In the second half of a debate on green economics and growth, economists Robert Pollin and Peter Victor re-emphasized their agreement on the limitations of GDP as a measure of economic well-being, including inequality, distribution, and health outcomes.
However, they remained at odds over whether economic growth can accompany a transition away from fossil fuels.
Victor emphasized the rate of investment as a major issue.
“We’re told we must, must expand that energy sector, because jobs and growth in GDP comes first, and we’ll deal with the climate change issues separately or later on,” said Victor. “This is not a healthy or productive way to go forward.”
“It’s really a question of timing. If you transition to green energy slowly, it’s less of a problem than if you try to do it fast. You try to do it fast, then you have massive short-term investment which can only be supported by the existing sources of energy, which are fossil fuel,” said Victor.
Pollin concluded the discussion by arguing that climate stabilization and growth can be simultaneous “because investing in the green economy requires more inputs by people, and less inputs by energy, per se, and by machines.”
“My fundamental point is that I don’t care, per se, about GDP growth,” said Pollin. “I do care about jobs, I do care about distribution.
“If we make a point of trying to slow GDP growth, it is going to mean less job opportunities, a rate of reduction in generating new jobs. It’s going to create huge political resistance, and it’s unnecessary,” said Pollin.
SHARMINI PERIES, TRNN: Welcome back. I’m moderating a discussion between Bob Pollin and Peter Victor. We’re discussing whether it is possible to transition from fossil fuels to new, clean, green energy systems and achieve sustainable growth, or do they have to be decoupled. They agree on a lot of things, but when we left off in segment one, Bob Pollin was arguing that based on very conservative assumptions, his modeling demonstrates that if we combine investing in clean, renewable energy and improve efficiencies, and then link that to equivalent levels of GDP growth, we can still lower CO2 emissions at a rate of about 40-80 percent over 20-35 years, which is what the IPCC is calling for. In response, Peter Victor is arguing that our economy must work within the biosphere, so that when we measure emissions of certain countries we must also factor in consumption of goods produced elsewhere but consumed by that country. For example, Canadians consuming goods made in China. We should factor in emissions of producing that good, transport, and so forth, and when we do that we can get a different result than what we are seeing in the, in the news recently. Further, he says we’re dealing with a much more complicated set of environmental issues than simply climate change and CO2 emissions. Peter Victor also argues that while he agrees with investing in a variety of green renewables to improve the relationship between the economy and the environment, they too have to be produced, and we will have to make more investments much faster, not to mention the intermittency of adopting new technologies. Now, Peter Victor is arguing that our economy must work within the biosphere. So when we measure emissions of certain countries, we must also factor in consumption of goods produced elsewhere but consumed by that country. For example, Canadians consumed goods made in China. We should factor in the emissions of producing that good, as well as transporting that good to Canada. And when we do that we get an entirely different result. Further, he says, we’re dealing with a much more complicated set of environmental issues than simply climate change and CO2 emissions. Peter Victor says while he agrees with investing in a variety of green renewables to improve the relationship between the economy and the environment, they too have to be produced, and we will have to take and make more investments much more faster, not to mention the intermittency issues in adopting new technologies. Instead, Victor argues for slowing down growth and producing less, which could have a meaningful and sustainable result. There is much more to discuss, so let’s continue. So let me go to you, Bob. Can you respond to Peter’s arguments? I know you have already stated your position on GDP, that it is, in fact, inadequate, and you agree with Peter here. But it appears to be a continuing issue in this discussion, but what about what he’s saying about slowing down growth and getting consumption under control? ROBERT POLLIN: Yeah. Well, look, I completely agree. GDP as a measure of economic success has massive problems, not only with respect to environmental issues, with respect to measuring labor by home work, by primarily, by [inaud.] does not include that. It does not include other kinds of fads in the economy. And so there’s all kinds of problems with GDP, per se. Now, economic growth, whether we measure it by GDP or some superior indicator, is another matter. I mean, economic growth can be growth of a clean energy sector. And yes, of course, I have taken into account, along with a lot of other people in the literature, not just me, the problems in building up a green energy