Warmer but Richer

James Pethoukokis via Cafe Hayek

In one of its occasional assessments, the Intergovernmental Panel on Climate Change—the cowinner with Al Gore of the Nobel Peace Prize—posited a scenario in which the global economy would grow at about 2 percent a year for the next 100 years (it’s growing at more than twice that pace currently) with "fragmented" and "slow" per capita economic growth and technological change.

Indeed, it is just this scenario that was used by the influential Stern Report on the economic impact of climate change. By the year 2100, the size of the global economy would be $243 trillion. However, there is another IPCC scenario. It imagines "a future world of very rapid economic growth, low global population growth that peaks in mid-century and declines thereafter, and the rapid introduction of new and more efficient technologies." According to this story line, the global economy would grow at 3.5 percent per year, giving us a $550 trillion global economy in the year 2100, more than twice the size of the economy assumed in the first scenario.

I don’t know about you, but give me a century of accelerating technological change and $300 trillion to pay for it, and there are few problems that would keep me up at night. So the question is: Which policies will get us there?

A couple of years ago, people were all asking themselves what the world could do to avoid catastrophes like the Indonesian Tsunami.  I argued the best thing to do was to help poorer countries to develop as fast as possible. 

Ironically, the primary way to avoid such disasters is not by reversing human technology (as global warming activists want to do), but by increasing it, in the form of warning systems and evacuation routes.  Global warming advocates actually want to keep everyone poor – they blame wealth and progress for global warming, but note that wealthy countries like the US (the global warming great Satan) has had the technology and the wealth to afford to put systems in place that would have prevented such a huge death toll.  Wealth, prosperity and technology are what would have averted this disaster, and it is just these things that global warming advocates oppose for Southeast Asia.

  • The scenario is called the A1 family. Unfortunately, there was a political argument against Stern adopting it. The A1 family of scenarios is based on increasing globalisation and increasing free trade, both in ordinary economic activity and in technologies (especially power tech).

    The Stern Report was commissioned by the government of Great Britain, which is a member of the European Union; in turn, the European Union is, primarily, a protectionist customs union: that is to say, the EU is an organisation that, by design, hampers free trade.

    To say that our best chance of beating AGW (even supposing that it exists) is to break up protectionist entities such as the EU was not politically desirable for the British government (which would, in any case, benefit — both financially and through the increase in power — by scaring its populace.

    DK