Source: Australian Broadcasting Corporation
URL: http://www.abc.net.au/lateline/content/2011/s3247216.htm
Date: 17/06/2011
Event: Paul Gilding and Tom Friedman on climate change and the end of economic growth
People:
Ali Moore: Well as we've seen today in Canberra, getting agreement on how to respond to climate change is proving to be hard work. Two men who share a deep interest in the economic impact of climate change are Paul Gilding and Thomas Friedman. Sustainability consultant Paul Gilding is a former CEO of Greenpeace International and he's also the author of The Great Disruption: why the climate crisis will bring on the end of shopping and the birth of a new world. He joins us tonight from Hobart. Thomas Friedman is a Pulitzer Prize-winning columnist for the New York Times and is the author of several books. His next which will be published a little later this year - That Used to Be Us: what went wrong with America and how it can come back. He'll be in Australia to speak at the Sydney Opera House in late July. He joins us tonight from Washington. Good evening to both of you gentlemen and welcome to Lateline.
Paul Gilding: Good to be with you.
Thomas Friedman: Evening.
Ali Moore: If climate change is like a car trip where the scientists have given us the ultimate destination and the question is are we there yet, Paul Gilding, are we? Are we at the tipping point?
Paul Gilding: I think we are and I think there's only time to take kind of diversionary action. It's too late not to have an accident, we're going to have the crash, the only question is how severe is the crash and what will our response be in the process of slowing down. So is it fatal or not is our question to answer still but certainly it's too late to avoid the accident.
Ali Moore: This is what you call the great disruption?
Paul Gilding: That's right and I think it's going to be a great disruption. I don't think it's the end of civilisation or of humanity but it's certainly the end of our economy as we know it and it's the end of this idea of endless consumerism, economic growth just going on and on endlessly to the point of absurdity in terms of our lifestyles but also to the point of absurdity in terms of our expectations that the planet can support that economy any further. And I think we're now seeing the numbers stack up in terms of what the consequences of that are in terms of resource rising, oil pricing, arable land and so on. And so this will translate now into economic impact rather than just environmental impact.
Ali Moore: Thomas Friedman, is Paul right? Is economic growth as we know it dead?
Thomas Friedman: Well I think he's absolutely right. We obviously, we've been kind of locked on a growth path of building more and more stores to sell more and more stuff to be made in more and more Chinese factories powered by more and more coal so China could buy more and more T-bills to be recirculated back to America to build more and more stores to sell more and more stuff powered by more and more coal so China could earn more and dollars to be recirculated back... We've been kind of in that loop and basically that loop is what we're seeing slowly grind to a halt here. We just can't keep it going that way. My friend Rob Watson, who's the founder of Green Buildings likes to says, you know, Mother Nature, she's just chemistry, biology and physics. That's all she is. You can't talk her up you can't talk her down, you can't sweet talk her, you can't say, Mother Nature, we've having a bad recession. Could you take a couple of years off? She's going to do whatever chemistry, biology and physics dictate and Mother Nature, to put it in American baseball terms, she always bats last and she always bats 1,000. So do not mess with Mother Nature and that's exactly what we're doing.
Ali Moore: You talk about this loop grinding to a halt and I remember vividly in 2008, and this was when you wrote that there had been this clash of Mother Earth and Father Greed, they hit the wall at once. But back in 2008 we talked a lot about this, about how we all bought too much stuff, we were way too materialistic, we depended too much on accumulating and everyone talked about how that would come to an end. But what happened? Markets recovered, people felt more confident, they started buying more stuff again. So was it really a moment when Mother Earth and Father Greed clashed or was it really just one of the many moments that we have in the cycle that is the great economy?
Thomas Friedman: It's a good question. The way I put it at the time was that it was our warning heart attack. It was Mother Nature and Father Greed basically saying you are growing in an unsustainable way. You're growing based on situational values. Do whatever the situation allows rather than on sustainable values. Grow in a way and we can continue to grow in a way but do it on the basis of sustainable values, values that sustain us. So I think that's really how I look at what we call the great recession.
