Our dreary totalitarian dystopian future

Greg Ip, WSJ's Chief Economics Commentator, recently published an editorial whose title contains a?question "Why No One Wants to Pay for the Green Transition." Ip answers this question by referring to a recent report published by the French economist and public policy expert Jean Pisani-Ferry?for the Prime Minister of France, entitled "The Economic Implications of Climate Action." It is worth quoting select passages from the Executive Summary?and?Chapter 1?of this report to see just what a dreary future is predicted for the French (and, by implication, for humankind in general) over the next 35 years as we march forward to the utopia of "climate neutrality" in 2050:

From the Executive Summary 1. Climate neutrality is achievable, but it will require a transformation on a scale comparable to an industrial revolution. Yet unlike past industrial revolutions, this transformation will be global, it will be faster, and it will be primarily driven by public policies rather than technological innovations and markets. ... 4. In order to achieve our emissions-reduction targets by 2030, and thus reach climate neutrality by 2050, we need to achieve in 10 years what has barely been achieved in 30. This sudden acceleration implies that all sectors will have to contribute. To avoid slippages, the targets set for 2030 and 2050 should be supplemented by binding carbon budgets, at both the European and national levels.... 6. Decarbonisation will require significant additional investment in the next decade (more than 2 percentage points of GDP in 2030, ... in comparison to a scenario without climate action). ... 7. Financing these investments will likely entail an economic and social cost between now and 2030, since they do not increase the growth potential. ... [T]he transition away from fossil fuels will likely result in a temporary slowdown in productivity, estimated at one quarter of a percentage point per year. This is due to the redirecting of investment towards reducing reliance on fossil fuels rather than towards expanding production capacity or increasing its efficiency. It will also bring labour reallocations. 8. More broadly, the transition will affect well-being in ways that are inadequately measured by conventional indicators such as GDP. Regulations are no less painful than carbon pricing in this regard. ... 10. The climate transition is inherently a source of inequality. Even for a middle-class household, it costs the equivalent of around one year’s income to renovate a house and change the heating system, or to replace a conventional vehicle with an electric one. Even if the investment is cost-effective, thanks to the energy savings it delivers, it may not be affordable without government support. To be accepted politically and socially, the economic cost of the climate transition must be distributed fairly. 11. Households and businesses will require substantial support from the public purse. Considering new expenditures and the temporary decline in revenue due to slower economic growth, the risk to public debt is approximately 10 percentage points of GDP in 2030, 15 percentage points in 2035 and 25 percentage points in 2040, assuming that the decline in energy-related revenue is offset in order to maintain a constant aggregate tax and social security contribution rate. ... 13. Beyond the necessary reallocation of expenditures (including of fossil fuel-related budgetary and tax expenditures), and in addition to public debt, a temporary increase in aggregate tax and social security contributions will likely be required in order to finance the climate transition. This could take the form of a one-off levy on the financial assets of the most affluent households. The magnitude of this one-off levy would depend on the anticipated public finance cost of the climate transition. 14. The climate transition poses a risk of inflationary pressure over the next decade. Amid uncertainty over how inflation is measured, central banks will need to clarify their policy approach and spell out how they intend to respond to the price pressures induced by the transition. At the very least, they will need to take a cautious approach to monetary policy, and will likely need to temporarily raise their inflation targets.

From Chapter 1 There is almost universal agreement as to the fact that Earth’s atmosphere and surface are warming – and to the causes of this trend. Thirty-five years on from the creation of the IPCC, it would take an incredible act of blindness to fail to recognise that climate change is happening, that it is – and will increasingly become – severely damaging, that there is a causal link between the build-up of greenhouse gases (GHGs) in the atmosphere and rising temperatures, and that there is an urgent need for global collective action. ...?At the same time, it would also be incredibly flippant to claim that this urgent and imperative action will have no economic cost by 2030. ... [B]y putting a price – financial or implicit – on a free resource (the climate), the transition increases production costs, with no guarantee that the reduction in energy costs will eventually offset them, while the investments it calls for do not increase productive capacity but must nevertheless be financed.

In sum, we will live in a society with significant "economic and social costs:"

• where expenditures on other goods are crowded out by increased climate-related investments, which will be made with little deliberation ("we need to achieve in 10 years what has barely been achieved in 30")?and with no guarantee that there will be a return on investment ("with no guarantee that the reduction in energy costs will eventually offset [increased production costs]"),
• where growth in productivity stalls, (according to Bard, productivity has grown at an annual rate of 1.3% since 2000, so a slowdown of one quarter of a percentage point per year is significant),
• where workers are "reallocated" from some sectors of the economy to others,
• where the public debt rises even more rapidly than it already is rising,
• where taxes are higher ("temporarily," we are assured), and
• where inflation (once again "temporary") is so bad that central bankers will have no option but to relax their inflation targets, possibly triggering hyperinflation.

And, to counter all these negative impacts, it will be necessary for the government to redistribute wealth from the rich, to the poor, "fairly," of course.

The closest analog to the dreary totalitarian dystopia?that Pisani-Ferry describes in his report are the 5 Year Plans of Stalin's Soviet Union. As society seeks to meet the prescribed climate targets of 2030 or 2035 or ... 2050, our lives and the economy will be completely regimented ("all sectors will have to contribute") by cadres of government experts imposing mandates?("public policies," "binding carbon budgets," "painful regulations")?from the Commanding Heights, while the market-tested trial and error and piecemeal engineering of capitalism ("technological innovation and markets") will be abandoned. We can already see this process playing out, as governments at various levels instruct us on?what heating systems we may have in our homes, what stoves we may use, and?what cars we may buy (while the inventories of car dealers bulge with EVs that no one wants). And, to be sure, the government will not tolerate any "slippages."

Is it any wonder why no one wants to pay for the green transition?