sector. Problems such as intermittency with solar and wind, i.e. that the sun doesn’t shine all day and it isn’t windy all the time. So yes, you have to recognize the nature of these problems. And what I’m saying, and the research that I’ve done, says that if we link investments, and I’m not talking about, you know, something that’s excessively ambitious, because I’m talking about something in the range of 1.5 percent of GDP. That means 98.5 percent of GDP is not spent on clean energy investments, efficiency, and renewables. But 1.5 percent. And is if in, investment, if GDP goes up then the clean energy goes up. So like for a country like India or China that expects to grow at 6 percent a year, their green energy sector would grow correspondingly. And I don’t think it’s overly ambitious, given the patterns that we’ve observed thus far, and also the fact that as we improve the technologies over time, costs are going to come down and we’re going to learn more about how to implement these technologies more effectively. So I think it’s the only solution, because if we say part of the solution is reducing consumption, I’m not against that. It’s just not going to get us anywhere close to where we need to be, and we are never going to reduce consumption by 80 percent, or 40 percent. It’s not going to happen. And so therefore we need to substitute dirty energy for clean energy. PERIES: Peter, were you thinking reducing consumption here? PETER VICTOR: I don’t think I ever said reducing consumption. It’s quite interesting that comes up. I’d prefer to–I’ll come back to that. I just want to make a couple of related points. I mean, again, Bob and I agree on a lot of things. I don’t want to say I don’t support the idea of investing in green energy. I just think that there’s this fundamental connection between the rate of economic growth that you try to achieve and the extent to which you have to invest in that green investment. I’d like to slow the pace down, particularly in the rich countries, so that the green investment isn’t so onerous. The other thing I wanted to say is Bob and I both agree that measuring the success of an economy, and this came up in your question, Sharmini, by GDP is part of the problem. GDP was never intended as a measure of how well-off we are, of our well being. It doesn’t deal with inequality and distribution, it doesn’t deal with environmental consequences of producing and consuming the GDP, and some of the other things that Bob mentioned. So part of the degrowth agenda, a big part of it, is to say let’s get away from this preoccupation with GDP. Now, the question is, well, why aren’t we doing that? There’s clear evidence that we’re not. I don’t know what it’s like in the U.S., but in Canada we get monthly reports on Canada’s GDP, how much it’s grown, how much it hasn’t. And clearly when that message comes out we’re supposed to think, well, if it’s gone up that’s good, if it goes down it’s bad. But it’s such an indirect and often contradictory measure of the things that we’re really interested in, such as health outcomes, education, the social circumstances of our population, environmental world, and so on. That’s all forgotten. It’s just a question of GDP. So the degrowth message is just don’t pay so much attention to GDP. So if we want a cleaner energy system, certainly let’s push for that. But let’s not use GDP growth, and I’m going to explain why I say this in a moment, as some kind of criteria. Now, let me give you an example of what’s going on in Canada right now. We’ve got issues around our oil sands economy. What are we hearing in the debate? Well, we’ve got to keep promoting the oil sands, because that will create jobs. So it’s not that it’ll meet some energy shortage. No, we don’t need to do that. It’s a way of employing people. Employing people’s important because that’s our distribution system. And the point I’m making here is we’re told we must, must expand that energy sector, because jobs and growth in GDP comes first, and we’ll deal with the climate change issues separately or later on. This is not a healthy or productive way to go forward, which is why I like to side with the people that promote degrowth and say please, let’s get away from thinking that growth of the economy in rich countries is an important measure of our success. PERIES: And Peter, are there economists you’re working with proposing another way of measuring that’s more comprehensive, that factors in the environmental and ecological issues? VICTOR: Yes, there are many candidate measures that researchers have developed that are slowly being picked up in some official agencies, but it’s very slow. And I do think that one of the, Bob probably won’t like this, I think one of the reasons why it’s so slow is because most economists don’t do what we’re doing in this conversation. That is, stand up and say, you know, GDP doesn’t carry all of the meaning that you think it does, and it’s not such a good measure of how we’re doing. They say, well, GDP, we’ll use that for now. We’ll keep promoting it. And so, yes. In my work, in my modeling work, one of the things that we try to do is be a little more disaggregated. We don’t try to wrap up the whole story of