The problem with economic optimism

November 20th, 2008

I picked up Jeffrey Sachs‘ Common Wealth on Tuesday, and it’s an interesting book so far. Sachs and I seem to agree on a lot of issues; for example, population size and climate change are both concerns for long-term human sustainability.

However, we part ways in a big way when it comes to talking about what solutions are going to look like.

Not on all things, of course; for example, Sachs argues in favour of a carbon tax, combined with hard emissions targets, in order to stabilize and reduce atmospheric greenhouse gas concentrations. Lots of evidence out there that this is a good way to go, and probably less cumbersome than a cap-and-trade system.

However, Sachs is an optimist. This is probably a good way to be, but sometimes it gets out of hand. Sachs argues, in the first chapter, that world-wide, incomes are growing and will converge at some point, upwards of where those of us in the developed world are now, provided we begin to substitute sustainable technologies and work to stabilize the population. It’s not clear from Common Wealth, at least to this point, whether he’s talking about everyone when he talks about incomes, or just average incomes. And given everything else I know, I think he has to be talking about averages. If some 70% of the world population is not actually catching up, but only treading water or even falling behind in terms of the ability to consume, I think it’s a bit ridiculous to argue that we’re all going to end up with roughly higher living standards with only a few small tweaks, as nice as that idea is.

The chapter on climate change which follows is also problematic, for a similar reason. Sachs argues that climate change is a pressing problem that will effect everyone in the world to some degree. He does, as noted, make some good points; in addition to arguing in favour of a carbon tax, he also argues for a global fund to support mitigation efforts and technology transfer, especially for the most impoverished and hardest hit countries. However, for Sachs, the main two efforts should be improving efficiency and carbon capture and sequestration. Both of those are great ideas, and the first in particular should certainly be a major R&D focus in my opinion. But both of these concepts, particularly CCS, involve new technologies. The benefits are only potential.

If climate change is an urgent problem, and Sachs and I agree that it is, shouldn’t we simultaneously be arguing hard for public policies – such as the carbon tax – that will reduce our overall emissions now, instead of waiting for new technologies to emerge? Shouldn’t we allocate most of our public resources to what we can do right now, in order to buy time for the new technologies that might help in the future?

Unless I’m misreading Sachs, I think he’s arguing that we should put our efforts into these new technologies instead of trying to stabilize and reduce consumption in other ways. I’ll update my thoughts when I finish the book.

Updated to add: I just learned that the term for what Sachs is advocating is weak ecological modernisation.