Josh Bivens: EPI: Yes, David Brooks, there really is a class war [feedly]

Yes, David Brooks, there really is a class war
https://www.epi.org/blog/yes-david-brooks-there-really-is-a-class-war/

New York Times columnist David Brooks, in an article sub-titled "No, Virginia, there is no class war," recently trotted out an old argument about why wage growth has been so sluggish for so many U.S. workers for so long: they're just not very good workers. Specifically, he argues that "wages are still mostly determined by skills and productivity." Ergo, if there is growing inequality in wages, it must be driven by inequality in workers' own productivity.

But the evidence he cites is totally unconvincing on this.

First, he notes that wages for lower-wage workers have recently grown more rapidly than for middle-wage workers. But it's been shown againand again that this is driven in large-part by those states that have raised their minimum wages. It's also been shown that tighter labor markets disproportionately benefit the lowest-paid workers. The argument that changes in relative bargaining power and economic leverage have been the prime mover of wage trends in recent decades is not an argument that wages can never rise, period. When policies change—like minimum wages increase and the Fed allows labor markets to tighten without slamming on the interest rate brakes—good things happen. We just need to change a lot more policies.

Second, he cites a study that looks at wage and productivity growth in high-skill and low-skill industries between 1989 and 2017. The first odd bit of this evidence is that the wage growth he reports the study claims for high and low-skill industries is essentially identical: 26 percent versus 24 percent. The second odd bit is that this means even high-skill industries only gave average annual wage increases of 0.8 percent over that time, even as aggregate productivity grew by almost twice as fast over that time (about 1.4 percent annually). Finally, and most important, using industry-level productivity growth to infer anything about the productivity of individuals working in these industries cannot be done. To put it most simply, productivity growth within an industry can occur because each input used in production gets more productive, or, there is a shift in the mix of inputs. This might sound wonky but I'll explain a bit more in the next paragraph:

This issue of changing the mix of a firm's inputs also nullifies the conclusions he draws from his third and fourth bits of evidence—both of which highlight that there has been growth in the inequality of productivity between firms. Again, changes in a firm's productivity often have nothing to do with individuals' productivity or economy-wide productivity. Take the example of an auto company that once ran the factory cafeteria with its own employees. One day, it decides to fire the cafeteria employees and "rehire" them through a services staffing company. Measured productivity of the auto company will rise—the cafeteria employees didn't make cars and so the firm's output won't change much. But, if the factory cafeteria was a necessary part of the business (say for retaining workers, or at least keeping them onsite during lunch to minimize time away from the assembly line) and must be kept running, then there has been no economy-wide productivity gain that's occurred by spinning off the cafeteria workers into a separate firm. Instead, by throwing the cafeteria workers out of the lead firm, the auto company has reduced these workers' bargaining power and wage declines are likely in their future even as their own productivity has not changed at all.

Finally, we should mention this bit of his column: "Today's successful bosses are doing what they should be doing: increasing productivity, growing their businesses and offering great service."

Does anyone really believe that pay for corporate managers is driven by their personal productivity? Are today's CEOs really that much more productive relative to rank-and-file workers than CEOs were when, say, Microsoft and Apple were founded? CEOs of large public companies made salaries 45 times as large as the pay median workers in their industries in 1989. By 2018, they made 278 times as much. It seems awfully unlikely this was driven entirely by CEOs' own productivity. We know, for example, that CEO pay is largely driven by luck. For example, oil company CEOs receive large pay gains when the global price of oil rises—which they obviously have little control over. And between 2006 and 2015, a study by Ric Marshall and Linda-Eling Lee found that the relationship between CEO pay and what a company's shareholders earned on their investment was negative—meaning that CEOs' pay was not determined by how much they generate in profits.

In its own way, the Brooks column is very useful, highlighting a key political cleavage over what people think drive disparate economic outcomes. Is it simply skills, talent, and hard work, or have institutional and policy changes that disempowered some while protecting others (rule-rigging, to be less polite about it) been the real story? Put me down for the latter view. And it is clear that more and more economists are adopting this view, because it conforms much more tightly to the real-world evidence.

