By Joel Kotkin
Monday, May 30,
2022
The color green has long been
associated with envy, but increasingly it’s becoming a pigment of mass
delusion. Amid near-hysterical reporting about the climate, the U.S., and much
of the West, is embracing willy-nilly policies likely to weaken our economy and
boost China’s ascendancy at the expense of democracy and market economies.
In essence, China is adopting a version of
the great Muhammad Ali’s “rope-a-dope” boxing strategy, which had the opponent
wear himself out by launching harmless punches as Ali lounged on the ropes.
Then, as the rival began to weaken, Ali would seize the moment and pummel him.
Much the same is happening with the
emerging climate agenda. Under Paris and other accords, China, as well as India
and other developing countries, essentially have been given a pass not to
achieve “carbon neutrality” until 2060. The argument is largely (at least
formally) that the West is responsible for the heavily hyped climate
“apocalypse” because of its longer history
of industrial growth, although neither China nor India seems
eager to de-industrialize, cut itself off from medical advances, or otherwise
halt its progress toward Western levels of prosperity.
Western countries, notably the United
States but also the EU, have reduced their emissions significantly over recent
decades. They have assumed considerable costs in making their economies more
“green” and, in some cases, have sought to eliminate or constrict whole
industries, such as oil and gas, while imposing enormous costs on their
farmers, manufacturers, small-business owners, and, directly or indirectly,
consumers.
In contrast, despite its penchant for
tantalizing Western greens with demonstration
projects suggesting a turn toward a “net
zero” policy at some point in the future, China has made a recent
decision to slow its greenhouse-gas
reduction. Amid a global energy crisis, China continues to expand its use of coal and other fossil-fuel plants. This allows the
likes of Apple’s Tim Cook to pose as a progressive green visionary here, while
basing his company’s production in a country that emits more greenhouse gases
than the United States and the EU combined.
Nor is China alone. India is doing the
same, and we can imagine that over time other developing countries, notably in
Africa, will want access to power. Today, one in ten people globally have no
access to electricity and over 3.5 billion lack reliable access to it. Many of these countries now look to
China, not the West, to meet this demand with new fossil-fuel projects.
Ironically, green policies tend to push
production out of places with strong environmental controls and into dirtier
places with lower energy and regulatory costs. According to one study, California’s draconian laws have pushed so many industries and people
out of the state that the net impact of emissions — this is global after
all — has been negligible at best. Green policies have already accelerated the
de-industrialization of countries such as the United Kingdom and could undermine recent efforts to bring factories back from
China.
Chinese dictator Xi Jinping’s
commissioning of new fossil-fuel plants likely reflects pragmatic concerns
about inequality and economic costs for the country’s masses. As someone with
an analytical, longer-term view of politics, and more importantly as an
already-significant figure in Chinese history, Xi knows that a weak economy could
demolish both his imperial “mandate of heaven” and undermine the legitimacy of
the Communist Party. The cadres may well address climate issues over time,
notably by massively
ramping up nuclear power, but they
will continue to maintain a wary eye on how policy affects a potentially
restless citizenry.
Xi is an awful, even genocidal dictator,
but he is focused on his subjects, if only out of political
calculation. In the West, an odd coalition of the upper-end gentry
in Silicon Valley and climate activists on Wall Street impose increasingly draconian “net zero” policies. As the U.S. faces
a growing energy shortage, President Biden and most of his party still seem
determined to reduce energy investment, with new regulations making it harder
to build new fossil-fuel plants, a factor that is contributing to soaring energy
prices. Earlier this month, the Biden administration
canceled a lease sale for some large oil and gas projects.
In some ways, the embrace by many of the most powerful
Western companies of environmental, social, and
governance (ESG) goals and the notion of “the Great Reset” represents nothing
less than a modern equivalent of class war. The potential profits for Wall
Street and tech firms to be made by capitalizing on an enforced jihad against
fossil fuels may be profitable, but for most people in the West the prospects
are less rosy.
