more than 95% of the people in this planet about what you just talked about, and I will put you into a higher category than that, quite frankly.
So I think that from a standpoint of understanding the economics and understanding the environmental factors, you blend the two perfectly, which is why I asked you to do the show tonight.
Hail (47:24):
Well, thanks very much. It’s a great pleasure to do it. It’s a really important issue. I just didn’t . . . If there’s anyone out there that disagrees with anything I said, I don’t want you to think if you’re watching that I’m saying that my view is any more privileged than yours, because this is not an area which I’m an expert in.
It’s an area that I think we all need to find out more about, and I’m going to, I’ve got a few months now. We’re not much teaching given the way the academic year works over here. It’s going to be my top priority over the next few months to think about these issues and a little bit more . . .to so far, a lot of what we’ve said in the last hour is very vague.
I’d like to read a little bit more widely than I have. And I’d like to be able to say some of these things with a greater degree of confidence. I am confident enough based on the people that I’ve spoken to already, and the reading I’ve done, that it is possible for us to limit global warming to two degrees Celsius above pre-industrial levels.
The bad news is the, this has major consequences, especially in some of the lower income parts of the world for people, and it will cost lives. And there will be, there already are a more extreme climate events as a result of this global warming having taken place.
And further bad news if you like, is that what we’re doing now has consequences for the global climate, which stretch hundreds of years into the future, not just a few decades into the future. But the good news is that two degrees Celsius from all my reading is not catastrophic and we can carry on.
Grumbine (49:05):
Very, very good. I really appreciate you joining us again. And it’s always a pleasure. And I look forward to talking to you again very soon.
Hail (49:12):
Thanks very much, Steve.
Grumbine (49:13):
You got it, man. Have a great night.
Ending Credits [music] (49:20):
Macro N Cheese is produced by Andy Kennedy, descriptive writing by Virginia Cotts and promotional artwork by Mindy Donham. Macro N Cheese is publicly funded by our Real Progressives Patreon account. If you would like to donate to Macro N Cheese, please visit patreon.com/realprogressives.
Check out Steven’s book “Economics for Sustainable Prosperity”
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Dr. Steven Hail teaches economics at the University of Adelaide, Australia. He and host, Steve Grumbine, unpack the IPCC report on the global climate threat and discuss ways to advert the coming crisis. Policy & technology wonks are in for a treat as Dr. Hail talks of the possibility of pulling carbon dioxide from the atmosphere and adverting solar radiation. Hail insists on the need for public investment in renewables. Not only do we need green electricity, we need to actually use it. He suggests radical measure like confiscating or nationalizing all coal production. Both Dr. Hail and Steve Grumbine are proponents of Modern Monetary Theory. As they imagine the ideal society, considerations of fiscal balance and the GDP are the least important measures of success. Their focus is on prosperity and sustainability. They pose the big question: can the scale of economic activity continue to grow without destroying the planet?
@StevenHailAus on Twitter
Check out Steven’s book “Economics for Sustainable Prosperity” www.palgrave.com/gp/book/9783319909806
Special Thanks to Geoffrey Ginter for the excellent intro song! And of course special thanks to our guest Steven Hail, the donors of Real Progressives and our excellent staff of volunteers
Macro N Cheese – Episode 6
12 Years with Dr. Steven Hail
March 6, 2019
Steven Hail [intro/music] (00:04):
The next US presidential election is the most important democratic election in the history of our species. We have not started to cut greenhouse gas emissions globally at all. We need a massive research effort. This is World War II. It’s the space race. It’s the arms race all rolled into one.
Geoff Ginter [intro/music] (00:41):
Now let’s see if we could avoid the apocalypse altogether. Here’s another episode of Macro N Cheese with your host, Steve Grumbine.
Steve Grumbine (01:33):
Hello, my friends. This is Steve with Real Progressives. Tonight we’re going to talk about the 12 year window that the IPCC report put out with Dr. Steven Hail. He’s been a frequent guest of ours and he’s a big part of what Real Progressives is. He’s also someone who I trust very, very much to really keep it real and keep it within the lines of truthfulness to give us some bearing.
So, but what I want to do to start this show is kind of talk about what some of the key findings of the IPCC report were and Dr. Hail and I will go through them both from an economic perspective in terms of what it would take to mobilize in order to help us survive and thrive; and also just sort of talking about maybe some of the misnomers that may have come out in this as well.
But at the top, a key finding of the IPCC report is the dramatic difference that restricting warming to 1.5 Celsius above pre-industrial levels would have on the global environment. I think this is really a very important. The scientists found by 2100 global sea level rise would be 10 centimeter lower with global warming of 1.5 Celsius compared to two degrees Celsius.
