The Case for Intervention

Economists on the right believe that government’s role is to foster the conditions for an ideal free market, where by-and-large issues are overcome by supplying demand. In this case, where there is demand for sustainable solutions, supply will follow and business will transition to a more sustainable future naturally. It would generally not be government’s role to artificially create demand through regulation.

Left wing economists believe that it is government’s role to lead through such issues, regulating and investing where necessary to ensure that the desired outcome is achieved, in this case, sustainable business.

A criticism of the former is that it can take markets a long time to balance supply and demand, and that market failures can exacerbate issues.

A criticism of the latter is that it assumes the government is the expert in all matters and can enact the correct interventions to achieve the goals. This leads to wasted time and money through experimentation and confuses the market, causing reduced investment and delayed decision making.

It is fair to say that both of these criticisms have been observed in governments all around the world.

We are in unprecedented times. It is true that governments and markets alike don’t know what to do to avert the impending calamity that we can now clearly see, not just on the horizon, but right in front of us.

Time is up. We now need a massive, concerted effort if we are to limit the future destruction caused by climate change.

We need the markets, we need government policy, regulation, and investment. We need to overcompensate, because taking our time is no longer possible. We need to invest in making every business sustainable, every supply chain efficient, and the economy fully zero emission.

This will require vast amounts to achieve, and some money will be wasted. But that will be a drop in the ocean compared to the sums research shows we will need to respond to the damage climate change will do if left unchecked. We simply can’t afford that bill, and just because it hasn’t come due yet doesn’t mean it won’t. We are already accruing Planetary Debt at an accelerating rate.

There is precedent for this scale of action however. The current total global death toll from the Covid-19 pandemic is almost 7 million. A recent study suggested that the global death toll from heat/cold changes attributed to climate change is around 5 million, per year. During Covid-19, the world mobilised, with governments intervening in the most extreme way in citizen’s lives. In the UK, the estimated cost of government interventions is around £400 billion. The Office for Budget Responsibility estimated a net cost of the UK reaching net zero by 2050 to be £321 billion.

It is entirely possible to achieve the scale of ambition and action needed to limit global warming. What we really lack is meaningful leadership.

We need a visionary and driven individual to take the lead, push through the politics, unite government and business, and finally get us on track to deliver societal transformation that can only be achieved through urgent and far-reaching intervention.