Ali Moore: Paul Gilding, where do you see these signs that we're grinding to a halt? Talk us through what you're seeing?
Paul Gilding: Well I think one of the most dramatic ones we're seeing lately and financial commentators are starting to discuss this now is that commodity prices, which have been going through a pretty steady fall since you know, the turn of the last century, so for 110 years or so we've seen a consistent decline averaging about 1.5 per cent per year, 70 per cent over that time frame. And they've only really gone up during period of extreme demands like WWI, WWII, you know, sort of price shocks have seen it go up otherwise they've gone down. Those commodity prices have now gone up again during a recession and so of course what that means is that the prices are going up because demand is out stripping supply and this is not just one or two items, this is like the entire range of commodities across food, minerals and so on. So of course that's in a recession. What that means of course if we could get the global economy really growing again, then of course those prices would spike and would stop growth again and I think that's probably the biggest example we've got. And those resources, those commodities are actually coming from Mother Nature and what we're now seeing of course is that now we're running right now at about 150 per cent of the sustainable capacity of the planet and we're planning to grow the economy to three or four times this size by 2050. It's just not going to happen. Not because we don't want it to not because it wouldn't be nice or because polar bears will die, because physics and chemistry and biology as Tom said, I mean it's just not physically possible for that to occur.
Ali Moore: But let's look at Australia right now for example and certainly we have a two-track economy but what many people see is that commodity prices are high and indeed they're driving growth, they're driving employment so those people who are employed can buy more. That gives more people jobs. It seems to be a positive cycle for Australia. It's hard to sort of come to this point where it's all necessarily unsustainable.
Paul Gilding: Well it's positive for Australia in the short-term because of course commodity prices going up is good for Australia but the bottom-line is that is only going to get worse globally because of course the more commodity prices go up, the inputs to our very consumerist, very material economy are no longer affordable. And so as we've always seen when oil price goes to new highs we get a recession as a result and with peak oil now coming on board as well I think we are going to see absolute fundamental limits to economic growth. Now of course I don't mean 1 or 2 per cent this year, next year, but the basic model which assumes that we're going to grow the economy and keep on doing so until everyone in China and India and everywhere lives like we do is just not possible. You can't have an economy that big because there isn't enough room on the planet for it. Of course during the cycle of getting there there are good times, bad times for different countries, but we're looking at the total global growth model here and it just no longer adds up.
Ali Moore: Thomas Friedman, to what extent though, and I will put this to Paul in a minute, is Paul's point relying on no change? Because you wrote back in 2009 that people were already using the economic slowdown to retool and reorient their economies and you made the point that Germany and Britain and China and the US were all putting in place stimulus packages that revolved around investments in clean power. I mean do you believe the world can come back from the brink, that people can change?
Thomas Friedman: I certainly do, provided that we face up to the problem. You know Ali, my last book on this was called Hot, Flat and Crowded and whenever I talk to people about that I always, I'll hold up the book and say, well maybe you don't believe in hot, maybe you don't believe in climate change and global warming, no problem. That's between you and your beach house. But please, please believe in flat and crowded. That is the world is getting more and more flat, that more and more people can see how we live, aspire to how we live and live like we live. In my country's case, in American-sized homes, driving American-sized cars, eating American-sized Big Macs, and there's going to be more and more people. We know that. So when flat meets crowded more and more people and more and more people who can and aspire to live like us, that only goes one way towards the kind of explosive demand on resources that Paul just discussed.
Ali Moore: I'll come back to the US in a minute but Paul what about all the work that is being done? I mean look at China for example and its and most recent five-year plan and the commitment there to renewable energy, the massive solar farms that we see in Portugal. Do you dismiss all that sort of thing as being just not enough?
