The Amazon is burning.

Sep 1 JDN 2458729

As you probably already know, the Amazon rainforest is currently on fire. You can get more details about the fires from The Washington Post, or CNN, or New York magazine, or even The Economist; but I think the best coverage I’ve seen has been these two articles from Al-Jazeera.

I have good news and bad news. Let’s start with the bad news: If we lose the Amazon, we lose everything. The ecological importance of the Amazon is basically impossible to overstate. The Amazon produces 20% of the oxygen on Earth. 25% of the carbon absorbed on land is absorbed by the Amazon. We must protect the Amazon, at almost any cost: Given how vital preserving the rainforest will be to resisting climate change, millions of lives are at stake.

The good news is there is still a lot of Amazon left.

This graph shows the total cumulative deforestation of the Amazon, compared against its current area and its original area. The units are square kilometers; the Amazon rainforest has been reduced from 4.1 million square kilometers (1.6 million square miles) to 3.3 million hectares (1.3 million square miles), a decline of about 20% (21 log points). We still have four-fifths of the rainforest remaining—less than we should, but a lot more than we might.

Amazon_cumulative

This graph shows the annual deforestation of the Amazon, with results that are even more encouraging. While the last few years have had faster deforestation than previously, we are still nowhere near the peak deforestation rates of the early 2000s. At peak deforestation, the Amazon was projected to last no more than 150 years; but at current rates of deforestation, the Amazon would not be completely destroyed in more than 400 years.

Amazon_annual

Of course, any loss of the Amazon is bad. We should actually be trying to restore the Amazon—that extra 800,000 square kilometers of high-density forest would sequester a lot of carbon. We probably can’t actually add the 9 million square kilometers (3.4 million square miles) of forest it would take to stop climate change; but any reforestation we do manage will help.

And a number of ecologists have been sounding the alarm that the Amazon is approaching some sort of tipping point where it will stop being a rainforest and become a savannah. If this happens, it may be irreversible. It sounds crazy to me—80% of the forest is still there!—but that’s what ecologists are saying, and I’ll defer to their expertise.

On the other hand, ecologists have been panicking about “irreversible tipping points” on almost everything for the past century. We really can’t be blamed for not taking their word as gospel: They’ve cried wolf about “population bombs” and shortages of food and water for a very long time now. So far their projections on the rates of temperature rise, species extinction, and deforestation have been quite accurate; but their predictions of dire human consequences have always suspiciously failed to materialize. Humans are quite creative and resilient, as it turns out. This is part of why I’m not actually afraid climate change will cause the collapse of human civilization (much less the utterly laughable claim of human extinction); but tens of millions of deaths is still plenty of reason to take drastic action.

Indeed, I think panicking is precisely what we need to avoid. If we exaggerate the problem to the point where it sounds hopeless, that won’t encourage people to take action; it may actually cause them to throw in the towel.

What do we actually need to do here? We need to restore as many forests as possible, and we need to cut carbon emissions as rapidly as possible.

This doesn’t require a revolution to overthrow capitalism. It doesn’t require exotic new technologies (though fusion power and improved electricity storage would certainly help). It simply requires a real commitment to bear real economic costs today in order to prevent much higher costs in the future.

Bernie Sanders has a climate change plan that is estimated to cost $16 trillion over the next ten years. Make no mistake: This is an enormous amount of money. US GDP is about $20 trillion, growing at about 3% per year, so we’re looking at about 6% of GDP over that interval. This is about twice our current military budget, or about our military budget in the 1980s. Notably, it is nowhere near the levels of military spending we reached in the Second World War, which exceeded 40% of GDP. That’s what happens when America really commits to something.

Would this be enough? The UN seems to think so. They estimate that it would cost about 1% of global GDP to keep global warming below 2 C. Even if that’s an underestimate, 6% of the GDP of the US and EU would by itself account for twice that amount—and I have no doubt that if America committed to climate change mitigation, Europe would gladly follow.

And it’s not as if this money would be set on fire. (Military spending, on the other hand, almost literally is that.) We would spending this money mainly on infrastructure and technology; we would be paying wages and creating millions of jobs.

So far as I know Sanders’s plan doesn’t include paying Brazil to restore the Amazon, but it probably should. Part of why Brazil is currently burning the Amazon is the externalities: The ecological benefit of the Amazon affects us all, but the economic benefit of clear-cutting and cattle ranching directly benefits Brazil. We should set up some sort of payment mechanism to ensure that it is more profitable for Brazil to keep the rainforest where it is than to burn it down. How can we afford such a thing, you ask? No: How can we afford not to?

