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One way to look at the climate crisis: Billions of people are using machines that burn carbon to accomplish their goals, and the carbon is heating the atmosphere. Different technologies could accomplish the same or better goals with less carbon, but they are not widely available.
Let’s move a step upstream. Why are our technologies bad? Answer: the price of carbon is too low. Although we pay to extract and transport carbon, burning it is free. The price is too low to reflect the social cost and too low for acceptable outcomes.
When people consume too much of something, you can ban them from using it or tax it. Actually, “you” can’t do either, but governments can enact laws that ban or tax carbon. What we can do is to advocate for such laws. Given the global nature of the problem, many governments would have to enact and actually enforce these laws. However, the record so far is very poor.
To understand why the policy record is so weak, we need to move another step upstream. Policies result from the interplay of political interests. In a mixed economy (with both a market and a government), businesses are powerful interests. Much of their power comes not from explicit pressure and advocacy but from their pivotal role in the economy. They produce the goods and jobs that political leaders want. Many businesses are currently wedded to producing or consuming carbon. They do not even have to say–because most leaders already believe–that reducing carbon will cost jobs.
Although these sentences describe a capitalist mixed economy, other systems are not necessarily preferable in these respects. For instance, the USSR had a disastrous environmental record because its government, too, was influenced by interests that depended on carbon and pollution. They just tended to be (technically) within the public sector. And in countries like the USA, the carbon-dependent interests are not limited to for-profit companies. Unions, federal agencies, and elected representatives from carbon-intensive districts have often contributed to the problem.
Moving upstream to this political level helps to explain why we don’t already have carbon taxes even if they would be optimal. It also suggests a different policy response: subsidize interests that benefit from decarbonization until they grow more powerful than the interests that benefit from burning carbon. The favored interests will include companies but also unions, geographical communities, and looser groupings, such as users of public transportation.
This is what the new climate bills do–not only the Inflation Reduction Act, but also the CHIPS and Science Act, which, as Robinson Meyers notes, directs large sums to climate R&D. These investments could start a virtuous cycle by empowering interests that reduce carbon, which will then demand favorable policies, perhaps including a carbon tax. Michael Ross summarizes important research that supports this strategy in this thread.
By the way, the same logic should also influence how we assess the details of the legislation. For instance, if you want to spend money as efficiently as possible to decarbonize, you should not restrict the funds to US-based companies, as the new bills do. You should buy renewable energy, technologies, etc. from the lowest bidder. But if you are trying to strengthen interests that support decarbonization, then the protectionist aspects of these laws makes sense. You want to strengthen local special interests, which can then become domestic lobbies. If the Europeans and others are angry about our protectionism, let them invest in EU companies.
I endorse this strategy but would want to keep two critiques in mind–coming from opposite ends of the ideological spectrum. Public choice economists in the Virginia School will be alarmed about enhancing the influence of any special interests over government. Such interests will favor themselves in the narrowest possible ways, leading to policies that are opaque and inefficient and that constantly change, preventing individuals and firms from making plans. Being generally libertarian, the Virginia School wants less government rather than more. However, given a government of any size, they would hate a strategy that empowers interests to lobby and allows bureaucrats to make discretionary choices. They would much prefer a carbon tax because it is transparent, universal, and predictable.
From the other end of the spectrum, Marxist political economists will think of the interests that receive subsidies not as individual investors and bureaucrats who want to feather their own private nests but rather as capitalist institutions that will seek to preserve a fundamentally unjust economic system. If the recent laws work, they will mitigate climate change while preserving capitalism, which is problematic from the left.
Both criticisms are worth serious and ongoing consideration. However, simplistic versions of both negate the role of democratic self-governance. We can discuss and act so that the money is spent well. Then the political economy will be substantially democratic rather than corruptly bureaucratic or narrowly capitalistic.
I always want to move one more stage upstream from policy, asking what you can I should do as well as what the government should do. (My new book is all about that.) One reason is existential: you and I are people, not “the government” (even if you happen to work for a government agency–or even if your name is Joseph R. Biden). Whoever we may be, our primary responsibility is to allocate our own ideas and energies well. But we are wiser and more effective when we do that in groups rather than as individuals.
The other reason is analytical. The government is not an unmoved mover. It is in midstream, as much an object of influence as an influencer. For that reason, it is rarely valuable to ask what it should do without having a strategy for what we should do to affect it. And while we are asking what we should do to affect any given government, we should also consider other means of change.
In concrete terms, the new laws create opportunities and obligations for civic action. Most importantly, we (you and I) must make sure the money is well spent. A new transit line will not automatically reduce carbon; it will only benefit the environment if people ride it a lot. And that requires a thoughtful and responsive design for the transit. New institutional arrangements like the National Climate Bank, which will receive $27 billion (including $8 billion earmarked for “disadvantaged communities”) under the Inflation Reduction Act will provide opportunities for public participation, whether that engagement is cooperative and welcome or adversarial.
Most of the money will ultimately flow to firms: that is the nature of a capitalist economy. Subsidies and contracts for businesses create opportunities for entrepreneurs to found better companies, for employees to make their existing firms work well, and for consumers to demand accountability.
A new agenda has also emerged for citizens who want to advocate for federal policy. The recent laws authorize spending but do not appropriate the necessary funds. I think the appropriation is safe for 2022-23 because the congressional leadership is onboard, but we will need to advocate appropriations every subsequent year. We must also keep an eye on implementation of these laws, and we should be especially attuned to opportunities to expand civic capacity, because civic engagement is far upstream. One approach is to invest in groups that organize and train people to work together for the environment. Mary Ellen Sprenkel, President and CEO of The Corps Network, says:
Though it is reassuring to witness our country’s largest investment to date to address the climate crisis, we are disappointed this package does not include support for a Civilian Climate Corps. The Inflation Reduction Act includes funding to restore coastlines, accelerate green manufacturing, make homes more efficient, and strengthen the resilience of our infrastructure. These are laudable investments, but who will do these projects? Who will rebuild and reinforce our coasts, install resource-saving implements in homes, build green infrastructure in our cities?
Let’s work on that next.
See also: what if climate change isn’t a tragedy of the commons?; A Civic Green New Deal; the Green New Deal and civic renewal; the cultural change we would need for climate justice (from 2014); and Tisch College’s Civic Green website.