One Percent is Not Enough

One Percent is Not Enough

My perspective on the book One percent is enough

at the launch this Report to the Club of Rome in Berlin September 13, 216

by Jørgen Randers

 I have been searching for a solution to the sustainability problem – that of fitting a big and materially rich population onto small planet Earth – for 45 years.

My colleagues and I first defined the problem in The Limits to Growth book in 1972, and repeated the problem definition in follow-up books in 1992 and 2004. In our view the problem is that if there is physical growth – in population, resource use, and pollution output – on a finite planet, the likely outcome is overshoot of the physical limits of the planet. Followed by collapse to sustainable levels, unless there is genuinely extraordinary action to organise a manged decline.

In 2012 I wrote the book 2052 – A Global Forecasts for the Next Forty Years where I concluded that the problem will take the form of a climate crisis in the second half of this century. Unless there is very significant change in human behaviour, global warming will pass +2ºC in before 2050, reach +2.5ºC in 2075. This will start gradual and unstoppable melting of the Northern permafrost over the next five hundred years – accompanied with continually rising sea levels.

In the years following 2012 I (and many others, including Graeme) have been looking for solutions to the climate challenge – knowing that it will require genuinely extraordinary action to stop global warming before it is too late. I knew from the 2052 book that it will require action way beyond what is profitable or cost-effective. Action much beyond what will be brought forth by the operation of the free market and democratic decision making. In short solving the problem will require strong governmental intervention – well designed bans and subsidies.

It is comforting to know that it is very simple to solve the climate problem – in principle. All it takes is to reduce the emission of greenhouse gases by banning all use of coal oil and (fossil) gas. The problem is that such action is politically infeasible, because people do not accept the resulting increase in the rice of electricity and gasoline. The political elite cannot act because they won’t be reelected if they try.

So what to do?

Our book One percent is enough gives the answer. It lists 13 genuinely extraordinary measures that if implemented would solve the climate problem. The 13 proposals would in fact lead to the orderly cessation of the use of coal, oil and gas – first in the rich world, later in the poor world.

Our 13 proposals differ from all other climate solutions because we restrict ourselves to proposals that should be politically feasible in rich free market democracies. Each of the 13 proposals, if implemented, will give a short-term advantage to a majority of the voters.

Furthermore, the 13 proposals are designed in such a manner that they do not lead to higher unemployment and more inequity. This is crucial, because it is a sad fact that most conventional climate solutions has the effect of reducing the number of jobs in dirty sectors (those producing or using coal, oil and gas) – without providing any safety net for those who lose their jobs. Given this sad fact, it is not surprising that there is solid opposition against most climate solutions – and especially from those who work in or own dirty activity.

The main idea behind our 13 proposals is to focus primarily on those that stand to lose their jobs when climate emissions are reduced – when the use of coal, oil and gas is eliminated. Our 13 proposals are designed to ensure that the unemployed will receive a steady income after their job is gone. Lasting until they have trained for obtained a new job in cleaner activities (typically services, care, culture or research). In ordinary language: that they will keep ample unemployment benefits from the state until they have a new paying job. It is important to know that this will only affect roughly one percent of all jobs – hence the title of our book – so the burden on the taxpayer would be acceptable, reducing their disposable income by one percent or so.

It is obvious that the simplest way to implement our solution is to take more taxes from those who still have an income, and pay it to those who are forced to leave a dirty job and find a cleaner one. But is equally obvious that there is not a political majority in favour of such tax increase. The majority is unlikely to be willing to pay well for an unemployed minority.

Our book proposes a solution to this problem. Our 13 proposals achieve the same result – income security for those who lose a dirty job – in an indirect manner. Each proposal is designed in order to deliver a short term advantage to a majority of rich world voters. At least this is our intention!

We agree that it will require a lot of explaining to demonstrate that the 13 proposals will indeed lead to income security and hence eliminate the resistance against strong climate action. We further agree that our proposals do not further the interest of the economic elite, and hence will be resisted intensely by owners and the business interest. But even in rich nations, the rich constitute a minority and their special interest should not win forth in truly democratic decision-making.

The 13 proposals are listed in the appendix to this note.

