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March 6, 2021

Risky growth

Opinion

March 6, 2021

Through 2019, the last year for which data is available, greenhouse gas emissions and global GDP growth remained as highly correlated as they have been for the last half century. What this means is that despite the rhetorical back-and-forth over technological innovation and government policies as potential solutions to climate change, the role of economic production as its cause is unchanged from prior years. To date, the outsourcing of greenhouse gas emissions to China and India accounts for most or all of the alleged progress being claimed by rich nations.

This relationship between GDP and greenhouse gas emissions is more than a statistical anomaly. It is evidence of the causal relationship between them. And because GDP can be stated in terms of income, responsibility for climate change is approximated through the distribution of income. Those with higher incomes are responsible for a greater quantity of climate change than those with lower incomes. This assignment of responsibility works at the level of nations and economic class. Rich nations are responsible for more greenhouse gas emissions than poor. And the global rich bear more responsibility than the global poor.

In a world where capital is both fungible and mobile, the framing of greenhouse gas emissions within national geographical boundaries– as the Paris Climate Accord and other environmental agreements do, substantively misrepresents the political economy that produces them. Additionally, while technological innovation is both welcomed and encouraged here, the declining rate of economic growth since the neoliberal epoch began explains the declining rate of growth in greenhouse gas emissions. In other words, bottom-up theorizing about the impact of green technologies isn’t yet showing up in this top-down data.

For those unfamiliar with the history, the US emerged from WWII with the only industrial infrastructure left intact. From about 1948 through the early 1970s, this produced a high level of real (inflation-adjusted) GDP growth coincident with high greenhouse gas emissions from within U.S. borders. As industrial infrastructure was built overseas, economic production became more widely distributed. Both China and India implemented export-led economic growth strategies, meaning that they took over greenhouse gas emitting economic production from the U.S. and Europe. The result: goods bound for US and European markets are increasingly produced overseas.

In economic and environmental terms, globalization means that national geographical boundaries are of less value in identifying the sources of economic production. Most complex products like automobiles or computers now incorporate parts, resources, and labor from multiple countries. In environmental terms, this produces opportunistic mobility, a disconnect between legal jurisdiction and physical economic production. With China and India having taken over dirty economic production for the benefit of corporate interests and ‘consumers’ in rich countries, the question of who should bear the environmental costs is complicated.

In terms of grabbing environmental headlines, the US rejoining the Paris Climate Accord is good news. However, the framework of the accord as an agreement amongst nations plays into this disconnect between discrete national borders and the relocation of greenhouse gas emitting industries to China and India. Another way to consider the question is to ask: who benefits from economic production? The answer from mainstream economists illustrates the intellectual poverty of their premises: everyone. Markets didn’t ‘misprice’ carbon emissions for two centuries. Markets didn’t even know that they existed until climate scientists pointed them out.

One of the central points of the 2018 IPCC Climate Report on limiting global warming to 1.5 degrees Celsius is that the problem is global. There is no practical way to limit its impact to those who are creating it. The ‘steady state’ with respect to greenhouse gas emissions is a relative rate of growth. Irrespective of which party occupies the White House, every minute, hour, day, week, year, and decade environmental decline is getting worse in close proportion to economic production – GDP. The collective ‘we’ can either radically transform Western political economy starting three years ago or the future of humanity is an open question.

The longstanding use of marketing in the US to quiet political disputes has resulted in a proneness to conflating symbolism with policy success. A quick perusal of environmental reporting found years of claims of success in reducing greenhouse gas emissions that disappear once the national environmental ledgers are adjusted for outsourced emissions. Imports into the US from China and India are assigned carbon footprints based of the pollution that is released in their production. Because these products are made for export to the US and Europe, the political argument can be made that this is where the environmental costs should be borne.

The question for environmental negotiators is how this disconnect between national boundaries and outsourced emissions will be rectified? The national economic goals of the Chinese and Indian political leadership in building-out dirty, export-based industrial infrastructure is development economics 101. It is how Chinese and Indian economists educated at Harvard or Yale would have been taught to do economic development. The problem of differing stages of economic development is well understood in environmental negotiations. The question of how eight billion people can drive Escalades and live in McMansions has not been answered yet.

The problem is complicated by the economic decision making whereby the types of economic production that have been exported aren’t clearly distinct from methods. Not only have the US and Europe outsourced dirty economic production, but the US has been exporting the US coal ‘saved’ through EPA restrictions on its domestic use to India, Brazil, China, etc. That is, if the political leadership in the US were held to account for greenhouse gas emissions, the dirty coal it sold to China – much of it mined from Federal lands, would have been left in the ground. While Trump! is guilty of environmental crimes, it was Barack Obama who did this.

Excerpted: ‘Economic Growth is the Cause of Climate Change, Not the Solution to It’

Counterpunch.org