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Joseph Stiglitz: The Truth About the Trump Economy [feedly]

Don't skip this one. 

The Truth About the Trump Economy
https://www.project-syndicate.org/commentary/grim-truth-about-trump-economy-by-joseph-e-stiglitz-2020-01

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China Renews Its ‘Belt and Road’ Push for Global Sway [feedly]

For months in Western oriented Asian press, I have been reading about the "defeats" of China's Belt and Road International Development strategic focus. That strategy rests on a different political and economic foundation than those associated with Western neo colonial or colonial patterns.
Apparently not dead at all.

China Renews Its 'Belt and Road' Push for Global Sway
https://www.nytimes.com/2020/01/15/business/china-belt-and-road.html

BEIJING — China's big-money push to build ports, rail lines and telecommunications networks around the world — and increase Beijing's political sway in the process — seemed to be running out of gas just a year ago.

Now the program, called the Belt and Road Initiative, has come roaring back. Western officials and companies, for their part, are renewing their warnings that China's gains in business and political clout could come at their expense.

Chinese companies signed Belt and Road contracts worth nearly $128 billion in the first 11 months of last year, according to China's Commerce Ministry, a 41 percent increase over the same period in 2018. The contracts are mostly for construction and equipment by big Chinese companies using Chinese skilled labor and loans from Chinese banks, although the projects often create jobs for local laborers as well.

The latest contracts include a subway system for Belgrade, Serbia; an elevated rail line in Bogotá, Colombia; and a telecommunications data center near Nairobi, Kenya.

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The return of Belt and Road is likely to raise tensions with the United States, which worries that China is building a globe-spanning bloc of nations that will mostly buy Chinese goods and tilt toward China's authoritarian political model. The initiative figures into many of the disputes between the two countries over national security and technology.

The rush of new Belt and Road contracts follows a public pullback by Chinese officials in 2018 after projects in Malaysia, Sri Lanka, Pakistan and elsewhere were criticized by local officials and others as bloated and costly. China argues that since then, it has fine-tuned practices to trim waste.

"We will continue to follow a high-standard, people-centered and sustainable approach to promote high-quality Belt and Road cooperation with partner countries," Xi Jinping, China's top leader, said during a visit to Brazil in November.

Chinese officials have long presented Belt and Road as a chance to give emerging markets the same kind of world-class infrastructure that has helped make China a global economic powerhouse. Under Belt and Road, state-owned Chinese banks typically lend practically all of the money for a construction project to be carried out by Chinese companies. The borrowing countries are then required to repay the money, often with oil or other natural resources.

Officials in the United States and Western Europe have long criticized Belt and Road as predatory, and in recent years, some officials in developing countries began to agree. In 2018, Sri Lanka gave its major port to China after it could not repay loans, while Malaysia halted its own costly Belt and Road projects.

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Chinese leaders began to acknowledge the criticism. Vice Premier Liu He of China publicly raised concerns in early 2018 about heavy lending by Chinese banks, not just for the Belt and Road Initiative.

In the months that followed, Chinese financial regulators clamped down hard on domestic and overseas lending alike. New Belt and Road contracts plummeted, Chinese data showed. China's financial regulators told the country's banks to look twice at further lending to poor countries. Top leaders practically stopped mentioning the program.

But the credit crunch produced a much broader slowing in the Chinese economy in 2018 than expected. Financial regulators reversed course. That has produced a revival of lending for domestic infrastructure projects and for Belt and Road projects alike. Contracts started to be signed in earnest again in the final weeks of 2018, and momentum built through last year.

In recent days, two groups representing Western governments, companies and banks have raised questions about the resurgence of the Belt and Road Initiative.

A report released on Thursday morning by the European Chamber of Commerce in China concluded that Chinese-built telecommunications networks and ports are set up in ways that make it hard for European shipping companies, computer software providers and other businesses to compete.

A survey by the chamber of its members also found that they had been almost completely excluded from bidding on Belt and Road Initiative contracts, which went mostly to Chinese state-owned enterprises.