Extreme heat waves will be experienced by 14% of the world’s population at least once every five years at 1.5 Celsius; but that figure rises to more than a third of the planet if the temperature rises to two degrees Celsius. Arctic sea ice would remain during most summers if warming is kept to 1.5 degrees Celsius, but at two degrees Celsius, ice-free summers are 10 times more likely leading to greater habitat losses for polar bears, whales, seals, and seabirds.
If warming is kept at 1.5 degrees Celsius, coral reefs will decline by 70 to 90%, but if temperatures rise to two degrees Celsius, virtually all the world’s reefs would be lost. So with that astounding set of features, I’m going to go ahead and bring on my guest, Dr. Steven Hail. Welcome to the show, sir.
Hail (03:54):
Thanks for having me on again, Steve.
Grumbine (03:57):
I mean, this is, this is pretty, pretty big stuff if you’re paying attention at all. And for the average person that’s both watching here and reading these things coming out, this has gotta be either terrifying or they go, yeah, we’ve heard this a million times before. Nothing’s going to happen. What is your take on the IPCC report?
Hail (04:19):
It’s easy to be terrified by it. And it’s easy to be terrified and end up being despondent and just not wanting to listen to anymore when you listen to the sort of things you just read out, all of which are entirely realistic.
I wouldn’t overly dwell on that 1.5 degree figure either, which although it is what the recent report was all about and was focusing on, a positive way of looking at it is that if, if, if we go to two degrees warming above what they call pre-industrial levels, which is really what the average global temperature was in the late 19th century, then we’ll get more . . . .
There’ll be all sorts of major costs around the world, which are obvious already having just gone one degree above what used to be the average temperature on the, on the planet; but we can deal with them. I mentioned this because that report made some assumptions.
It made, particularly made, assumptions about the development and scaling of negative emissions technology, or an ability to suck large amounts of carbon dioxide out of the atmosphere, which are optimistic because that technology is unproven or unproven on any scale as yet.
If you read through the summary for policymakers you’ll, you’ll see that they’ve made assumptions about that. The European Environment Agency earlier this year published a report, which indicated that in the, in the absence of that technology, we’ve basically already gone past 1.5 degrees.
They said that to keep a 50% chance of keeping global warming within 1.5 degrees Celsius – I’m just looking at where we’ve written down on the wall – above the levels of a 150, 200 years ago, we needed to keep atmospheric concentration of carbon dioxide equivalent gases to 430 parts per million if that’s not bamboozling us, a statistic like that.
Now, they also reported earlier this year that we exceeded that in 2012. They also estimate that to stay within two degrees Celsius with a 50% confidence, we need to stay below 530 parts per million. Now we’re now at 450 parts per million. We’d be going beyond 530 parts per million on current trends in about 18 years from now.
So it doesn’t change the story really. If you want to take the IPCC report, you could say we’ve got sort of 10 years to act to stay within 1.5 Celsius. If you want to take a less optimistic view about the development of technology to suck carbon dioxide out of the atmosphere, we’ve maybe got about that same amount of time to keep it within two degrees; but I don’t mean to be negative.
I think we should be as positive as we can be. If we don’t do anything at all, then the climate, by the end of the century, is going to be three to four degrees hotter. Maybe even more than that.
Grumbine (07:32):
What I want to talk to you, I guess, about is, you know, as, as a project manager by trade, and I’m oftentimes looking at timelines, key milestones. And what do they mean when they say 12 years? Are they saying that we have our act together? I mean, obviously you just said we’ve already passed the 1.5 anyway.
Hail (07:50):
Well, that’s not me saying that. That’s the scientist that worked for the European Environment Agency . . .
Grumbine (07:54):
Sure, sure, sure. No, no, no. I didn’t mean to put it on you like that, but with that in mind though, as we present that, you know, what are the milestones? What is it, what does that 12 year represent that we bring the emissions down, which would mean we have to start way sooner than 12 years. It’s not like something that we got 12 years to wait.
There’s intermediate steps that get to that point, that event horizon. Can you describe some of the steps or some of the milestones we might be concerned about in that process? I mean, I mean, they’re just kind of putting this 12 year, 18 year or whatever, the amount of time out there. There’s, I’m not seeing, and maybe I just didn’t read it. I’m not really seeing a plan for intermediate steps or, or whatever that would take place to mitigate such a thing.
Hail (08:43):
Well, there are lots of ways to bake a cake . . . am I supposed to crack an egg? I don’t know what the expression is. There’s lots of paths you can take, and they model various scenarios within that report. But if you’re going to be realistic about it, technologically, it’s something that we can do, but the, in order to do it, you need at least two out of three political entities fully engaged.