Eric Heymann, a senior economist at
Deutsche Bank Research, may be an advocate of the “Great Reset” or something akin to it, but he still warns
that Europe’s Green Deal and its goal of climate neutrality by 2050 threatens
a European
mega-crisis, leading to “noticeable loss of welfare
and jobs.” Overall, it is the industrial areas and the countryside that suffer,
not the favored cities of Western elites — even though the unfavored
geographies are “on a par” with big cities in terms of greenhouse-gas
production. Already as many as one-quarter of Germans and three-fourths of
Greeks have had to cut other spending to pay their electricity bills, which is
the economic definition of “energy poverty.”
Much the same has happened in America,
most notably in the center of green virtue: California. Because of strict
climate rules, California electricity prices have increased five times as fast
as the national average over the past decade. In 2017 alone, they increased
at three times
the national rate, devastating poorer Californians,
particularly in the less temperate interior where “energy poverty” has grown
rapidly. Last year, residential energy prices grew 2.7 times the rate of the
rest of the country. California’s environmental policies, as a new
Breakthrough Institute Report suggests, are creating a “Green Jim Crow,” whereby housing, jobs,
and upward mobility vanish for the state’s largely minority working class.
California’s high energy prices have had a
particularly harsh impact on blue-collar sectors, too. Indeed, an analysis by
the Chapman Center for Demographics and Policy details how California’s anti-climate-change regime has
exacerbated economic, geographic, and racial inequality by depressing
historically well-paying jobs in manufacturing, energy, and home-building, all
key employers for working and middle-class Californians. Even without adjusting
for costs, no California metro ranks in the U.S. top ten in terms of
well-paying blue-collar jobs. But four — Ventura, Los Angeles, San Jose, and
San Diego — sit among the bottom ten.
The green future, as it is unfolding, will
be a distinctly inegalitarian one. It’s hard to imagine a future Houston, with
its vast middle-class economy, being built around “renewable” energy. Of course
the media and their environmental allies hail the promise of “green jobs,” but
even the climate-obsessed New York
Times admits that these jobs — which tend
to be temporary and non-unionized — pay for less than those in fossil-fuel
energy and manufacturing.
Nowhere is the danger posed by green
delusions clearer than in the race to electric cars. Even as gas-powered cars
are getting cleaner and new workable technologies, such as hybrid cars, are
emerging, the green elite has decided that only one kind of car — an electric
one — can be permitted over time. As states such as California seek to ban
gas-powered cars, something the Biden administration has also proposed, we
could be undermining our own transport sector, ceding a large part of our
economy into the hands of China.
The ever-quickening pace of mandates for
electric cars, with little in the way of new electric capacity, seems likely to
serve Chinese interests more than ours. Beijing maintains almost total
domination of the solar-panel
industry — its battery capacity is now
roughly four times
ours, a gap projected to expand by 2030. They
also have effective control of the requisite rare-earth minerals and the
technology for processing them.
Indeed, given China’s growing dominance
in computer
production (and its drive to control
semiconductors as well), the future of American automobile production could
very well consist of slapping a Chinese computer to a Chinese battery with some
bent metal, arguably also sourced there, around it. The much celebrated big
reductions in solar prices, it turned out, came with government subsidies, and
now that China has removed these, prices for the materials for solar panels have surged to the point
that many planned
projects are being delayed.
Like many other current green policies,
the shift to electric cars will also threaten the living standards of working-
and middle-class households. As the prices of rare metals and computer chips
surge, the prices of EVs have grown. Electric-truck maker Rivian recently raised the price of its pickups by $12,000 to nearly
$80,000, not normally what working- or middle-class Americans can afford to pay
for a pickup. The enormous
demand for both rare earths, such as
lithium, as well as such basic commodities as copper and aluminum — critical
for EVs — has sparked a mounting inflationary wave in EV costs and could lead
to more environmentally challenging mining projects.