"It was rather sobering to see that for businesses, it is quite insignificant what we get out of this," said Joerg Wuttke, the chamber's president.

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The Institute of International Finance, a research group in Washington backed mainly by big Western banks, issued a different warning on Monday as part of a broader report on global debt.

The institute's report said that many poor countries in the Belt and Road Initiative now find themselves with sharply increased debt burdens. Many of these countries could barely qualify to borrow money even before they took on the new debt, the report said.

The institute's report also said that 85 percent of Belt and Road projects involved high emissions of greenhouse gases linked to climate change. These projects have included at least 63 coal-fired power plants.

The new reports come after a warning issued last year by European International Contractors, a trade group of construction and engineering companies. The trade group cautioned that loans for Belt and Road Initiative projects tend to carry considerably higher interest rates than those from lending institutions like the World Bank.

The construction industry group, and also the European chamber, said that the costs of Belt and Road Initiative projects are often greatly underestimated so that they can pass muster with Beijing officials. Poor countries then end up paying for cost overruns, they said.

European business groups, which include telecommunications equipment makers, have focused lately on Belt and Road's emphasis on telecommunications. Many developing countries now have national telecom networks built by two Chinese companies, Huawei and ZTE, that have been big participants in the Belt and Road Initiative. Huawei won a contract last spring to build a large telecom data center in Kenya.

The European chamber report said the networks were designed in ways that made it hard for European companies to sell any further hardware or software in these markets. European markets for telecom equipment, by contrast, are often more open, it argued. Huawei, for example, has sought to provide equipment for Germany and Britain.

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Alongside telecommunications, the biggest security concern in the West about the Belt and Road Initiative has involved China's construction or expansion of extensive ports. These ports now ring the Indian Ocean and extend up the west coast of Africa and into the Mediterranean.

The European Chamber report said that European shipping companies, which have ranked among the world's largest since the Middle Ages, increasingly find themselves at a competitive disadvantage. The new ports are designed and managed by Chinese state-owned enterprises that are under the same Chinese government agency as Chinese shipbuilders and Chinese shipping companies.

China has contended that economic growth has long suffered in many emerging markets from high transportation costs, and that the construction of new ports can reduce these costs.

Lin Qiqing contributed research from Shanghai.


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Reducing the Health-Care Tax [feedly]

Reducing the Health-Care Tax
http://cepr.net/publications/op-eds-columns/reducing-the-health-care-tax

Jared Bernstein and Dean Baker
The Washington Post, January 14, 2020

One of most enduring, economically and socially damaging, downright frustrating facts about life in the United States is how expensive health care is here. Not only does U.S. health care cost far more than in other advanced economies, but compared with the nations that spend less, we have worse or equivalent health outcomes. In fact, U.S. life expectancy now lags behind that of all the advanced economies.

An MRI scan that cost $1,400 here went for $450 in Britain and $190 in Holland. Thirty tablets of a drug to reduce the risk of blood clots (Xarelto) cost $380 here, $70 in Britain, $80 in Switzerland and $60 in Holland. Hospital admission for angioplasty is $32,000 here, $15,000 in Australia, $12,000 in Britain, $7,000 in Switzerland, $6,000 in the Netherlands.

Add to those differences the latest outrage in health-care costs: surprise medical billing, when even well-insured patients can wake up from surgery finding that they owe thousands of dollars, because someone treating them while they were unconscious was out of their insurance network.

Princeton economists Anne Case and Angus Deaton (a Nobel winner) recently summarized the problem by labeling it an $8,000-a-year annual health-care tax paid by U.S. families. This is the difference in costs between what we pay for health care and what people in other countries pay. As Case put it: "We can brag we have the most expensive health care. We can also now brag that it delivers the worst health of any rich country."

Why call this expense a tax? Well, for one, if you want health coverage, you can't escape it. But even if you don't — and good luck with that — you still can't escape the tax, as both employer- and government-provided health care extract payments through lower paychecks and public financing.

