Paul Krugman: Building a Green Economy

Paul Krugman

Recently, Paul Krugman, Nobel economicst published an article in the New York Times entitled “Building a Green Economy”. The article looked at the economic and political aspects of one of the most critical questions of our times: “Do we have to act on global warming?” Some countries have already responded Yes and consider action an economic and moral obligation. For others, notably the United States and the emerging economies, the matter is open to debate. Krugman doesn’t answer the question for us, rather he reasons on whether we have enough information to make a decision at all. In this sense, his response is affirmative: we do have sufficient information. According to the article, the effect of a very strong policy for reducing carbon emissions would reduce the gross world product by between 1 and 3 percent. (The proposed legislation is actually much blander.) In contrast, the potential cost of inaction, is too high according to the article. Now, many conservatives in America are against any attempt to impose green house gas limits. Their reasoning is that the research is inconclusive or even distorted. In contrast, Krugman says that the credibility of researchers has been amply demonstrated given that their models have been able to accurately predict the warming seen over recent decades. So, if those scientific predictions continue to be right, then the average temperature around the planet will rise about 5°C by 2100. With that comes the likelihood of dire economic and social consequences. Given the relatively small cost and the chance to avoid problems by making adjustments to how we conduct business, the economic case for action is reasonable. The article poses the dilemma of whether to act in advance of a vote in the Senate on the Waxman-Markey bill, which has already been passed by US House of Representatives. The proposed law, the American Clean Energy and Security Act of 2009, would establish a cap-and-trade system for greenhouse gas. At this point, says Krugman, it’s no longer a question of science, but of political will. On a local level, the political will has already been demonstrated. By supporting Project Manifattura, the autonomous Province of Trento is moving forward on green building and eco-sustainable industry.