The current heat wave and wildfires in Australia are an immediate cause for concern, threatening large scale damage to homes and life. They have also caused some to focus on the possibility of an increase in such catastrophes as average global temperatures rise. Meanwhile, Joseph Stigliz warns of an urgent need for structural change to respond to the simultaneous threats to the long term future of society resulting from climate change, poverty and inequality.
In Australia yesterday, Julia Gillard warned that:
Gillard said extreme bushfires were part of life in a hot and dry country.
”And while you would not put any one event down to climate change … we do know that over time as a result of climate change we are going to see more extreme weather events,” she said.
The biggest disasters in Australia’s recorded history have been during the summer months and such disastrous events are likely to increase. However, it is not just temperature rises that cause such events, but unusual climatic conditions:
Climate scientists predict average temperatures are set to increase by somewhere between two and five degrees by the end of the century, but it’s not average temperatures that create cyclones and bushfires. The big ones – those that kill scores of people and inflict hundreds of millions of dollars in property damage – occur in exceptional climactic conditions.
This includes a prolonged drought, followed by a day or so of high temperatures, low humidity and gusty winds. Chris Hammer explains:
Australia’s hot dry summers already ensure that such exceptional circumstances will inevitably occur. They occurred in Victoria and South Australia in the Ash Wednesday fires of 1983, and the Black Friday fires of 1939, long before climate change was perceived as a threat.
Some may take comfort in that, but it would be a misplaced comfort.
An average increase in summer temperatures will increase the frequency of bushfires, perhaps exponentially. The modelling cannot be precise on this, but the direction is clear.
This is because with an increase in background temperatures, climate scientists also expect an increase in climactic volatility. In other words, more exceptional weather events: drier droughts, wetter floods and more catastrophic bushfires.
Such environmental catastrophes are inevitably linked with social and economic conditions as are any possible solutions. I’m not sure about Stiglitz claim that an adequate response to climate change will “restore adequate demand and growth“, rather than aim for a sustainable, steady state economy. However, he does outline some of the causes of global economic and social problems. Stiglitz argues that world is needing to adjust from a society based in manufacturing to a service-based one.
While processes of manufacturing necessities have become cheaper and more efficient, the demand for services such as health and education has grown: a demand that is far from being fully met internationally. Stligltiz argues:
New firms must be created, and modern financial markets are better at speculation and exploitation than they are at providing funds for new enterprises, especially small- and medium-size companies.
Moreover, making the transition requires investments in human capital that individuals often cannot afford. Among the services that people want are health and education, two sectors in which government naturally plays an important role (owing to inherent market imperfections in these sectors and concerns about equity).
In this context, Stiglitz points to a crisis of inequality as being one of the major global problems that threatens the long term future for human society.
Indeed, I (and others) have argued that growing inequality is one of the reasons for the economic slowdown, and is partly a consequence of the global economy’s deep, ongoing structural changes.
An economic and political system that does not deliver for most citizens is one that is not sustainable in the long run. Eventually, faith in democracy and the market economy will erode, and the legitimacy of existing institutions and arrangements will be called into question.
The “market” will not provide the solutions to the inter-related problems of climate, environment, inequalities and poverty. It requires “structural transitions” and provisions that include governments taking an active role. As Stiglitz concludes:
As we struggle with today’s crises, we should be asking whether we are responding in ways that exacerbate our long-term problems. The path marked out by the deficit hawks and austerity advocates both weakens the economy today and undermines future prospects. The irony is that, with insufficient aggregate demand the major source of global weakness today, there is an alternative: invest in our future, in ways that help us to address simultaneously the problems of global warming, global inequality and poverty, and the necessity of structural change.
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