Case and Deaton may be erring on the low side in their $8,000-per-family figure. The Organization for Economic Cooperation and Development puts per-person spending in the United States at $8,950 a year. That compares with $5,060 in Germany, $3,470 in Canada and just $3,140 in Britain. If we assume a family of three, we would get an annual health-care tax of $11,670 compared with Germany and more than $17,000 compared with the cost of health care in Britain.

How can such differences persist, especially in a service where consumption is so essential to well-being? If ice cream were that much more expensive here, we'd have a lot to squawk about, for sure. But it wouldn't be a matter of life and death.

An obvious, and correct, answer as to why U.S. health care is so expensive is because we do so little, relative to other systems, to control costs. But it's worse than that. We do a fair amount to make health care more expensive.

First, our system of private insurance costs far more than single-payer systems like Canada's, and also more than countries with private but heavily regulated insurers like Germany. OECD data show that as a share of health spending, our administrative costs are three times that of Canada's and twice that of Germany's. Getting our administrative costs closer to those in other countries would require regulating private insurers and expanding public coverage, but it could save us at least 10 percent of our total health-care bill.

Next, we pay twice as much to our health-care providers and for prescription drugs as everyone else. The latter costs us more than $3,000 per family per year. We pay more than twice as much for medical equipment, costing us a bit less than $1,500 per family per year. Doctors and dentists cost us close to an extra $750 per family per year.

One reason for the outsize costs of these inputs to U.S. health care is that government policy protects our providers. When it comes to manufactured goods, like cars and clothes and almost everything on the shelves of Walmart, economists and policymakers push for "free trade" and more competition. But when it comes to health-care providers, these same authorities turn protectionist.

In areas like prescription drugs and medical equipment, this protection is explicit: Manufacturers are granted patent monopolies. The government will arrest anyone who sells protected items in competition with a patent holder.

In the case of doctors, we have maintained or increased barriers that make it difficult for qualified foreign physicians to practice in the United States. We also prevent other health-care professionals, such as physicians' assistants and nurse practitioners, from doing many tasks for which they are entirely competent. There is a similar story with dentists and dental hygienists.

Other countries directly control drug prices. In France, the government determines whether a new drug is an improvement or a copycat, and, if the drug is deemed useful, the government negotiates drug prices with the manufacturers and caps their revenue. When sales exceed the cap, the manufacturer must rebate most of the difference back to the government.

Here in the United States, we give drug companies and medical equipment manufacturers' patent monopolies and allow them to charge whatever they want. We don't even let the government use its massive leverage to negotiate lower drug prices for Medicare beneficiaries. That's what makes these goods expensive; they're almost always relatively cheap to produce.

This is fixable. It would take regulating costs, reducing reimbursements to providers and increasing competition.

The pharmaceutical industry's rationale for cost-exploding medical patents is that it helps incentivize research and innovation. Without them, it's likely that pharmaceuticals and medical equipment companies would do less speculative research. But it would take a fraction of the savings from reducing such protectionism to replace patent-support research with publicly supported research (for which we already spend $40 billion a year).

In terms of boosting competition, allowing foreign doctors whose training meets our standards to more easily practice medicine here would bring U.S. physicians' pay in line with international standards. Of course, our doctors pay much more for their education than doctors trained elsewhere, so part of this new structure would also require reducing the domestic cost of medical education and alleviating some of the educational debt burden that U.S.-trained doctors have acquired.

Increasing competition would also require using antitrust measures to push back on the pricing power engendered by the consolidation of both hospital groups and medical practices. An analysis by the New York Times of 25 metro areas found that hospital mergers "have essentially banished competition and raised prices for hospital admissions."

Even if we succeed in raising competition and reducing protectionism, health care will still be too expensive for many low- and moderate-income families, many of whom have suffered stagnant incomes in recent decades. Like every other wealthy country, we will need to get on a path to universal coverage. But whatever form that takes, if we can significantly reduce our current health-care tax, the savings will easily be large enough to extend quality, affordable coverage to every American.

---

Jared Bernstein, chief economist to former vice president Joe Biden, is a senior fellow at the Center on Budget and Policy Priorities. 

Dean Baker is a senior economist at the Center for Economic and Policy Research.