When California’s governor Gavin Newsom
announced an accelerated schedule to ban gasoline-car sales by 2035,
Assemblyman Jim Cooper, an African American from Sacramento, denounced the proposal, pointing out that the low- and middle-income drivers
he represents can’t afford vehicles that “cost more than $50k each.” “How will
my constituents afford an EV? They can’t,” he tweeted. Besides denouncing this
move as “environmental racism,” he also pointed out that Newsom’s move doesn’t
“take into account the strain an all-electric vehicle fleet will have on our
state electric grid.”
Emboldened by its mission to “save the
planet,” the climate–industrial complex is not focused on such things as
looming power
shortages, national security, or conditions for the
masses. Instead, it chants doggedly about the most extreme projections while
ignoring that there is considerable debate — even within the ranks of the IPCC — about the extent of the threat, its timing, and best solutions.
This embrace of apocalypse, now deeply entrenched in the mass media, allows it
to ignore both class and national-security concerns.
China’s reluctance to adopt a quick “net
zero” agenda for the near future, however, suggests a critical flaw in the
policy of an ever-accelerated climate-change regulation. After all, the Chinese
see the same data and will know what the implications of its greenhouse-gas
emissions are meant to be, and yet Beijing still seems unworried enough to
recognize that climate policies also involve a trade-off, not something
that suggests that it believes that a planetary catastrophe lies ahead.
Certainly, the reluctance among American greens to allow for natural gas or
nuclear power (a view that may be losing its edge in Europe, if the EU
Commission’s green taxonomy goes through) means that our industries will remain
underpowered relative to China’s, whose firms can access a broader mix of
alternatives. Even Elon Musk, whose fortune depends on electric cars, has slammed “green hucksters”
making U.S. energy policy.
In the future, we must confront the
reality that our energy policies are playing into the hands of a Chinese-led
authoritarian bloc, fueled increasingly by Russian oil and gas, including
one new gas
pipeline (and there may well be more). Rather than use our domestic production to secure our
economy, and middle-class jobs here, the administration has sought out supplies
from such enlightened places as Saudi Arabia, Venezuela, and, perhaps soon,
Iran’s forward-thinking mullahs. This seems fine with our virtue signalers such
as Blackrock’s Larry Fink, an enthusiastic ESG advocate, who told investors
last fall to triple their exposure to China.
There may be some stirrings in our corner
of the ring. As noted above, Russia’s war in Ukraine has spurred the EU to
change its energy policies to accommodate natural gas — including from the
United States — and, in some places (notably, France), to return to nuclear power. Many Europeans now openly admit that wind
and solar cannot solve the continent’s short- or medium-term needs without an
expansion of both gas and nuclear energy. In the private market, realities
concerning energy are devastating the sky-high prospects for green-energy
firms and may lift the fossil-fuel
investments so despised by the enlightened
classes.
Reality may be dawning, if slowly, on this
side of the Atlantic as well. Faced with the prospect of widespread power
shortages, President Biden, no doubt to the horror of many greens, has decided
to send federal money for nuclear plants. Even in California’s green dreamland,
Governor Newsom has reversed his position on shutting down natural gas and the state’s last
nuclear plant in order to avoid massive shortages this summer. This reflects a
reality that California, with enormous fossil-fuel deposits, has become
hopelessly dependent on imports of energy, largely from less regulated states and
abroad.
We need to find better ways to deal with
climate issues besides undermining our economy for the benefit of autocrats and
the unelected bureaucracy that enforces their will. Less intrusive methods,
such as promoting home-based work, energy efficiency, and even carbon taxes,
would be less damaging than the current, often ineffective regulations. Also
necessary may be a growing focus on climate
adaptation, as the Dutch have done for centuries,
that could allow for economic growth even as emissions drop. But first we have
to recognize the consequences of our current trajectory: a weaker middle class,
mass immiseration, and growing global dominance by China. If this is what we
are being told we must do for the “Great Reset,” it’s time to unset it.
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