the economy in a single measure like GDP. We look at measuring some of the things I touched on a moment ago, questions of distribution, questions of equity, questions of employment, questions of poverty. All of these things we model individually so that we get a more comprehensive picture of the possible alternative futures that are out there. PERIES: And Bob, tell us about other measurements that could be used, and do you agree with what Peter just said about the other ways in which we can measure? POLLIN: I completely agree. I never stated otherwise. I never said that GDP is a be-all, end-all, I never said that GDP should be prioritized over fairness, distribution, gender equity, poverty reduction, environmental protection. So there’s no argument whatsoever, and there’s really not much to add. There’s nothing to add. Peter said things quite well. The big issue that I do want to raise, though, and this comes out of my research I produced at many levels for different countries, and this is on the issue of jobs, which is critical, as Peter said. It’s the basis for most people’s living standard, whether they’re employed or not, and how much they get paid. What my research has shown over and over again is that building a green economy is actually good for jobs. It is not good for coal miners’ jobs. It is not good for tar sands pipelines, and so forth, true. That’s true. But if we look at the overall level of job creation by investing in a green economy versus maintaining a fossil fuel economy, you overwhelmingly expand job opportunities by building a green economy, so that in terms of garnering support for a green investment agenda, rather than saying the green [investment] that we need to protect the environment even if it means costing jobs, what my research shows is that investing in the green economy is a major engine of job opportunities. I’ve shown it for the U.S., I’ve shown it for Germany, I’ve shown it for Brazil, India, South Korea, Indonesia, South Africa, China, Spain, it works. It’s very straightforward. It works over and over again, because investing in the green economy requires more inputs by people, and less inputs by energy, per se, and by machines. And also, on a related point by Peter, he said building the green economy will entail energy inputs itself. That’s true. But if we’re investing in energy efficiency, and my estimates are quite conservative on the opportunities for energy efficiency gains, I think we can raise energy efficiency standards on average by about 30-40 percent. That’s what’s out there in the research work. On top of that, if we are expanding the green energy sector, that becomes self-perpetuating in that we use green energy to build the green energy sector. So it does not entail more emissions, necessarily. The faster we grow the green energy sector, the lower we get emissions, the faster we get emissions down dramatically. PERIES: Bob, Peter did say that there’s really confining to have green energies be used in the green energy sector, because there’s no, really, such thing, because it is using certain kinds of energies which are not clean in order to generate some of that. Your response to that? POLLIN: Well, that’s true now. Because, you know, 90 percent of all energy being consumed now is fossil fuel energy, or nuclear. But as we substitute away from fossil fuel energy and nuclear, that means the production of energy itself, the production of wind turbines, the production of solar panels, the transportation needs of moving a solar panel, for example, from China to Amherst, Massachusetts, as an example. As we substitute out of fossil fuel energy and into clean energy, then that problem also dissipates, so that what–imagine that what we’re talking about is using green energy, 100 percent, to run the economy. Well, we will have therefore solved the problem of emissions from energy sources. That doesn’t mean, Peter’s right, that doesn’t mean we have to solve the other sources of greenhouse gas emissions. But the goal is to get to 100 percent renewable energy as quickly as possible. And part of, a big part of getting there is to raise efficiency standards, and the other part is to expand our production of clean, renewable energy. PERIES: From what I can understand from what Bob’s saying, Peter, is that some transition is required in this process, and we will eventually try to resolve this problem of using dirty energy to achieve green energy. What do you make of that? VICTOR: It’s really a question of timing. If you transition to green energy slowly it’s less of a problem than if you try to do it fast. You try to do it fast, then you have massive short-term investment which can only be supported by the existing sources of energy, which are fossil fuel. So it’s a question of the pace at which you make the transition, as well as the level of the change that you’re trying to achieve. And this comes back to the point I’ve been stressing throughout this interesting discussion, that the pace has something to do with the rate of which GDP grows. And if GDP is growing less slowly, then the pace of the transition can be that much reduced. So you know, we don’t disagree. I hope it’s clear to everybody who’s watching