The FT has reported today that:
Policies to tackle climate change are likely to keep energy prices higher for longer and may force the European Central Bank to withdraw its stimulus more quickly than planned, one of its senior executives has warned.
Isabel Schnabel, the ECB executive responsible for market operations, said the planned transition away from fossil fuels to a greener low-carbon economy “poses measurable upside risks to our baseline projection of inflation over the medium term”.
I have already noted this morning Nick Cohen suggesting that the Tories are baffled by the 21st-century. It would seem that they are not alone. We have that confusion on display here. A 20th-century obsession with inflation is being used as an excuse for inaction on climate change as if compliance with an arbitrary rule on inflation rates is more important than saving the planet from distruction. It looks as though the European Central bank has now seen 'Don't look up' and is issuing instruction that we should not look at climate change but instead keep our eyes firmly focused on the goal of inflation targets instead because that in their opinion is the greater priority.
I can quite confidently suggest that this is a form of insanity. When I was in my youth the term MAD was often used to describe nuclear weapons policy, the acronym standing for 'mutually assured destruction'. I think that we might need to revive the term. Compliance with the edicts of neoliberal thinking is now MAD. The question is when, right across the political spectrum, is there going to be an appreciation that unless we think again about what our priorities are and how we organise society to achieve them then we are not going to survive?
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Yes, there is complete blockage of thinking regarding climate collapse in ruling circles. It is worth watching a Youtube clip of John Doyle, a senior scientist in the EU dealing with IT entitled “End of Normal” talk to a degrowth summer school. Despite the fact that lip-service is paid by the EU of the need to tackle climate change whenever Doyle makes a report on his work, he is always told why isn’t he saying that the work will help economic growth when as he says, if we do nothing, in 10 years we are in deep trouble and in 20 years most will be dead unless economic activity on the present model is not reversed drastically now. We are already at 2.4 degrees, 1.5 is pie in the sky now.
I will look that up and watch it
Cohen to me is still too much of a contrarian to be taken seriously and still likes to bait the Left even though his employer claims to not want to divide its readership. He does that in this article – recognising that Kinnock warned us about the future but that the Left did not provide any answers even though the Left has not dominated the Labour Party for some time and has certainly not been so whilst the party has been power.
I prefer Tim Snyder’s POV about the politics of inevitability created by the adherence to TINA thinking to explain the situation because he at least acknowledges how Neo-liberalism has inculcated ALL political parties in the West which has resulted in a feeling of ‘hopelessness’ – actually I’d call it cluelessness.
It’s all very well Cohen talking about the Tories inability to deal with reality. Because what Cohen is doing is ignoring the craven Right wing of the Labour party and it’s adherence to the Neo-liberal TINA thinking. He’s looking after his Right wing mates who were so sympathetic of course to the alleged anti-Semitism under Corbyn’s leadership (I wonder why?).
The Labour party is dominated by centrist Right wingers who kid themselves that they can embrace Neo-liberalism and contain it thus underestimating its extremist roots. And it is THEY who do not have the answers. Not just the traditional Left.
So I find Cohen neither helpful or positive in this context as he just muddies the waters further and prevents reconciliation and resolution in HM Opposition. I wish he’d just shut up to be honest. He’s just a shit stirrer.
The British public simply do not trust ANY politician anymore – and do you know why? Because they all appear to think and talk the same. How often do we hear that refrain folks? I hear it all the time. And it all revolves around Neo-liberalism and its hold on politics. In a past article also baiting the Left, Cohen upheld the view that Neo-liberalism does not exist and therefore we cannot explain it to the British public. Really?
Tell me – Mr Cohen – any one – have we really been able to try?
Deconstructing 1: “Policies to tackle climate change are likely to keep energy prices higher for longer”. The “policies” to tackle the climate disaster are (broadly): energy efficiency measures and renewables. Using less of something will tend to drive down that “somethings” price. Renewables (PV and wind) in most locations deliver elec that is cheaper than fossil (or nuke) alternatives. This reality can be seen on an almost daily basis, across Europe when RES output >>> fossil output (source: ENTSO-E data) prices fall. This begs the question: which reality does Schnabel live in?
Deconstructing 2: “planned transition away from fossil fuels to a greener low-carbon economy “poses measurable upside risks to our baseline projection of inflation over the medium term” which would be correct if & only if RES capital equipment producers were unable to keep up with demand and this in turn drove up CAPEX and by extension LCOEs for RES. But this situation is at best unproven. Furthermore, as noted in Deconstruction 1, even given current market “models” RES elec price is <<<< Fossil elec price. Begging the question: what upside risks?