One of those is the US government. The other one is the European Union. And the third one is China. And I think it’s unreasonable to expect China, although China is the biggest emitter, but because of the stage of its economic development, to take the lead. So then it has to be the US and the European Union, probably with the US in the lead.
So I, that’s why I said on another podcast I did recently, that I think the next US presidential election is the most important democratic election in the history of our species.
Grumbine (09:49):
It’s terrifying to think that when you look at the people they’re trotting out already from the neoliberal Democratic Party, you’re looking at people like Kamala Harris who are true Wall Street people. You’re looking at Cory Booker, who has already sold out several times whenever there’s been an opportunity to take a legitimate Progressive stand.
You’re looking at people that are veneer of Progressivism with a whole bunch of very, very neoliberal background that, first of all, are absolutely economically illiterate; and secondly, they are truly on the hook for somebody’s paycheck if you look at the donations they receive.
Hail (10:26):
They are going to change their mind though, Steve. I don’t know whether by the time the election comes around, but in five to 10 years time, everybody’s going to change their mind. That’s what I think, which is kind of, I think, hopeful because it may be that by that stage, extraordinarily severe actions need to be taken.
Even if we can develop a technology to suck carbon dioxide out the atmosphere and to deflect some of the solar energy in geoengineering to try and limit the consequences of what we’re faced with. It’s not all, all doom and gloom. I’m not sure how to, I could go through a series of measures that might be part of a path to a sustainable future that we could step back a bit.
Cause, um, this is all, if you look at this in the face, it’s almost so scary as to be off putting. And I remember in Kate Raworth’s book, “Doughnut Economics,” which I recommend everybody to read at some point even though Kate is not well, she may know about Modern Monetary Theory, but she doesn’t write as though she does. She’s a great ecological economist.
When she was first asked by Oxfam to do some work on whether green economic growth indefinitely was a possibility or not, and she started investigating, it was almost too scary an issue to take on, to look in the face. So she sort of approached it from the side, kind of.
Let’s suppose, suppose you were elected president at the next election, and you’ve got a Treasury Secretary who’s Stephanie Kelton, and your Chairman of the Federal Reserve is Warren Mosler. And you’ve got Randall Wray in charge of the Congressional Budget Office.
And just like Roosevelt was regularly in contact with a foreign economist, John Maynard Keynes, you’re regularly in contact with a foreign economist, William Mitchell, and you’ve got on your cabinet or as advisors, you’ve got Scott Fullwiler and Fadhel Kaboub and Mat Forstater and all sorts of other economists that we respect.
Now, what sort of society would you want to create? That’s where I want to start from, I think. What is it that you’d be looking to do?
Grumbine (12:50):
Well, I can tell you from my perspective, I would like to see us taking a more sustainable approach to not only production in society, but an equality-based thing that would allow our cities to flourish without having so much poverty in them, without having so much pollution in them.
To elevate all ships, if you will, to ensure that everyone has their basic needs met, and to prevent, you know, people making decisions based in a desperation that, I mean, that would be the kind of society I would want based on an ecologically friendly, you know, scientific build of our country, of our world.
Hail (13:33):
Well, yeah, I agree with you and, and neither you or I, in setting all those things out have said anything about gross domestic product.
Grumbine (13:43):
Not a bit.
Hail (13:43):
It may rise. It may fall. It’s not the point really. It’s just like the fiscal balance is not the point. And we need to take the focus away from worrying about what the government budget balance is. I mean, it’s not that it’s not important. It’s just that it may be appropriate to run a fiscal deficit forever. And if it is appropriate to run a fiscal deficit forever to balance the economy, to manage the economy and the environment, then that’s fine.
And as far as real GDP is concerned, as far as the scale of economic activity in the country is concerned, I would like to be similarly agnostic because even once we do all the things that I’m about to suggest, I’m not sure whether the scale of economic activity, the quantity of goods and services we produce over time can continue to grow indefinitely.
So that that’s one form of agnosticism, even if it could sustainably without destroying the climate and our natural environment, I’m not sure that it would be optimal for it to because economic activity, however it’s organized has both benefits and costs.
And if the social and environmental costs of additional economic activity ever come to exceed the benefits, then even if you could do it without destroying the planet, it’s not necessarily the case that you’d want to.
So what I would want to do over time, and this would involve increasing real GDP in the short term, it would involve using up some of our limited carbon budgets, too; because it would involve making investments now to make things better in the future.
But I’d like to build a society where people had economic security, where there was full employment, where there was no involuntary unemployment or involuntary poverty, where there was a much higher level of equality of income and wealth than is the case at the moment, where there was a free access to good quality education and healthcare for all.
