13 Strategies for Fighting Climate Change While Reducing Inequality and Unemployment

The following excerpt is from the new book by Graeme Maxton and Jorgen Randers, Reinventing Prosperity: Managing Economic Growth to Reduce Unemployment, Inequality and Climate Change (Greystone Books, 2016).


For most of the last thirty years, unemployment has been rising in the rich world, while the gap between rich and poor has been widening. This is not what conventional economists said should happen. They said that the strong economic growth experienced from 1980 onwards should have created jobs and spread the wealth around more evenly, especially as it was supplemented by open trade and less market regulation. Instead, average standards of living have stagnated or declined in much of the developed world. Only the rich have become richer, while poverty has increased. Now, thanks to new technology, even more jobs are at risk.

These problems have also made it hard to solve the big environmental challenges of pollution, resource depletion, species loss, and climate damage—because many people think that whatever is done to respond to these problems will result in slower growth, further job losses, and even wider inequality.

Yet to continue on the current path makes no sense. Eventually, the widening gap between rich and poor will undermine social stability. Sticking with the current system will also ruin the planet for future generations, because further conventional economic growth will require more fossil energy, which will result in more of the damaging emissions that cause climate change.

For most of the rich world, the option of continuing along the path of rapid GDP growth no longer exists in any case, because the rate of productivity growth in everything that cannot be mechanized or computerized will continue to slow, no matter what economists and politicians do. The populations of Europe and Japan are going to decline, which means fewer consumers, which in turn means fewer producers. Although the coming wave of new technology will boost productivity growth for those who still have jobs, once everything that can be robotized has been, there will be very little scope for further productivity improvement, because most people will work in nonrobotizable services, culture, and care. In these sectors, productivity growth is very slow and often undesirable. So in the postindustrial, post-robotized economy, there will be very little scope for any further economic growth. Not only will the population of many countries be in decline, the average GDP per person will stagnate.

So there will be a general freezing of the system, irrespective of how much interest rates are cut, workers are reeducated, or money is printed. At the same time, governments will have to spend more on responding to the effects of climate change, forcing them to raise taxes. This will take workers and investment away from the consumer goods sectors and slow consumption growth. Some raw materials will become more expensive, too, and more effort will be required to maintain an acceptable flow of resources, which in turn will result in less capacity for consumption growth. As we discussed in earlier chapters, fixing these problems is not going to be possible using conventional ideas within the existing economic system. There is a need for some new thinking, for an alternative to the extreme free-market ideology. Unemployment and inequality have to be attacked head on, not indirectly by promoting conventional economic growth. And we know that for any new policy to work, it must benefit the democratic majority in the short term, because that is what motivates people to vote for, and then demand, change.

To this end, we offer thirteen politically feasible proposals to improve average well-being in the rich world. Our goal is a future where average living standards will be higher than if extreme free-market thinking is allowed to continue. We believe that by combining our thirteen proposals—by grafting them onto the current free-market system—it is possible to steer the rich world toward a better future, to counter the five challenges (see Box: What are the main challenges facing the rich world? in Chapter 8), and, most importantly, to reduce future unemployment, inequality, and climate change. Almost all of our ideas will need to be implemented gradually, over many years if not several decades.

Thirteen proposals to reduce unemployment, inequality, and climate change

1. Shorten the length of the work year to give everyone more leisure time.

2. Raise the retirement age to help the elderly provide for themselves for as long as they want.

3. Redefine “paid work” to cover those who care for others at home.

4. Increase unemployment benefits to maintain demand during the transition.

5. Increase the taxation of corporations and the rich to redistribute profits, especially from robotization.

6. Expand the use of green stimulus packages by printing money or raising taxes to help governments respond to climate change and the need for redistribution.

7. Tax fossil energy and return the proceeds in equal amounts to all citizens to make low-carbon energy more competitive.

8. Shift taxes from employment to emissions and resource use to reduce the ecological footprint, protect jobs, and cut raw materials use.

9. Increase death taxes to reduce inequality and philanthropy while boosting government income.

10. Encourage unionization to boost incomes and reduce exploitation.

11. Restrict trade where necessary to protect jobs, improve well-being, and help the environment.

12. Encourage smaller families to reduce the pressure of humanity on the planet.

13. Introduce a guaranteed livable income for those who need it most and give everyone peace of mind.

Of course, this may seem like an idealized list that has absolutely no chance of being accepted by those in power—by which we mean financiers, the rich, and big corporations, not elected politicians. Many of our proposals will also be resisted by those who fear losing their jobs or paying more tax. But notice that we have deliberately listed proposals that we believe have a chance of being politically accepted in the rich world. This is because each of our proposals, with the exception of number 12, will provide an immediate benefit to most people. They should appeal to the democratic majority of voters, which in most of the rich world still carries enough weight to get legislation passed—though we acknowledge that this can take time.

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