I’ve been giving some thought to the Conservative ideal that free markets will solve climate change issues as people will demand action of Industries in Canada. Having considered this, I don’t believe that free markets on their own will, or can, resolve the issue. Not without political leadership to modify the market signals.
During the great depression in the 1930′s and then World War II in the 1940′s, a large share of humanity was faced with a fairly abysmal view of the world and the future. In these unforgiving conditions, traumatized by their collective experience, almost everyone wanted to build a better, safer and fairer world. They accepted that this meant sharing some of their wealth and freedoms with others for the common good.
Public hospitals and schools were built, living standards were deliberately raised and ancient class divisions were broken down.
Later, as the developed world came to feel more comfortable and less vulnerable, many started to begrudge the spending of their money on such intangible, long-term benefits; the post-war contract between citizens and their states started to break down.
By the 1980s, politicians such as Margaret Thatcher and Ronald Reagan had even started to suggest that there was “no such thing as society”. Investors could single-handedly make the world a better place and any constraint on trade, such as a nasty old law, was quickly labelled as a burdensome hindrance.
This conservative rhetoric proved to be a huge electoral success in many countries; and while Reagan and Thatcher once stood at the fringes of political thought, their view of personal and consumer choice as an article of faith has become mainstream.
Even financial disasters such as Enron, the looming pensions “time-bomb”, and Hurricane Katrina do not seem to have fundamentally shaken the widespread belief that the market will one day, somehow, magically solve our problems.
But why should consumer choice be held sacred? Are consumers best placed to make informed choices? Are there not situations where a bit of straightforward regulation might be more effective?
As far back as the early 1950′s the link between smoking and lung cancer was shown, yet to this day consumers still choose to buy cigarettes.
Clearly, having a good evidence base is not enough on its own to produce sensible decisions.
In the case of climate change, our scientific understanding is increasingly robust and proven by observation, and it is becoming inevitable that we will have to reduce our carbon emissions drastically or pay extremely dire consequences.
But we simply do not like the implications. We have become emotionally attached to our fossil fuel based lifestyles and status symbols.
Governments and businesses, of course, need to remain popular. For businesses this means selling as cheaply as possible; for governments, giving us goodies today as well as promising more tomorrow.
So who will take responsibility for unleashing the potential solutions to global climate change? In the view of many, leadership from our elected representatives is essential.
This is especially true when it comes to changing the rules under which individuals and businesses compete, and making the hard choices for the long-term good of society.
By contrast, maintaining a business-as-usual approach merely encourages consumers to continue buying cheap, inefficient, technologies.
Another insidious side effect of governments not giving leadership is that businesses fear being undercut and losing market share, should they have to incur the true costs of their production which are being avoided by their competitors in other jurisdictions.
Undoubtedly, breaking this paralysis will require immense moral courage. For courage, leaders of today need only to look back in time a little and see what their predecessors did.
For example, the hard-won ban against slavery deliberately went against what was considered economically justified.
Prior to this ban, people had been free to own slaves for hundreds of years, and many could see nothing wrong with continuing to do so. Actually, many of that era predicted the ruin of the economy if slavery were abolished.
Now it will never be reversed, and the world economy has adjusted to operating in ways which do not require the exploitation associated with slavery. (The fact that economic slavery has some resemblance to real slavery is a subject for another day.)
Similarly, markets now need to be forced to address, and to assimilate, the environmental and social costs associated with climate change, and to move on to a higher playing field.
Today’s competitive pressures and short-term profits simply should not be allowed to justify emissions standards and carbon prices being kept permanently low, at untold long-term cost.
This week the papers reported on a study out of the UK that not addressing climate change could send the world into an economic depression not seen since the 1930′s. Jack Layton was so motivated by this report that he asked for a meeting with Prime Minister Harper.
If we started now, spreading the costs and inconvenience over the coming decades, preventing catastrophic climate change could be relatively affordable.
Alternatively, if we continued to delay action or suddenly decided to do everything we could in a panic, the costs and disruption could be enormous.
Crucial technologies or economic activities that are dependent on fossil fuels might be impossible to replace on short notice, and this could be disastrous for our entire civilization.
It will not be easy, but we must learn to accept that consumer choice cannot be expected to solve complex, large-scale problems. Governments have to step up to the plate and to step in with legislation when it is needed; giving all the responsibility to markets and consumers is not good enough.
People don’t need more products, they need better.
We must find the courage to remove the worst products from the market, to build environmental costs into prices, and give the low-carbon alternatives a half-decent chance of getting established.
Consumers will then take care of the rest.