And of course, above everything else, there has to be ecological sustainability. Climate change is not the only issue there, but it’s the most pressing issue.
So once we’ve got all those things in place, then if you want to target something, target something like Phil’s (Phillip Lawn) Genuine Progress Indicator, but otherwise we’ll still measure Gross Domestic Product, we’ll measure the monetary value of what’s been produced in the economy in a year, but like the fiscal balance, it should become something of no interest because it is not a goal in itself.
It is a means to an end, right? Having said all that, let’s go back to what you could do. One thing you could do is you could confiscate or nationalize all coal production. It may be that you don’t want to confiscate coal production because of the impact that has on the savings of people that have invested in fossil fuel companies.
But you could do something like a swap very long-term government securities, or perpetuities paying a very low rate of interest forever for shares in companies involved in, in coal production or fossil fuel production generally. And you could just lock them up, eventually. You couldn’t do that overnight. But you were talking about having 12 years to deal with climate change crisis.
And roughly speaking, given what scientific scientists say about our carbon budget, which is the total amount of carbon dioxide and other greenhouse gases that we can safely emit if we are going to stay below, say two degrees Celsius above pre-industrial levels. Yeah, that’s something like that. Maybe a little bit more 12, 15 years, perhaps a little bit more than that is the amount of time we have at the current level.
If everybody was using up the same amount per head of greenhouse gases as an Australian or an American, it would be five or six years. It’s no time at all. And we free ride off everybody else. You know, we free ride off all those African people who are not using anything at all at the moment. Or to put in another way, like I said on a podcast that people really don’t like you saying this.
I’m reluctant to come on and talk about this because even in New York I felt uncomfortable because it’s easy to misinterpret what you’re saying. I am in favor of economic development. I’m in favor of improving the quality of what we provide over time. If we end up with a steady state economy in the sense that real GDP isn’t growing, it doesn’t mean the quality of things won’t be increasing.
It doesn’t mean that the quality of people’s lives can’t be increasing. I’m not even saying now that that’s necessarily going to be essential; but when you start saying these kinds of things, people find them a little bit shocking. As far as the US is concerned, people say that the economy needs to, or the economy, we need to reduce our greenhouse gas emissions by 10, maybe 10 to 15% a year between now and the 2030.
And we need no net greenhouse gas emissions at all by 2050. That’s what they say. Now, let me just ask you a couple of questions. Which year do you suppose had the highest ever level of greenhouse gas emissions for the world economy?
Grumbine (19:19):
I should know this, but I don’t. You to tell me.
Hail (19:21):
Well, I do – last year.
Grumbine (19:23):
Oh, wow. Ok.
Hail (19:24):
We have not started to cut greenhouse gas emissions globally at all. If you look at the US, you’ll see greenhouse gas emissions falling somewhat, but there are two reasons why the figures fall somewhat in recent years – not nearly enough, even if it were not for these two reasons, but two reasons.
The US basically has, because of its net imports, has exported its greenhouse gas emissions to the countries that it imports goods from – they’re taking place somewhere else in the world.
And something else, which is often left out, when you look at national statistics is civil aviation and merchant shipping, which is just treated like it’s an act of God and not actually allocated to particular countries.
So we have to reduce our greenhouse gas emissions by 40% by 2030. And we have to eliminate, at some point by the 2030s anyway, and we have to have no net greenhouse gas emissions by 2050. Now we are getting better at creating real GDP, at producing goods and services with monetary value per unit of greenhouse gas emissions that we per ton of carbon dioxide that we put into the environment – this is called relative decoupling, relative decoupling is happening. It’s happening in the US. I
t’s happening a bit faster, perhaps in Europe. It’s happening around the world. It’s happening in China. We need to go beyond that though. Of course we need absolute decoupling. We need, in other words, if the economy is going to keep growing, we need our greenhouse gas emissions to fall, and to fall quite quickly.
That once you take into account, the things that I just mentioned is perhaps happening in one or two countries like Sweden, but virtually nowhere, really. At the moment, there’s no evidence that we are doing a sufficient amount of absolute decoupling so that the the gross greenhouse gas, the carbon dioxide we put into the atmosphere, we have any significant chance of canceling that out so that we have zero net greenhouse gas emissions by 2050.
So we’re placing at the moment, a big bear on research and development, on technological change, on being able to organize economic activity and the generation of power in order to minimize the amount of greenhouse gas we put into the atmosphere, and also the development of negative emissions technologies to suck it back out again.
So, but having said all that, at some point, we need to lock up fossil fuels; and coal we need to lock up quite quickly. 30% of US electricity generation at the moment is coal. In the year 2000, I think it was something like 50%. So there is progress being made. We need a massive public investment in renewables.