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Bloomberg: Trump Plans to Nominate Shelton, Waller to Federal Reserve [feedly]

More efforts to politicize the Fed. (If this were to happen, regulatory economic control would pass into Trumps hands. With that kind of power, hard to see anything but revolutionary tactics dislodging it)

Trump Plans to Nominate Shelton, Waller to Federal Reserve
https://www.bloomberg.com/news/articles/2020-01-16/trump-plans-to-nominate-shelton-waller-to-federal-reserve-board

President Donald Trump plans to nominate Judy Shelton and Christopher Waller to join the Federal Reserve, the White House said.

The president, who has publicly criticized Fed Chairman Jerome Powell and his colleagues for not cutting interest rates as aggressively as he would like, tapped the pair in July for the two remaining vacancies on the central bank's seven-seat board in Washington. But the formal announcement of his intention to nominate them didn't come until Thursday and will now move to the Senate for consideration.

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If confirmed by the Senate, they will join an institution that's been under constant attack from the president who has sought to make Powell a potential scapegoat if the economy falters as he seeks re-election this year. Trump returned to this theme at the White House on Wednesday, appearing to lament that he had passed over Kevin Warsh in picking Powell as Fed chief.

Fed officials cut interest rates three times in 2019 but signaled they expect to keep rates on hold through 2020, based on their forecast of moderate economic growth with unemployment staying near a 50-year low.

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The two economists have widely different backgrounds, but their policy comments suggest they'd be inclined to be open to Trump's calls for easier monetary policy.

Shelton, who has been an informal adviser to Trump, has publicly said the central bank should reduce rates. She's spent decades outside mainstream economics and recently appears to have completed a metamorphosis from proponent of returning to the gold standard -- a concept broadly espoused by those who feel monetary policy is too lax -- to an advocate of the need for more stimulus.

She has a doctorate in business administration from the University of Utah with an emphasis on finance and international economics.

Waller is largely a conventional choice because he's drawn from within the Fed's own ranks.

He is a Ph.D. economist who previously served as a professor of economics at the University of Notre Dame before joining the St. Louis Fed in 2009, where he is director of research. Waller has been consistent in his calls for a more dovish approach over the years. His key research focus has been on monetary and macroeconomic theory and the political economy.

Lengthy Process

The lengthy Senate confirmation process means neither candidate is likely to join the board for months. Current Vice Chairman Richard Clarida's nomination was announced April 18, 2018, and he wasn't sworn in until Sept. 17. Governor Michelle Bowman, nominated the same day as Clarida, didn't take office until Nov. 26.

As a high-ranking Fed staffer, Waller may have a better chance of passing muster with lawmakers than some of Trump's previous contenders. As for Shelton, the Senate has already confirmed her in her current role as the U.S. executive director for the European Bank for Reconstruction and Development.

Read more: Fed Hopeful Shelton Questions Value of Bank's Dual Mandate

Her unorthodox views, though, could attract opposition.

In an interview with Bloomberg in May, she said she was "highly skeptical" that the goals for the Fed set by Congress -- the pursuit of maximum employment, stable prices and moderate long-term interest rates -- were relevant.


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Science and engineering report shows continued loss of U.S. dominance

https://www.washingtonpost.com/science/2020/01/15/science-engineering-report-shows-continued-loss-us-dominance/?fbclid=IwAR2toxhvXaLvpRP8oO2qmUzk2z7niLlTsOeNRxdLlbhhmtIvehPwfeAyRyA  

The Cerro Tololo Inter-American Observatory in Chile, which is funded by the NSF. (T. Abbott/NOAO/AURA/NSF)

By 

Ben Guarino 

Jan. 15, 2020 at 9:00 a.m. EST

The United States has continued to fall from its position as the uncontested world leader in science and engineering, according to a federal report on scientific investment and education released Wednesday.

The National Center for Science and Engineering Statistics, a federal statistical agency within the National Science Foundation, took the pulse of American science by compiling research expenditures, journal articles, the scientific workforce and education data. The NSF submits this state-of-the-science report to Congress every two years.

