Charlie Young (England, AC 08-10)
The way I see it, we can pull our way out of this crisis in two ways. We can try and run as fast as we can up the down escalator or we can make a concerted effort to jump over the barrier to the stairs.
From all corners of the globe experts have been calling for and granting fiscal stimuli. We can spend our way out of this. The question is how? Personally I think it would be good to have something to show when we come out the other end of this crisis. The easiest short term option would be to just support what we have at the moment – arguably what brought us down.
By supporting these industries we are running up the down escalator, fighting against the mass lack of demand. We could, in the short term, by supporting the production of millions of products and services that aren’t wanted at the price they are being offered at. There is an imbalance, so the immediate reaction is to balance it out – through subsidies, tax cuts or investment.
But we all know this can’t last forever. When things level themselves out and the down escalator slows its pace we’ll be able to breathe out a big sigh. But we won’t be any more stable, it will be the same, only with lots and lots of debt.
At the same time, we’ve been building up a massive environmental debt that somebody’s going to have to pay off. Nature has been bailing us out so far but it’s coming close to crunch time. To avoid catastrophic climate change the IEA 1, Lord Stern 2, McKinsey &Co.3 and the UN 4 have called for around US$400bn to be spent this year on transition to a low carbon economy.
The weight of financial support needed to keep our world from collapsing seems impossible.
In fact, similar to the wide-spread call for fiscal stimuli, experts from every continent have called for a ‘green new deal’. It seems we may be able to solve both these crises at the same time. There is a back-log of environmental projects just waiting to be released upon the economy, only they don’t have the capital or support to start. Clever investment could ‘unleash a wave of creativity and innovation in greening the economy’ 2. The fiscal multiplier of improving efficiency, investing in new, clean technology and building new infrastructure that will support a low carbon economy are all very high and can produce millions of jobs. We have a rare win-win chance to use the same money for both these problems. It’s quite incredible.
It’s an unprecedented opportunity, some could say a miracle. Amazing, but if we ignore this we won’t have another chance to supply this level of green investment without damaging the economy in the short term. Now we have a mass of under utilised resources and a need to spend money to revive the economy.
There would also be a heap of ancillary benefits: local air pollution, energy security, fuel poverty, mitigating climate change and lowering long term costs across the board are just a few. In the words of the British Government, we could be hitting ‘a flock of birds with one or two stones’. However, we are at the bottom of the league table when it comes to green stimuli. It is time for us to act on our rhetoric. We need to jump over the barrier and start climbing the stairs.
The economic crisis is not the end. After this I will move into adulthood and grow old. I have a life ahead of me which, if we don’t make clever investments now, may have to deal with catastrophic climate change. I am genuinely scared that due to oversight at the G20 summit, I and my generation will be signed up to a future that we do not want: a future from my nightmares. The decision is in our hands. Now.
1 – IEA (2008): World energy outlook 2008, International Energy Agency, Paris.
2 – Bowen, Fankhauser, Stern, Zenghelis (2009): An Outline of the case for a ‘green’ stimulus. Policy Brief, January.
3 – McKinsey and Company (2009): Pathways to a low carbon economy, January.
4 – UNFCCC (2007): Investment and financial flows to address climate change, United Nations Convention on Climate Change, Bonn.
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