So scientists tell us maybe 3% of GDP should be going along these lines at the moment, which is about seven times as high as the current investment. And we actually need to electrify power. So we can’t go around driving petrol driven cars in the future. We need to have green electricity. And then we need to use that electricity to provide more of the total power that we use around the world.
I think less than 50% of the power that’s used comes from the electricity grid. And it needs to be more like 90%. We need a massive research effort. This is World War II. It’s the space race. It’s the arms race all rolled into one. Now, I don’t know how you do that. There isn’t one way of doing it. The research can take place in the private sector, or it could be people working for the government.
I actually think that all the world’s governments should be cooperating. We should be bringing together the greatest expertise in the world, and making sure it’s well-funded – having these people work together. And then the results of the research they do should be freely available to everybody everywhere on the planet. That’s what I think ought to be happening there.
Reducing inequality will be great. Inequality has kept growing in the US and in Australia, too, and not to the same extent. We need to get back to 1960s levels of inequality. At least if you want something else to target, a climate scientist that I have been, forgotten his name, that I’ve been reading a lot by recently, provided some by this statement with some evidence to back it up that 10% of people are responsible for 80% of emissions around the world.
And that would be true within countries, too. Maybe it’s not 10% and 80%, but, um, by reducing inequality, you reduce greenhouse gas emissions quite significantly. We need either a fee and dividend system, like in, like they’re talking about in Canada, but with a higher fee or a global emissions trading system with a very tight cap to be introduced sooner, rather than later.
We need to focus on what matters. That’s what you and I were talking about before, because a lot of the things we want to do actually are consistent with addressing this problem. It would be a big help if we all went vegan, but I’m afraid I’m not likely to do that, and neither are most people.
I greatly respect people who do for whatever reason, and I’m not going to deny that it would be a – helps with 10 or 15% of the problem would go away if we all stop eating meat and dairy. It would be a big help if we all stopped having more than two children, that’s not going to happen either. I think we have to ask some quite difficult questions, too.
I am not certain about whether renewables can be rolled out quickly enough at scale, and whether we have, whether there will be sufficiently efficient and reliable batteries available, and we’ll have the resources to build them quickly enough to deal with all this without thinking again about nuclear power. So, because for all its downside nuclear power does not generate these greenhouse gas emissions.
Grumbine (26:24):
You know, it’s funny, I was talking to a friend the other day and obviously, you know, there we see the outcome of Fukushima and we see the outcome of several other reactor problems that we’ve had, uh, you know, in Russia, et cetera. And, and there’s nothing good to be said about it, but yet at the same time, though, we see clearly that nuclear power provides tremendous environmental good as well.
Hail (26:50):
If we got 10 or 20 years, what I worry about is whether we’ve actually got time to do all those other things without it being too late. It’s just a question. I don’t have the answer to that.
Grumbine (27:03):
Who does? I think that the real, the real issue for me is, and this is as, as Joe Q public, right. I’m not a scientist. I’m not an economist, but I straddle both worlds asking questions. And as I look around at the people that could drive this, if there was enough empirical data, obviously we could get behind it and push, but we also have an incredible amount of special interests even within our own movements, forget the establishment and all the money interests.
We have balkanized ourselves into little teeny cubbyholes with ‘this is my special thing.’ And it doesn’t matter about the big picture. This is the only thing that matters. And this is the only thing that matters. And this is the only thing that matters.
And we are not going to work together unless my little thing that matters so much to me is addressed by everyone. And then we end up deadlocked, and then we end up with full inertia and that’s why you’re going to probably not see the kind of drop in our greenhouse gases, because we’re never going to actually push for it.
And it’s going to come to a point where you say, “Hey, can we even do anything about it?” And it’s, you know, I don’t know if you’ve ever been around people that see calamity coming and they just pretend like it’s not coming and they just hide their eyes and then it comes and gone.
Hail (28:19):
I think we’ll always be able to do something about it. It’s just a question of how severe the consequences will be. I think it is important that people realize that carbon dioxide and some of the other greenhouse gases, once you put them into the atmosphere, they are there for so very long that you might as well just assume they’re there forever.
They’re around much longer than radiation from using nuclear power. That’s how long they’re around. So the carbon dioxide we’re putting into the environment at the moment will be there, much of it, in a thousand years from now.
Intermission (29:11):
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Grumbine (30:01):
So, so let me ask you, you know, we’re talking about finding things that work as a filter to get rid of carbon from the air, carbon dioxide from the air. You know, and then you read the comments coming through and everybody is saying, “Oh, what about nuclear waste, nuclear waste?” And you’ve already stated that it’s simply not going to be the long term solution, but it may be a bridge while we try to buy time.