The report identifies several obstacles and declines. "There's no denying that the U.S. science and engineering enterprise faces head winds," Diane Souvaine, the chair of the National Science Board, told reporters on Tuesday.

"Fifty-nine years ago, President Kennedy sent America on a path to the moon," she said. "Today we find ourselves again in an hour of challenge and change."

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What the report found on investment:

The U.S. economy is tightly bound to science and technology. Since World War II, these advancements have driven 85 percent of economic growth, said Julia Phillips, chair of the National Science Board's science policy committee.

In 2017, the United States spent $548 billion on research and development. That's more than any other country. Business investments have driven growth of research and development spending, which has increased by about 4 percent each year since the turn of the century.

But, on the global stage, the U.S. share in R&D has been shrinking while the world's total swelled to more than $2 trillion — an overall tripling of investments between 2000 and 2017. In 2000, nearly 40 cents of each dollar used for R&D was spent in the United States. By 2017, the U.S. portion was down to 25 cents.

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Much of the growth has been in Asia; China, which was responsible for 32 percent of the increase in those 17 years, is probably the world's largest R&D performer. "China may already have surpassed the U.S. in total expenditures at some point in 2019," Phillips said, based on a National Science Board projection.

Phillips drew a distinction between two types of science expenses, what she called "fundamental research" vs. "experimental development." Fundamental research, which includes theoretical and applied work, generates new knowledge, she said. The United States spends more in this area than any other country, by a significant amount. This, Phillips said, is the "seed corn" of American science and engineering enterprise. The government funded $76 billion of that research in 2017. Businesses funded an additional $85 billion.

Countries such as China, in contrast, have devoted proportionally more money to experimental development. That funds the creation of new things — improved materials or devices, for instance — rather than knowledge.

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On education and employment:

The science and engineering workforce grew faster than overall workforce, a trend that has remained true since 1960. Many of these workers were born in other countries. Nearly 6 in 10 people with PhDs in the workforce, according to the report, are foreign-born.

In 2016, about 800,000 students in the United States earned bachelor's degrees, or the equivalent, in a science or engineering field. European Union countries produced almost a million undergraduates with these degrees. China awarded 1.7 million, the report said.

International students also make up large numbers of undergraduate and graduate degrees in U.S. science and engineering. In 2017, people with temporary visas earned a third of science and engineering doctoral degrees. Many of these students remain an important part of the scientific community in the United States, staying to work for years after graduation.

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First-year enrollments of foreign students, however, have fallen from their peak numbers in 2016. China and India have become competitors for attracting skilled international students. "Amid the global bidding war for talent, we need to avoid complacency," Phillips said.

A survey by international educators suggested that nationalist and anti-immigration rhetoric in the United States may have contributed to the recent decline in foreign students, CNN reported in November.

"While other countries work hard to attract international students, we are managing to send a message that talented foreigners are not welcome here, just when we most need them," Ángel Cabrera, president of George Mason University, said in a statement to The Washington Post in 2018.

And diversity:

In overall numbers, more women are in the scientific workforce than ever before, the new report said, as are black, Hispanic and other minority scientists and engineers. But because the number of jobs also increased, women and minorities remain underrepresented in most fields.

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Change has been slow. Women held 29 percent of science and engineering jobs in 2017, the report said. In 2003, that share was 23 percent. Underrepresented minorities rose from 9 percent of the workforce to 13 percent over the same period.

"The science and engineering enterprise in the United States ideally should reflect our population in race, ethnicity and gender," Phillips said. "It's clear that we have a long way to go."

--

John Case
Harpers Ferry, WV

Enlighten Radio

Socialist Economics

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Australia Shows Us the Road to Hell [feedly]

Australia Shows Us the Road to Hell
https://www.nytimes.com/2020/01/09/opinion/australia-fires.html

text only:

A controlled burn along the Princess Highway in Meroo National Park, Australia.Credit...Matthew Abbott for The New York Times

In a rational world, the burning of Australia would be a historical turning point. After all, it's exactly the kind of catastrophe climate scientists long warned us to expect if we didn't take action to limit greenhouse gas emissions. In fact, a 2008 report commissioned by the Australian government predicted that global warming would cause the nation's fire seasons to begin earlier, end later, and be more intense — starting around 2020.