Subsidies almost never create jobs

May 5 JDN 2458609

The most extreme examples of harmful subsidies are fossil fuel industries and stadiums.

Fossil fuels are obviously the worst: The $1 trillion per year in direct and indirect government subsidies to fossil fuel corporations are second only to the $4 trillion in climate change externalities produced by the fossil fuel industry. Instead of subsidizing these corporations $1 trillion, the world should be taxing them $4 trillion—so we are off by $5 trillion, every single year. This is 6.5% of the world’s GDP. In the United States, our largest oil subsidy is called the Interstate Highway System, but other countries have us beat: Iran, Uzbekistan, and Libya each give more than 10% of their GDP in subsidies to the fossil fuel industry.

Most stadiums receive some kind of subsidy, and many are outright publicly funded—and yet banks still get the naming rights. The largest teams with the most wealth of their own are typically also the most subsidized. The benefits of building a new stadium are not even particularly large, which is probably why over 85% of US economists agree that these subsidies don’t make sense.

But subsidies are all over the place, and one of the most common reasons given for them, if not the most common reason, is that they will “create jobs”.

This is the reason Trump gave for trying to subsidize coal (which isn’t even working). It’s the reason people give for subsidizing huge filmmaking conglomerates in making films (which costs the government about $90,000 per job created). Why are we handing money to rich people? It will create jobs!

This is almost never actually true. We have known that this kind of subsidy doesn’t work since at least the 1980s.

The states and cities that create the most jobs aren’t the ones that offer the most generous handouts to corporations. They are the ones that have the cleanest air, the best infrastructure, and above all the most educated population. This is why there have been months when the majority of US jobs were created in California. California is the largest state, but it’s not that large—it’s only about 12% of the US population. If as many as 70% of the new jobs are being created there, it’s because California is doing something right that most other states are doing very, very wrong.

And then there is the rent-seeking competition that megacorporations like Amazon engage in, getting cities to bid higher and higher subsidies, then locating where they probably would have anyway but with billions of dollars in free money. This is a trick we need to stop falling for: The federal government should outright ban any attempt to use subsidies to get an existing corporation to locate in a specific state or city. That’s not contributing to American society; it’s just moving things around.

There are a few kinds of industries it makes sense to subsidize, because they have high up-front costs and large public benefits. Examples include research and development and renewable energy. But here the goal is not to create jobs. It’s to create wealth, typically in the form of scientific knowledge. We aren’t trying to get them to hire people; we’re trying to get them to accomplish something that’s difficult and important.

Why don’t subsidies create jobs? It’s really quite simple: You need to pay for those subsidies.

The federal government doesn’t face a hard budget constraint like businesses do; they can print money. But state and municipal governments don’t have that power, and so their subsidies need to be made up in either taxes or debt—which means either taxes now, or taxes later. Or they could cut spending elsewhere, which means losing whatever benefits they were getting from that spending. This means that any jobs you created with the subsidies are just going to be destroyed somewhere else, by higher taxes or lower government spending.

Most state and local governments have really tight budgets. Allen, Texas was running a $30 billion budget deficit and cutting salaries for public school teachers, but still somehow found $60 billion to subsidize building a stadium. The stadium might “create jobs” by moving some economic activity from one place to another, but the actual real economic benefit of a stadium is very small. Public schools are the foundation of a highly-developed economy. Without widespread education, this high a standard of living is simply impossible to sustain. Cutting public education is one of the last things you should be willing to do to balance a government budget—and yet somehow it seems to be one of the first we actually do.

It is true that we spend a great deal on education, and that spending could be made a lot more cost-effective (we can start by cutting athletic coaches and administrators); but every $1 spent on education yields between $4 and $6 in additional long-run wealth for our society. This means that at quite reasonable tax rates (17% to 25%) a public education system can directly pay for itself. Compare this to subsidizing a stadium, which gets back less than $1 of benefit per $1 spent, or subsidizing oil companies, which actively harms the world.

People don’t seem to understand that a capitalist economy basically just creates as many jobs as it needs. In a financial crisis, that mechanism falters; that’s when the federal government should step in and print money to get it running again. But when the economy is running smoothly, trying to “create jobs” is just not a useful thing to do. Jobs will be created and destroyed by the market. Policy should be trying to increase welfare. Educate your population. Improve your healthcare system. Build more public transit. Invest in fighting poverty and homelessness. And if you don’t think you can afford those things, then you definitely can’t afford handouts to megacorporations that won’t even make back what you paid.