Hail (30:22):
I’m not saying that. I don’t know the answer to that question, Steve. That’s what I’m saying. I think nobody should react to any suggestion from anywhere using what Daniel Kahneman will call System One Thinking. System One Thinking is where, “Oh my God, it’s a shock. I’m not even gonna think about it.”
Grumbine (30:39):
Right.
Hail (30:40):
Where it’s just instinctive. You don’t think through the issue.
Grumbine (30:44):
That’s what the modern money world, too, the economic system folks tend to just knee jerk and reflexively respond. Same with the political dynamic as well.
Hail (30:55):
I hate the idea. I really hate. And I would die in a ditch to stop them building a nuclear power station anywhere near Adelaide. We have here ‘bound use renewable energy’ in this part of the world. I’m just putting the question out there; and it may be that it is possible to roll out around the world, renewable energy quickly enough with storage capacity so that it’s not, this is not necessary.
There are people that I respect who tell me that they know about these things that are skeptical about that.
Grumbine (31:29):
Sure. I mean, I mean the political will. I mean, I heard you saying earlier that you believe that, you know, we’re going to have no choice, and the people are gonna change; they’re going to have no choice but to change. That, see that’s where I’m, I’m, I’m stuck. I don’t have a belief.
I really am not telling you that doom and gloom here, I’m telling you straight up that I believe the establishment lemming mindset is so powerful that the ability to stay stuck in another world and LA LA LA, I can’t hear you is stronger than any drug I’ve ever seen in the world. I’ve never seen anything come close to the power that the party sycophants hold to. It is the strongest drug ever.
And so when I think about what it would take just to you stack rank this. The United States has gotta be the lead because China is not economically developed enough, even though they’re trending in the right fashion.
Hail (32:27):
Well, the US can’t do it on its own either. I just think two of those three. You have to get two of those three on side.
Grumbine (32:34):
Right. But we see that Donald Trump took, you know, took the presidency and this is people who are recalcitrant. They don’t want to hear anything about government doing anything. They’re more than happy watching them burn it down. And, and unfortunately this is a large part of America. And if we’re looking for America to lead in anything, that’s what you got. And, and I’m not giving you . . .
Hail (32:57):
But most people are going to change their mind. I think.
Grumbine (32:59):
I hope you’re right. I’m just . . . what I’m telling you is as much . . .
Hail (33:04):
I’m optimistic. I’m not pessimistic.
Grumbine (33:06):
I want to be with you there. I want to be with you there, but, and obviously social media is, but a very, very small microcosm of the real world. Okay. But there is a large subset of people that you would have considered allies that can’t stay focused for two minutes on a subject.
They can’t stay focused on anything important. And if this is as important . . . I mean, Kelton just came out the other day in her Stony Brook speech and said it was the number one issue – climate change.
Hail (33:35):
And you have to be, you have to be, how am I going to say this? Yes, you have to be stupid not to see it as the number one issue. I think it’s obvious now, or dishonest – one of those two, there are plenty of dishonest people. And we . . . there are plenty of people who don’t care about your grandchildren because the worst consequences of this . . .
Well, first of all, the worst consequences, these are not going to be felt in the US or in Australia anyway. They’re going to tend to be felt in lower income countries and already are. But secondly, the worst consequences of this, if we don’t, if we don’t deal with it are going to be felt from early in the next century., We’re not going to be around anymore.
So there is, there is that temptation to just ignore the issue. However, of course, some of the consequences of global warming are already obvious. We are seeing more frequent, extreme climate events in the world than previously. And a scientists who was the German government’s chief advisor on climate change called Joe . . . shell Hooper, Schnell Hooper (Josef Schnell Hooper).
I can’t get his name right. . . . as amongst the people to look at this statistically, and to say that it is that there is a link already demonstrably, a link between global warming and a greater frequency of extreme climate events around the world.
Assuming these people are right, and this can only become more obvious as, as the years go by; and, it’s then it’s just a question of how far we go before we start taking serious action. It does need to be quite dramatic. It needs to be a progressive Donald Trump type character, really, in a way, somebody that comes to power and just says, “Well, you know, this is what I want to do.
This is what we’re going to do.” And because when you look at the charts in the IPCC report, if you look at the summary for policy makers, they have a chart where they’ve got a greenhouse gas emissions rising year after year after year.
And then they say, “Well, this is what we’re forecasting if we’re going to avoid it, they say 1.5 Celsius,” but they probably mean two Celsius like that. It’s going up like that. And from now it has to go like that. And then they say, “Well, we can do this. It’s technically possible.” Well, that’s a good thing. It’s good that they say it’s technically possible.
