"Lessons for Climate Change in the 2008 Recession
By HENRY M. PAULSON Jr.JUNE 21, 2014
THERE is a time for weighing evidence and a time for acting. And if thereâs one thing Iâve learned throughout my work in finance, government and conservation, it is to act before problems become too big to manage.
For too many years, we failed to rein in the excesses building up in the nationâs financial markets. When the credit bubble burst in 2008, the damage was devastating. Millions suffered. Many still do.
Weâre making the same mistake today with climate change. Weâre staring down a climate bubble that poses enormous risks to both our environment and economy. The warning signs are clear and growing more urgent as the risks go unchecked.
This is a crisis we canât afford to ignore. I feel as if Iâm watching as we fly in slow motion on a collision course toward a giant mountain. We can see the crash coming, and yet weâre sitting on our hands rather than altering course.
We need to act now, even though there is much disagreement, including from members of my own Republican Party, on how to address this issue while remaining economically competitive. Theyâre right to consider the economic implications. But we must not lose sight of the profound economic risks of doing nothing.
Some members of my political party worry that pricing carbon is a âbig governmentâ intervention. In fact, it will reduce the role of government, which, on our present course, increasingly will be called on to help communities and regions affected by climate-related disasters like floods, drought-related crop failures and extreme weather like tornadoes, hurricanes and other violent storms. Weâll all be paying those costs. Not once, but many times over.
This is already happening, with taxpayer dollars rebuilding homes damaged by Hurricane Sandy and the deadly Oklahoma tornadoes. This is a proper role of government. But our failure to act on the underlying problem is deeply misguided, financially and logically.
In a future with more severe storms, deeper droughts, longer fire seasons and rising seas that imperil coastal cities, public funding to pay for adaptations and disaster relief will add significantly to our fiscal deficit and threaten our long-term economic security. So it is perverse that those who want limited government and rail against bailouts would put the economy at risk by ignoring climate change.
This is short-termism. There is a tendency, particularly in government and politics, to avoid focusing on difficult problems until they balloon into crisis. We would be fools to wait for that to happen to our climate.
When you run a company, you want to hand it off in better shape than you found it. In the same way, just as we shouldnât leave our children or grandchildren with mountains of national debt and unsustainable entitlement programs, we shouldnât leave them with the economic and environmental costs of climate change. Republicans must not shrink from this issue. Risk management is a conservative principle, as is preserving our natural environment for future generations. We are, after all, the party of Teddy Roosevelt.
A tax on carbon emissions will unleash a wave of innovation to develop technologies, lower the costs of clean energy and create jobs as we and other nations develop new energy products and infrastructure. This would strengthen national security by reducing the worldâs dependence on governments like Russia and Iran.
Climate change is the challenge of our time. Each of us must recognize that the risks are personal. Weâve seen and felt the costs of underestimating the financial bubble. Letâs not ignore the climate bubble."
Henry M. Paulson Jr. is the chairman of the Paulson Institute at the University of Chicago and secretary of the Treasury from July 2006 to January 2009.
By HENRY M. PAULSON Jr.JUNE 21, 2014
THERE is a time for weighing evidence and a time for acting. And if thereâs one thing Iâve learned throughout my work in finance, government and conservation, it is to act before problems become too big to manage.
For too many years, we failed to rein in the excesses building up in the nationâs financial markets. When the credit bubble burst in 2008, the damage was devastating. Millions suffered. Many still do.
Weâre making the same mistake today with climate change. Weâre staring down a climate bubble that poses enormous risks to both our environment and economy. The warning signs are clear and growing more urgent as the risks go unchecked.
This is a crisis we canât afford to ignore. I feel as if Iâm watching as we fly in slow motion on a collision course toward a giant mountain. We can see the crash coming, and yet weâre sitting on our hands rather than altering course.
We need to act now, even though there is much disagreement, including from members of my own Republican Party, on how to address this issue while remaining economically competitive. Theyâre right to consider the economic implications. But we must not lose sight of the profound economic risks of doing nothing.
Some members of my political party worry that pricing carbon is a âbig governmentâ intervention. In fact, it will reduce the role of government, which, on our present course, increasingly will be called on to help communities and regions affected by climate-related disasters like floods, drought-related crop failures and extreme weather like tornadoes, hurricanes and other violent storms. Weâll all be paying those costs. Not once, but many times over.
This is already happening, with taxpayer dollars rebuilding homes damaged by Hurricane Sandy and the deadly Oklahoma tornadoes. This is a proper role of government. But our failure to act on the underlying problem is deeply misguided, financially and logically.
In a future with more severe storms, deeper droughts, longer fire seasons and rising seas that imperil coastal cities, public funding to pay for adaptations and disaster relief will add significantly to our fiscal deficit and threaten our long-term economic security. So it is perverse that those who want limited government and rail against bailouts would put the economy at risk by ignoring climate change.
This is short-termism. There is a tendency, particularly in government and politics, to avoid focusing on difficult problems until they balloon into crisis. We would be fools to wait for that to happen to our climate.
When you run a company, you want to hand it off in better shape than you found it. In the same way, just as we shouldnât leave our children or grandchildren with mountains of national debt and unsustainable entitlement programs, we shouldnât leave them with the economic and environmental costs of climate change. Republicans must not shrink from this issue. Risk management is a conservative principle, as is preserving our natural environment for future generations. We are, after all, the party of Teddy Roosevelt.
A tax on carbon emissions will unleash a wave of innovation to develop technologies, lower the costs of clean energy and create jobs as we and other nations develop new energy products and infrastructure. This would strengthen national security by reducing the worldâs dependence on governments like Russia and Iran.
Climate change is the challenge of our time. Each of us must recognize that the risks are personal. Weâve seen and felt the costs of underestimating the financial bubble. Letâs not ignore the climate bubble."
Henry M. Paulson Jr. is the chairman of the Paulson Institute at the University of Chicago and secretary of the Treasury from July 2006 to January 2009.