Paul Gilding: I dismiss it not as being not enough but not being fast enough and coming too late. So it is not that it's not possible to do this differently, the trouble is we have left it so late we can't do it now fast enough to prevent a major economic crisis. So absolutely very excited about solar power, about the incredible transformation we're going to go through and I think we're going to do that with incredible speed one we start. And I refer to this as the kind of one degree war that I think we are going to mobilise as we do in war to stop climate change and to turn this around. However, we have such an economy built upon the old model it's simply going to take several decades to turn that around. So even with the war-like mobilisation and the complete transformation of the transport energy, agriculture and so on, it is going to take several decades to get there. And in the end we have to face up to the fact that the very basic idea behind our model which is that we can have infinite growth on a finite planet is simply not possible. So we can argue the timing and the transition points and so on but the bottom line is we can't get there and keep on doubling the economy every 10, 15 years into the future. At some point it must stop. And so we will see dramatic change, don't get me wrong. I'm very excited about how fast that change is going to occur and how we are going to have to think differently about consumerism and quality of our life being defined in difference ways. And we can do that but we have to face the fact that we're not going to change until the crisis hits and once the crisis hits there's a lags in the system which means it will take some time to transform. And during that period and I think for many decades thereafter we're not going to see economic growth of any significant scale and that's going to put, you know, a grenade into the glass house in terms of our politics, in terms of our society, in terms of our assumptions about how we live our lives and what works and what doesn't work in terms of our economic system.
Ali Moore: Well when it comes to things that are unsustainable Thomas Friedman, I mean look at America and look at the public debt - $14.3 trillion, 100 per cent of GDP. And I spoke recently to someone in the US who said that yes, people are concerned about it but then very quickly they move onto wondering what's for dinner. It's almost like out of sight out of mind. How sustainable is that sort of position in the US today and how active are your politicians at being able to not just talk about it but do something?
Thomas Friedman: Well we're actually going backwards Ali. You know in the last two years of Obama's presidency, climate change actually became a four letter word. We have a two party system here. One where Democrats have the right convictions about climate change but have no courage of their convictions and the Republican Party has gone completely overboard on this issue. They've actually gone to war against physics. They're actually gone to war against biology and math as well. So that's our choice right now - people who have the right ideas but are cowardly and people who have completely the wrong ideas. I mean we have a leading Republican presidential candidate Tim Pawlenty whose position is that we're going to have 5 per cent growth for the next 10 years once we elect him as president.
I mean they're in cloud cuckoo land. We haven't become serious about this at all and Obama has not used his bully pulpit. Climate change became a four letter word under Barack Obama because it is such a hot political topic here that everyone tells him you've got to stay away from it and he's presided over I think a real erosion in American understanding of this issue.
Ali Moore: So Thomas Friedman, when do you think we will know that we've got to this crisis point that Paul Gilding talks about that will lead to this extraordinary action that Paul also talks about and I'll get him to expand on in a minute. But when do you think we'll know that we're there?
Thomas Friedman: Well Ali, basically what's going on right now is we're all sitting around waiting for the perfect storm and the perfect storm is a storm that is big enough to finally end this debate but not so big to end the world. That's basically what we're sitting around waiting for. And so politicians aren't actually going to take the action we need. They're going to wait for the market and Mother Nature to act, okay and force us to do this. Now when Mother Nature acts, you know it's like we have a choice, we can go to the dentist and have him remove our rotten tooth, you know. It will hurt but they'll do it with Novocain and it will be done in a professional way. We're not going to do that. We're going to let Mother Nature do it. Now when Mother Nature does your dental work that's like having a caveman remove your tooth with stone tools. He'll get it out but there's going to be a lot of blood on the floor along the way.
Ali Moore: Paul Gilding, is that right?