this that the importance of moving away from dirty sources of energy to cleaner sources of energy, of course that’s right. All I’m trying to say is that the amount of energy that we will have to produce from these clean sources will be larger the larger is the economy that it’s supposed to be supporting. And that’s why, whereas Bob likes to say that, well, you can’t do it all by having a smaller economy, I’m making, if you like, the complimentary point which says, yes, and you’re making the task that much harder for yourself by trying to get an even larger economy. And I think the answer lies in a combination of these approaches, which is a moderation when it comes to how large the economy should be, particularly in wealthy countries, so that we pay more attention to questions of distribution, and less to just making more and more goods and services available for a minority of the population. And at the same time, we transform the way in which we produce energy. I just think it’s a somewhat different balance between scale and efficiency as compared with the position that I think Bob is taking. PERIES: Bob, let me give you the last word. POLLIN: Well, look, I think it’s been a very interesting discussion and I think Peter has made important contributions. I use his book in my course on ecological macroeconomics. These are critical points. My fundamental point is that I don’t care, per se, about GDP growth. I do care about jobs, I do care about distribution. I think if we, let’s talk about the wealthy countries, if we make a point of trying to slow GDP growth, it is going to mean less job opportunities, a rate of reduction in generating new jobs. It’s going to create huge political resistance, and it’s unnecessary. As I said, reducing GDP growth, or negative growth, is not a solution to reducing emissions, whether we like it or not. It can never get close to what we need to do. So that, for example, when I was doing work in Spain with the political party Podemos, Podemos is, on the one hand, trying to fight an austerity agenda. So they want to promote an egalitarian growth pattern. So do I. I want growth, I want the gains from growth being distributed equally. I want to get way past austerity. Now, the only way that you can do that and can combine it with an environmental climate stabilization agenda is to make massive investments in green energy. And those investments in green energy, as I showed in Spain, as with other countries, is a big source of job creation. So we get past austerity precisely by investing in green energy. And it is not a heroic set of assumptions. I’m saying 1.5 percent of GDP. That’s a lot, but I think it is imminently achievable. VICTOR: But it’s only modest because you’re only looking at climate change. Unless you have a green agenda that addresses the full slate of environmental issues, then it’s a very partial analysis that I think is, it’s not sufficient. It’s not enough. And I think that you start looking at what it’s going to cost in terms of investment to deal with the other kinds of environmental problems, loss of biodiversity being a classic one, there’s no simple solution to that. It won’t be dealt with through adoption of a few off-the-shelf technologies. When you start looking at what [has] got to do to an economy to wrestle those problems to the ground, then I think you end up with a different conclusion. And I know you wanted to give Bob the last word, but you can still do that. PERIES: Bob, go ahead, I will give you the last word. POLLIN: I think that, again, I think that these, these issues that Peter raises are quite critical. And it’s true, I’m focusing right now just on climate change. Except I wouldn’t say just on climate change. Climate change is–we’re facing an ecological catastrophe of something that never has been even contemplated before. So it is not just one issue among many, many issues. It’s the most fundamental issue facing the U.S. economy, the global economy right now. It’s about human survival on the planet. So yes, my research is focused on that. I don’t claim that my solution for climate stabilization is the solution for all the sets of environmental issues. But I will say this, that my research on climate stabilization has convinced me that going deep and working through the details of the possibilities that are available at each of the, with other climate issues, such as–environmental issues such as biodiversity, requires the same type of specific research agenda that myself and my coworkers have advanced with respect to climate change. So that’s where I would–I don’t think, I think Peter is raising very good points. I don’t think that he’s giving us necessarily an answer to those points. I don’t have the answer. I think I have a reasonable framework for dealing with climate stabilization now. PERIES: All right. Bob Pollin, Peter Victor, I thank you both for this very nuanced discussion, and I look forward to having you again, both of you. POLLIN: Thank you. My pleasure. VICTOR: Well, thank you very much for the opportunity. It’s been very enjoyable. POLLIN: Thank you. PERIES: And thank you for joining us on the Real News Network.
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