In our view, the most innovative and most promising proposals are the following three:

  1. Accelerate the emergence of clean sectors through the use of green stimulus packages financed by printing new money.

In simpler words, this means to let the government simply will pay for what is needed to cut man-made climate emissions. This is essentially only three things: Namely rapid expansion of renewable energy capacity (solar panels, windmills, hydroelectric plants), electrification of transport sector (replacing all fossil cars and trucks with electric ones, and establish the charging infrastructure), and increase the energy efficiency of all buildings (that is to insulate better). These three things will take society a long way towards cutting all use of coal oil and gas. These three are the core elements of the much discussed, and generally misunderstood, “green shift”.

Such green stimulus packages would be welcomed by most people, because they will create jobs, without any short term cost to the voters. In reality there will be a small cost, namely a small increase in the inflation rate. But this cost will be shared equally among all citizens and hence not create resistance.

Korea used green stimulus packages – paying people to create a cleaner country – as a central part of its macroeconomic response to the financial crisis in 2008-9.

  1. Tax coal, oil and gas at the source – for example at 40 dollars a barrel of oil – and distribute the tax revenue immediately to all citizens, giving each the same amount.

This second powerful proposal is to introduce a high tax on coal, oil, and gas –levied at the coal face, oil well, or gas pipeline entry point (or at the port of import) – and return the tax money that is collected to the people – giving each citizen the same amount, and in monthly check. This will make coal, oil and gas more expensive, and accelerate the transition to renewable and energy efficient activity. But the check received will be larger than the extra cost of energy for most people, since the majority uses less than the average amount of energy. Hence, once more, the majority will have a short term advantage from implementation of the proposal.

Iran used this method to remove its huge subsidies on fossil fuel in the spring of 2016. To gain popularity for the measure they started by sending checks to all households one month before they eliminated the fossil fuel subsidy.

  1. Increase the number of annual vacation days – for example adding two more vacation days every year – without a reduction in annual pay.

In economic words, this means to use the ongoing productivity increase in the economy to have more leisure rather than higher income. Two less working days per year amounts to less than 1 % per year reduction of a normal work year – yet another interpretation of our book title – and will be compensated by normal productivity rise, which has been around 1 to 2 % per year in recent decades in the rich world. And if productivity rise turns out to be lower, 2 more days of vacation every year, without reduction in the annual income – will simply increase the inflation rate slightly. And this will be paid for equitably by all citizens.

It may be necessary to make the number of vacation days compulsory – to avoid that the single minded income maximisers make everyone unhappy with their lower income and longer vacation.

Norway, Germany and other European countries have done this systematically since 1960. They now has a work year (some 1.600 hours per year) which is much shorter than that of US workers (some 2.000 hours per year). The income is lower, but vacations – and presumably wellbeing – much higher.

I hope you will enjoy the reading of the full volume, and that the liberal market economies o the rich world will follow our advice. Supported by a political majority in each step.

[1] 40 dollars per barrel amounts to 25 cents a liter of gasoline and 8 cents per kiloWatthour of electricity

One Percent is Enough

Thirteen proposals to boost average well-being in the rich world

  1. Shorten the length of the work year to give everyone more leisure time
  2. Raise the retirement age to help the elderly provide for themselves for as long as they want
  3. Redefine “paid work” to cover those who care for others at home
  4. Increase unemployment benefits to maintain demand during the transition.
  5. Increase the taxation of corporations and the rich to redistribute profits, especially from robotization.
  6. Expand the use of green stimulus packages by printing money or raising taxes to help governments respond to climate change and the need for redistribution.
  7. Tax fossil fuels and return the proceeds in equal amounts to all citizens to make low-carbon energy more competitive.
  8. Shift taxes from employment to emissions and resource use to reduce the ecological footprint, protect jobs and cut raw materials use.
  9. Increase death taxes to reduce inequality and philanthropy while boosting government income.
  10. Encourage unionization to boost worker incomes and reduce exploitation..
  11. Restrict trade where necessary to protect jobs, improve well-being, and help the environment
  12. Celebrate women who have one child or less when they pass the age of 50 to reduce the pressure of humanity on the planet.
  13. Introduce a guaranteed livable income for those who need it most and give everyone peace of mind.