It’s then just a matter of how many years has to go by before there is elected in the major European governments and in the US and elsewhere in the world. Australia is the worst emitter per head of the OECD countries. We’re just not important because there aren’t many of us.
That doesn’t mean, I’m not saying we shouldn’t take responsibility for that, but there are just, there are a lot of Americans – that’s part of the reason. We’re rich, too; and we create more damage per head in this respect than you do, but there just aren’t many of us.
How long has to go by before we get a president of the US who a bit like, not that I’m the greatest fan of Justin Trudeau, but that is able to stand up and say, “Look, this is a major problem. We have to deal with it.” We can try and deal with it through the market, by having a high price on carbon.
And you can do that in a revenue neutral way to make it more palatable and to protect those on low income from the consequences of a rising cost of living. But if you go through the market, you provide the private sector with signals, which should help to reduce emissions over time, but that’s then is not enough.
You have to do some other things as well, which is why I was listing the other things I went through. As many of the people that watch this podcast know, Phil Lawn is a very good friend of mine. And I think he is Australia’s leading ecological economist and very well versed in Modern Monetary Theory for longer than me. So I defer to these people. I listened to them. I read what they’ve got to write.
I read the scientists that they recommend to read. And none of these people are saying that it’s impossible and that we are bound to have a climatic catastrophe. It is possible to limit global warming and to avoid an ecological catastrophe.
Part of that is going to be technological, but part of it is behavioral, too; and changing the things we focus on, changing our priorities and to an extent changing our way of life. Imagine a New York that was largely pedestrianized, for example.
Grumbine (38:31):
Yeah.
Hail (38:31):
It’s difficult to imagine now, but that’s the sort of future . . . big cities, big investments in mass transportation, green mass transportation, less car ownership, or at least less car use. And the cars that we use, they should be running off, powered off the electric grid, and electricity should be generated 90% plus by renewables.
That’s the kind of future. And I think if you get the right people in positions of power, that they really could start to move in that direction quite quickly.
Grumbine (39:14):
I want to ask you a quick question. It’s probably not quick. I mean, the question will be quick, but the answer may not be. For folks that are here because they like to talk about climate change, and they’re concerned about the environment, this is one component of this, but the fix is not going to be done just by a bunch of people making decisions to change how they live.
That you, you had said that’s part of it, but there is a massive infrastructure/mobilization effort that’s going to require the ability to mobilize not only people, but resources to address this. And we understand that to be economic in nature. And it’s not just a tax. It’s not just . . .
When I think about what it would take, you know, first of all, the political will aside, let’s just pretend like everybody’s on board with this. You know, I think to myself, we have so many answers for green energy already in place today.
You know, we have solar highways, we have all kinds of things that could be deployed and how quickly, whether we have enough human resources to actually deploy them, I can’t say that, but let’s just say we did even – the economics behind it. Folks, if you can get ahold of this, the idea that we can afford to do the changes that need to be done, it should tip you off on a whole bunch of other things.
Here’s something that it’s like do or die to some degree. You know, not being an alarmist here, but saying, let’s just say that we keep this in the red zone so we’re not backing off. If you understand the way the economy works, we can take these steps. It’s not an issue of affordability. This is not an issue of carbon taxes paying for things.
This is a matter of us incenting good behaviors, discouraging bad behaviors through the role of taxation, but it’s also about marshaling real resources that we could to provide those filters, to provide those technological solutions, to change the way we do production, to alter the various means by which we store energy, to which we use energy, to which we dispose of waste, et cetera, that the money is not the issue here.
Correct, Dr. Hail? I mean, this is something that I want people to understand. Because if they can take this very concept here about money not being the object, then we can translate that to other areas later, as well, with healthcare and . . .
Hail (41:46):
Yeah, money’s never the object. You’re quite right as far as monetary sovereign government is concerned. I think a lot of your viewers know that already. They’re probably very familiar with Modern Monetary Theory. The US government is not going to run out of US dollars. The US can run out of things to buy with those US dollars. There are what we often call real resource constraints.
So there’s a limited stock of labor and skills and capital equipment and technology and infrastructure and natural resources. Now the ecological constraint is a little bit different and in a sense, that’s the problem because it’s a loose constraint. So it doesn’t bind us this year. We can eat into that carbon budget as much as we like this year, but it will bind us in the future.
And the more we eat into that carbon budget now the greater the constraint, the real constraint is going to be in the future. But again, it’s a real resource constraint. It’s not an issue as far as the money. You can pay for these things. There are many jobs, millions of jobs, future jobs, in a greening the US economy, in moving towards decentralized solar power or other renewables.
