Joseph Stiglitz: Corporate greed is accelerating climate change. But we can still head off disaster

By Joseph E. Stiglitz

Joseph E. Stiglitz is University Professor at Columbia University and winner of the Nobel Prize in Economics. He is also the co-chair of the High-Level Expert Group on the Measurement of Economic Performance and Social Progress at the OECD, and the chief economist of the Roosevelt Institute. His latest book, People, Power, and Profits: Progressive Capitalism for an Age of Discontent, will be released by W.W. Norton on April 23. The opinions expressed in this commentary are his own.  

America's economy has not been working for a large portion of the country. Workers at the bottom of the income scale earn wages, adjusted for inflation, that are not much higher than what they were 60 years ago, while the income of a typical full‐time male worker hasn't budged much from 40 years ago. In addition, life expectancy is in decline. But the economy is not only failing American citizens. It's failing the planet, and that means it's failing future generations. 

There are many reasons for our plight, including corporate power and greed centered on immediate profits and little regard for the impacts business decisions have on low-income Americans and the environment. Corporations have translated their economic power into political power, lobbying for policies that give them free rein to despoil the environment; and the swamp President Donald Trump promised to drain has been overflowing. At the same time, Trump has publicly asserted that climate change is a hoax, and yet his administration has repeatedly been forced to admit it is a reality — in response to climate lawsuits such as Juliana v. United States, for which I'm an expert witness.

 

Climate change is real, and it includes not only an increase in the average temperature, but also more extreme weather events including droughts, floods and hurricanes that have led to a large number of deaths. The United States has borne enormous costs as a result of the warming planet — in 2017, more than 1.5% of GDP. By the end of this century, some sectors of the US economy, including agriculture and energy, could lose hundreds of billions of dollars a year because of climate change, according to the latest report issued by the U.S. Global Change Research Program. 

 

So there is a real urgency to respond to our economic malaise and our climate crisis. The good news on this Earth Day is that these are problems of our own making, and that means a change toward pro-Earth policies can make a big difference. Even better, the major investments we need to respond to the crisis would be a spur to the economy. This is one of the central messages of the Green New Deal. 

 

The transition to the "green economy," in which we rely on renewable energy, won't happen on its own, however. It will require a mobilization of resources — the kind we saw during the New Deal and the Second World War. 

 

Government will have to take the lead, and it will require public investments — including in infrastructure and research — and regulations. Environmental regulations such as the Clean Air Act can and have worked, and typically are very cost‐effective. Without these measures, our air would be even more unbreathable than the air in New Delhi or Beijing today. 

 

Dealing effectively with climate change is well within our reach; in fact, I recently co‐chaired an international commission that showed that the global goals of limiting the increase in global temperatures to 1.5 to 2 degrees Celsius were clearly achievable. It would make so much more sense to spend money retrofitting our economy to reduce the risk of disastrous climate change rather than spending money to deal with the enormous economic and human costs of coping with its consequences. 

 

Some of the required resources would come simply from eliminating the huge subsidies we provide for fossil fuels, or from taxing corporations that inflict damage on our environment. This would encourage corporations to work hard to prevent it. But there are broader changes that would help grow the economy, providing some of the needed resources: curbing the excesses of corporate power more generally would lead to a more efficient economy and to more equality. So, too, would curbing the abuses of corporate governance, like CEOs paying themselves so much at the expense both of workers and investment. Policies that reduce discrimination in the labor market and provide more flexibility in hours are examples of supply‐side measures that work. And over the long run, education policies that help all citizens live up to their potential would also help the economy grow.

 

The mobilization during World War II had some long‐term salutary effects on our economy and society: It brought women into the labor force and it helped transform us from an agrarian to an urban society. The mobilization required to fight climate change has a similar potential. As we restructure our economy and society away from a high‐carbon economy and toward a more sustainable one, we should seize this opportunity to create the society that benefits all of us, as well as the planet.