On January the 21 st John Kerry, now the special presidential envoy for climate, presented a new direction for the US climate strategy. All friends of sustainability will be heartened by his comments that the US will move forward with humility and ambition. What he didn’t talk about is perhaps less heartening.
Its all about the investment, stupid. Whilst Kerry highlights that “In this decade through 2030, the world will need more than $1 trillion in annual investment in clean power systems to speed the energy transition,” the elephant in the room is that with the present way things are rigged, it is more profitable to invest in existing assets than to put money into greening the planet.
It is more profitable to invest in existing assets than to put money into greening the planet. How do we expect there to be any real change?Stephehinton.org
Many economists have explained this phenomenom, perhaps the most famous is Tomas Piketty in his books “Capital in the 21st Century” and “Capital and Ideology”. Professor of Banking, Richard Warner, has described the present system of being one of two economies: the daily flow of money from wages to companies, government and local authorities and the “money” that represents asset values – the assets being real estate, shares, etc.
Today, many houses are valued many times higher than the cost to replace them, and many times higher than the ability of the owner to pay back the loan they took to buy the house in the first place. That “money” in the value of house represents the price people are prepared to pay for it. But is this arrangement useful for the situation we find ourselves in?
If we are to have a new green deal, part of that will be a fiscal intervention to cap asset prices in relation to the price of labour. A cap in asset prices would mean it would be more profitable to invest in new green technology, to build out the capacity of the world’s infrastructure to feed, house and clothe world citizens whilst including them in this green production in a meaningful way.
Capping asset prices is hardly explored in economics textbooks and hardly talked about. It’s time we had these conversations, and talked about using the money we have for the good of all.
Read more about the need for investment in the report from the sustainable infrastructure group and the concept of the need to pivot in near time.
The daily flow of money – M0 and M1 in economics terms – is described by us as “Bathtub economics“.
3 thoughts on “John Kerry, envoy for the climate, tells it by not telling it”
It seems there are economists who follow this line of thinking https://thenextrecession.wordpress.com/2021/01/25/covid-and-fictitious-capital/
I need a translation of that – is it time to build the ARK?