Anything that is technically possible can be paid for. This is technically possible. That’s what the scientists tell us anyway. Yeah, it’s not a simple task and it’s a multipronged task. I suggested some things already that need doing over time. That’s just not the only ecological issue that we need to deal with, too. We’re putting too much at the moment in our food system, we’re using too much in the way of nitrogen fertilizers.
We’ve used up and we continue to use up around the world too much land that should be forested or wetlands, we’re losing over time. We are gradually poisoning the oceans and killing the fish as well. All of these things have to be addressed. These are the important issues. What the US government’s fiscal balance is taken out of context of these issues and the state of the economy and, and, and inflationary pressures is not.
So the role of taxes, yes, there is that macroeconomic role, which is to limit inflationary pressures. And there is a, the, there are those other roles bringing about a more even distribution of income and wealth. The US has amongst high income countries the most uneven distribution of income and wealth by some margin, if you could just deal with that – and that does involve taxation.
It involves, well, it involves other things, too, but a big part of it, I think you need to tax rich people because they’re too rich, not because you need their money. And we really don’t need people flying around in private jets. If they want, if they want to go into outer space on one of Richard Branson’s rockets or Elon Musk’s, then fine.
I’m okay with that as long as they only have a one-way ticket. They’re using up, they’re using up far more than their fair part of the carbon budget. We don’t need their money. We need them to consume less and consume different things, less of some things anyway.
And then the other issue is for many purposes in the most efficient way of limiting not just emissions of carbon dioxide, but the use of nonrenewable resources and the generation of waste generally is to, is to price those resources and a carbon tax or a fee and dividend system, or a cap and trade system where businesses or people have to pay a price if they’re generating additional greenhouse gas emissions. That’s part of that as well.
Grumbine (45:51):
Very, very good. All right. So Dr. Hail. With the closing here, I just want to ask you one final question.
Hail (45:58):
Could I just apologize to all your viewers about one thing?
Grumbine (46:00):
Sure.
Hail (46:02):
I am, to the extent that I know about anything. I know about money and banking and macroeconomics. So we’re talking here, Steve and I, about a really important issue that we should all be talking and thinking about, but please don’t imagine, that I imagine that I’m the world’s greatest expert in it or anything. I’m not. I don’t have any particular expertise in this area. I’ve just done a little bit of reading as you have as well.
So there will be people who are viewing this at the moment that are better informed, much better informed than I am. I just wanted to bring it to everyone’s attention. And I’ve mentioned it at the two International MMT Conferences we’ve had so far. Each time I’ve said, “I’m not an expert in this, but I know there are experts around and we should be discussing it.”
Grumbine (46:50):
Absolutely. I think, I think you give yourself too much burthen and downplaying what you do know, because just what you know . . . let’s just say you’re a citizen of the earth. I believe you qualify for that. And within that sphere, you know more than 95% of the people in this planet about what you just talked about, and I will put you into a higher category than that, quite frankly.
So I think that from a standpoint of understanding the economics and understanding the environmental factors, you blend the two perfectly, which is why I asked you to do the show tonight.
Hail (47:24):
Well, thanks very much. It’s a great pleasure to do it. It’s a really important issue. I just didn’t . . . If there’s anyone out there that disagrees with anything I said, I don’t want you to think if you’re watching that I’m saying that my view is any more privileged than yours, because this is not an area which I’m an expert in.
It’s an area that I think we all need to find out more about, and I’m going to, I’ve got a few months now. We’re not much teaching given the way the academic year works over here. It’s going to be my top priority over the next few months to think about these issues and a little bit more . . .to so far, a lot of what we’ve said in the last hour is very vague.
I’d like to read a little bit more widely than I have. And I’d like to be able to say some of these things with a greater degree of confidence. I am confident enough based on the people that I’ve spoken to already, and the reading I’ve done, that it is possible for us to limit global warming to two degrees Celsius above pre-industrial levels.
The bad news is the, this has major consequences, especially in some of the lower income parts of the world for people, and it will cost lives. And there will be, there already are a more extreme climate events as a result of this global warming having taken place.
And further bad news if you like, is that what we’re doing now has consequences for the global climate, which stretch hundreds of years into the future, not just a few decades into the future. But the good news is that two degrees Celsius from all my reading is not catastrophic and we can carry on.
Grumbine (49:05):
Very, very good. I really appreciate you joining us again. And it’s always a pleasure. And I look forward to talking to you again very soon.
Hail (49:12):
Thanks very much, Steve.
Grumbine (49:13):
You got it, man. Have a great night.
Ending Credits [music] (49:20):
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Check out Steven’s book “Economics for Sustainable Prosperity”