Why the Wealthy Will Have to Make Big Sacrifices to Rein in Climate Change
The rapid mobilization that’s necessary to stop a greenhouse meltdown won’t be happening in the near future, given that in Washington attitudes toward effective climate action span a spectrum from open hostility to timid torpor. In the meanwhile activism, exemplified by the April 29 People’s Climate March, is keeping hope alive, or at least on life support, while the more technical struggle to figure out the transition to a world free of greenhouse gases continues.
But even if we can achieve system change in time to rein in climate change, the years ahead will be no gluten-free cakewalk in the park. Whichever way this struggle goes, America faces some tough times ahead. With many households already living through tough times, it’s going to be the affluent who'll have to make the big sacrifices.
Dozens of scenarios have been published in the past decade purporting to demonstrate how large regions (in some studies, the entire world) can supply all of their energy needs from non-fossil-fuel sources. But some recent comprehensive reviews have found all such scenarios to be inadequate.
To make these scenarios work, it is typically necessary to make two assumptions: on the supply side an impossibly fast and extensive buildup of generation capacity, storage, and transmission, and on the demand side an unprecedented slowing of growth, or even a decline, in primary energy consumption. Attempts to satisfy current or increased demand with 100 percent renewable energy will run up against hard physical limits; the same fate awaits attempts to reduce demand only through efficiency improvements and market mechanisms. Those limits will defeat all attempts to hold atmospheric greenhouse-gas concentrations down to a safe level on an emergency timeline, unless there is an explicit, strictly enforced ceiling on fossil-fuel extraction and consumption, with no offsets or other escape routes. And the ceiling will have to decline steeply year by year.
The 33 percent
Renewable energy generation and the infrastructure to support it cannot keep up with the rapid abandonment of fossil fuels that will be required. Meanwhile, many regions of the world are still struggling to achieve a level of energy consumption—a “floor”—that permits a decent quality of life; no cutbacks are possible there. Those realities dictate that all reductions in energy use must happen in wealthy nations and among affluent, high-consuming classes and communities in developing nations.
Here in the United States, under any effective policy to prevent catastrophic global warming, virtually everyone will be affected by efforts to reduce emissions, but those in the upper part of the income and wealth scales will have to bear the brunt of the resulting economic disruption.
I predict that if we ever manage to achieve a fair, effective climate-emergency policy, it’s the 33 percent of American households with highest incomes who are going to bear the greatest economic burden. This does not mean that policies should explicitly target 33 percent of the population, but rather that the kinds of efforts that will be most effective in reducing emissions and ensuring good quality of life for everyone are going to require a much greater economic sacrifice from the 33 percent than from lower-income Americans. And within that top one-third, the higher a household’s income, the greater the sacrifice has to be.
With the response to the climate emergency following two necessary tracks—a legally imposed contraction of the fossil energy supply and a rapid global conversion to renewable energy—the economic onus will inevitably fall on our 33 percenters. First, there is the initial conversion to green energy capacity and infrastructure, the costs of which have been optimistically estimated at $15 trillion for the United States and $100 trillion globally (and the latter will require a large U.S. contribution.) The conversion has to happen over years rather than decades and will have to be heavily subsidized, with the money coming from taxation of higher incomes and slashing of military appropriations and other wasteful spending. And it will have to be regulated so that it provides plenty of employment but no profiteering.
Meanwhile, the tightening of fossil-fuel availability and the consequent cutbacks in production will cut deeply into the profits of industries not involved in green conversion. Stock prices of companies not working on the conversion will fall. Owners, investors, and upper managers, the great majority of whom belong to the 33 percent, will take a big hit from all of the above economic forces. And if the economy stagnates or if shortages and inflation strike, then price controls, subsidies, and other assistance will have to be directed at vulnerable households and regions. That will require even greater shifts of income and wealth from the 33 to the 67 percent.
This is just how things add up. It’s nothing personal against the 33 percenters. I like most of those whom I know. And of course, it may be the 25 or 30 or 40 percent. Furthermore, the top one-third are not a homogeneous group. Most probably think of themselves as middle class, while up there at the high end are found those seven-, eight- and nine-figure incomes.