Norman Davies wrote a history book called Europe. Page 604 “Market” which provides a description of Adam Smith. Last para: “In Smith hands “economics” was a branch of speculative philosophy, & its greatest practitioners have recognised the fragility of their conclusions. In the popular mind…. economics has (now) moved into the void left by the decline of religion and the moral consensus… From being a technical subject explaining human society in the way that medicine explains the human body , it threatens to become an end in itself.
Given the statements made, Isabel Schnabel clearly regards economics as a “belief” system, it is her “religion. I wonder if her middle initial is “I” standing for Imbecile.
Insults aside, the two paras perfectly capture the consensus view within the EU’s various institutions held by people who privately may hold different views (I have some examples) but publicly stick to the EUSSR’s “politburo line” in terms of economics, regardless of any & all external realities.
Thanks
And agreed
The argument is utterly illogical
If I may, another piece of imbecility – from the Germans – again. Showing that process is vastly more important that actually doing something (with respect to the climate disaster).
https://www.euractiv.com/section/economy-jobs/news/auditors-berlins-e60b-climate-fund-booster-constitutionally-questionable/
The implication is that central banks consider reducing carbon dioxide emissions as an “optional extra”, only to be pursued when there are no other economic concerns. I think that tells us all we need to know about the world they live in.
Understanding what’s involved in saving the planet means our leaders have to start thinking in terms of something other than the profit motive. Damaged as children by their boarding school institutions as they are, our leader class can’t do it. They simply aren’t capable as developing the necessary maturity is beyond them. Individual and communal survival solutions will therefore have to be found. There’s nothing else for it.
It certainly explains why they expect us just to ‘toughen up’ and grin and bear global warming just in order to keep their business model intact.
I must be missing something. Do the “serious” economists think that increasing supply (by promoting renewable energy) will be inflationary? I am sure I read somewhere that you got inflation when demand exceeded supply, not the other way round.
I do not think there is muddled thinking at the ECB. The neoliberal fanatics that control it rightly identify the threat posed by climate change, not to the planet, but to their own core values. The solution to the climate change crisis requires a planned, coordinated, international response financed by mega funding, whether via SDRs or some other form of state funding. To achieve such a plan, indeed, to merely have a public debate on it, de facto sidelines the neoliberal tenets. The consequences would be revolutionary, since it would propel MMT analyses (more or less garbled versions thereof) into the driving seat. Elevating inflation risk is a blocking tactic and using it while the neoliberal explanations for it are still driving the public discussion makes good sense.
Do these people yet understand that climate change is an existential crisis for us all? Some do, some don’t and some do but cling to the hope that the science isn’t quite right and we may yet be rescued by a miracle. The question is actually irrelevant, because the Brexit debate, the CRG and other organs of the right of the Tory Party, together with present day Republicanism in the USA combine to teach us that rational debate is not merely not happening, but is consciously viewed (and absolutely rightly so) as the enemy of neoliberalism. I agree that merely labelling every propaganda shift as “ideologically driven” is not the last word in analysis, but I believe it is pivotal to begin with that underlying assumption.
I regret that my own belief is that MMT has made only minor inroads as yet into the hegemony of neoliberalism, but that does not detract from the vanguard role of MMT. The importance of MMT is that it provides analyses (the ONLY analyses) that can form the basis of policies to address all of the crises facing the planet, since all such policies will require the planning I alluded to at the beginning. MMT, up to a point, can impose itself de facto simply because some of the more obvious solutions mean using it. But nothing is automatic and no political process is truly irreversible. It cannot be achieved ‘de facto’ in the longer term and the need for conscious penetration of the neoliberal monolith in the universities and financial institutions remains paramount. The starting point for analysis of any policy or propaganda shift must be the assumption that it is designed to serve the preservation of neoliberalism at a time when the fanatics at least fear, even if not understand that their absurdities are leading to crises that they might not be able to control. Precautions are already being put in place with repressive new laws and restrictions on the franchise.
“The neoliberal fanatics ……… rightly identify the threat posed by climate change, not to the planet, but to their own core values.
Yes. I think that quite likely.
and….”Do these people yet understand that climate change is an existential crisis for us all?”
No. I don’t think they do. I suspect that amongst the wealthy and uber-wealthy there is the belief that they will be preserved along with their wealth to inhabit some imaginary (and possibly fortified) ‘sunny uplands’.