Paul Gilding: Yeah, totally right. And it won't be just environmental, it'll be economic as well and therefore it's social. So as oil prices go up therefore food prices go up, because food prices goes up instability goes up as Tom wrote about in his column last week. And so you have this cycle that goes on and that's what's going to happen. Because it's a complex system. It's not just a major climate event. It's food prices going up, food shortages and famine creating political instability which is bad for markets, markets nervous. You know for example if we want to achieve a two degree temperature rise and no more than that and we're going to have an 80 per cent chance of achieving that, it means that between half and three quarters of all proven fossil fuel reserves, all coal, all oil and all gas can never be burnt. Now those companies are valued according to their assets and those assets can't be sold. So we're going to have a massive economic shock and I think the economic shock is what is going to drive us to change rather than the environmental impact. We've had the most extraordinary extreme weather in the past decade. I mean any right-minded person looks of that and says, what are you thinking? Of course there's climate change already happening.
Ali Moore: But Paul Gilding, my question to you is you talk about this war-like response, that that's the sort of emergency action that you see the world taking. Why so confident that the world will take that as a collective and it won't become a dog-eat-dog survival of the fitness?
Paul Gilding: Because there's no evidence in history of that. And for my book, The Great Disruption I looked at that in some detail. And I think World War II is the best example. And we forget now looking back just how much controversy there was before the declaration of World War II about same as we hear now - the threat isn't that bad. People aren't going to respond. We can't afford to militarise. All the same arguments were used. And if I was Winston Churchill in that period, I would have completely despaired of the inability of society to respond. And then suddenly it changed. Now what ended was not some new evidence, the evidence was always clear as it is now, what ended was denial. And what we do see in corporate crises, personal health crises, you know war so on, is denial goes on for a long time and it gets worse as the evidence gets stronger, which is what we're seeing now. The reason sceptical science is going on so strongly now is because the evidence is so strong you have to actually deny physics you know, to actually oppose what the climate scientists are saying. So that's why it gets so extreme and then it stops. And that's what history says that we do consistently - avoid, avoid and then oh my god! Then we act. And that's how it's going to be on this one as well.
Ali Moore: Thomas Friedman, is that right? Because I would have thought that certainly the recent historical evidence would suggest that the world is not very good at working together. I mean if you look at the impact of the GFC and the thinking now of the developing countries about the very institutions designed for the world to work together like the IMF and like the World Bank, there's a great deal of disagreement. And you look at the G20, I mean they haven't even been able to get themselves together about the response to the global financial crisis three years after the event. Is the world good at working together?
Thomas Friedman: Well you know it is a legitimate question to ask Ali because we're going through a moment right now where our problems are getting deeper. We've had a terrible decade of excess. At the same time when power is being disaggregated, you know through Twitter, Facebook and all these other social and technological changes, so one does worry that will the necessary be impossible?
But at the same time I really think Paul's historical analogy is right. And one of the things that's totally missing right now and that's key really to the argument Paul was making, and that's American leadership. And you know, when we basically dither and delay and deny, we America, well that gives an excuse for everybody in the world to do that. I think when we take the lead and take the lead by doing something hard ourselves, so it's not after you but follow me, I think you do get a different global response. But I want to add one point too because you know I cover the Middle East a lot and I've been out there covering the Takreer revolution in Egypt. You cannot understand what happened in the Middle East, remember world food prices hit a record high in December, when does the uprising start in Tunisia? In December. And you do have this loop going on now where higher food prices lead to greater instability, greater instability leads to higher oil prices, higher oil prices which are a huge component of food prices, lead to higher food prices. So we're in that loop and we've got to develop a counter loop now to that loop.
Ali Moore: Well look, sadly we are out of time but I guess the message from you both is that we can get over this, the world is not doomed. At least you are both confident that we have the ability to take the action should we choose to. Thank you very much for your time.
Thomas Friedman: It's flat but not doomed. [Laughter]
Ali Moore: Well, Paul Gilding and Thomas Friedman, many thanks for joining us tonight.
Thomas Friedman: Thank you.