Furthermore, though it may seem callous to say it, this disaster is unusually photogenic. You don't need to pore over charts and statistical tables; this is a horror story told by walls of fire and terrified refugees huddled on beaches.

So this should be the moment when governments finally began urgent efforts to stave off climate catastrophe.

But the world isn't rational. In fact, Australia's anti-environmentalist government seems utterly unmoved as the nightmares of environmentalists become reality. And the anti-environmentalist media, the Murdoch empire in particular, has gone all-out on disinformation, trying to place the blame on arsonists and "greenies" who won't let fire services get rid of enough trees.
These political reactions are more terrifying than the fires themselves.

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Climate optimists have always hoped for a broad consensus in favor of measures to save the planet. The trouble with getting action on climate, the story went, was that it was hard to get people's attention: The issue was complex, while the damage was too gradual and too invisible. In addition, the big dangers lay too far in the future. But surely once enough people had been informed about the dangers, once the evidence for global warming became sufficiently overwhelming, climate action would cease to be a partisan issue.

The climate crisis, in other words, would eventually become the moral equivalent of war — an emergency transcending the usual political divides.

But if a nation in flames isn't enough to produce a consensus for action — if it isn't even enough to produce some moderation in the anti-environmentalist position — what will? The Australia experience suggests that climate denial will persist come hell or high water — that is, through devastating heat waves and catastrophic storm surges alike.


Buildings on the main street of Mogo, Australia, destroyed by fire.Credit...Matthew Abbott for The New York Times

You might be tempted to dismiss Australia as a special case, but the same deepening partisan division has long been underway in the United States. As late as the 1990s, Democrats and Republicans were almost equally likely to say that the effects of global warming had already begun. Since then, however, partisan views have diverged, with Democrats increasingly likely to see climate change happening (as indeed it is), while Republicans increasingly see and hear no climate evil.


Does this divergence reflect changing party composition? After all, highly educated voters have been moving toward the Democrats, less-educated voters toward the Republicans. So is it a matter of how well informed each party's base is?

Probably not. There's substantial evidence that conservatives who are highly educated and well informed about politics are more likely than other conservatives to say things that aren't true, probably because they are more likely to know what the conservative political elite wants them to believe. In particular, conservatives with high scientific literacy and numeracy are especially likely to be climate deniers.

But if climate denial and opposition to action are immovable even in the face of obvious catastrophe, what hope is there for avoiding the apocalypse? Let's be honest with ourselves: Things are looking pretty grim. However, giving up is not an option. What's the path forward?

The answer, pretty clearly, is that scientific persuasion is running into sharply diminishing returns. Very few of the people still denying the reality of climate change or at least opposing doing anything about it will be moved by further accumulation of evidence, or even by a proliferation of new disasters. Any action that does take place will have to do so in the face of intractable right-wing opposition.

This means, in turn, that climate action will have to offer immediate benefits to large numbers of voters, because policies that seem to require widespread sacrifice — such as policies that rely mainly on carbon taxes — would be viable only with the kind of political consensus we clearly aren't going to get.

What might an effective political strategy look like? I've been rereading a 2014 speech by the eminent political scientist Robert Keohane, who suggested that one way to get past the political impasse on climate might be via "an emphasis on huge infrastructural projects that created jobs" — in other words, a Green New Deal. Such a strategy could give birth to a "large climate-industrial complex," which would actually be a good thing in terms of political sustainability.

Can such a strategy succeed? I don't know. But it looks like our only chance given the political reality in Australia, America, and elsewhere — namely, that powerful forces on the right are determined to keep us barreling down the road to hell.



Paul Krugman has been an Opinion columnist since 2000 and is also a Distinguished Professor at the City University of New York Graduate Center. He won the 2008 Nobel Memorial Prize in Economic Sciences for his work on international trade and economic geography. @PaulKrugman


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