For purposes of funding the transition, the fattest target will be the infamous 1 percent at the peak of the pyramid. Nevertheless, rich as they are, all of the 1-percenters roped together wouldn’t have enough income to fund and sustain such a conversion. Those 1.2 million households at the summit are now bringing in about $1.8 trillion a year, Uncle Sam is already raking $600 billion of that back in taxes, and what’s left will dwindle rapidly in a climate-ready economy. Under a climate emergency, the 1 percent’s brobdingnagian wealth can be mostly taxed away, and the proceeds can be put to much higher uses; even so, a windfall of that size won’t be enough to spare the other 32 percent from feeling the pain.
But put the 1 percent and the 32 percent together and now we have a population of close to 100 million people, numerous and affluent enough to shoulder the economic burden of the climate emergency. Who are these 33 percenters? Currently, they are households with incomes that exceed about $90,000 per year. Together, this one-third of U.S. households receives two-thirds of the U.S. population’s total income. The 33 percent own 94 percent of stocks by value. Their incomes are higher now than before the Great Recession hit in 2007, while the other 67 percent’s incomes are still lower. They have an average household net worth of approximately $700,000, in contrast to another 40 percent of households whose average net worth is negative, at -$22,000. The U.S. 33 percent are the global 4 percent, with higher incomes than 96 percent of the world’s people.
And 33 percent doesn’t add up to 33 for everyone. Only 18 percent of Hispanic and 15 percent of black households are members of the American top third.
Affluence versus survival
An economy in which production is aimed at protecting the Earth and meeting human needs rather than maximizing profit could make long strides toward eliminating both great wealth and deep poverty. And, research shows, economic and ecological fairness form a positive feedback loop: if climate mobilization helps shrink inequality, it will drive greenhouse emissions even lower.
Increases in inequality of wealth and income are consistently linked with higher emissions. In explaining this, researchers note that the affluent have the most to gain from climate-disrupting activities and at the same time are able to shield themselves from the worst impacts of climate disruption. Then there is the longstanding observation that the opulent lifestyles of the wealthier classes influence the less wealthy, driving wasteful production and consumption at all income levels—the so-called “Veblen effect.”
But because economists love wealth, they also love to argue that increases in wealth tend to increase efficiency—efficiency, that is, according to the economist’s definition: the dollar value of gross domestic product generated per ton of fossil carbon emitted. But that mathematically rigged metric is useless to anyone concerned about climate justice. So researchers like Boston College sociologist Andrew Jorgenson have been using a much more apt ratio: the degree of human well-being per ton of carbon emitted. And, he finds, as inequality grows in prosperous nations, the emissions required to improve overall well-being increase. Therefore, notes Jorgenson, “Reducing inequality in nations throughout the world could enhance both climate change mitigation efforts and human quality of life.”
The problem with inequality is not just that too many people are poor; it’s also that too many are rich, and the rich are too rich. (That distortion is going to get much, much worse if anything resembling President Trump's proposed tax cut for the most wealthy Americans is passed into law.) It was once believed that affluence could not only increase efficiency but that, despite encouraging greater consumption, it could even drive down total greenhouse emissions. That belief in the so-called Environmental Kuznets Curve has been debunked. In recent research, whether it’s comparing nations, states, or localities within a given time span or it’s tracking a society over time, greater affluence actually leads to higher greenhouse emissions. Wealthier regions may seem to be polluting less, but that’s just because they export emissions by shutting down their local manufacturing industries and buying more climate-damaging goods from poorer countries.
The economist Thomas Piketty's 2014 book Capital in the Twenty-First Century brought the explosive growth of destructive wealth and outrageous inequality to the long-overdue attention of the corporate media and political elites. But discussing his book in Monthly Review, John Bellamy Foster and Michael Yates noted that while Piketty expertly and exhaustively documented the concentration of income and wealth into fewer and fewer hands (and even put the word "capital" in the title of his book), he did not adequately link increasing inequality to the gross imbalances of power that exist in a mature capitalist society—the imbalances between those for whom wages and salaries are the means of subsistence and those to whom they are an expense to be minimized. Foster and Yates endorsed Piketty’s proposal to address inequality—a wealth tax—but went on to write that simply calling for a tax is not enough, that “this would require in turn a reorganization and revitalization of the class/social struggle, and in every corner of the globe.”
That goes for the global ecological crisis as well. The powerful individuals, corporations, and institutions at the peak of the pyramid who have reaped the benefits of the atmospheric carbon buildup will continue to stand in the way of climate justice, because to act otherwise would cost them too much. It will fall to the 67 percent, along with millions of allies in the 33 percent, to upend the pyramid and tackle the climate emergency head-on.