The Choice of the Green Economy Model Is a Must for the West Nowadays
It Is a Litmus for Political Honesty
A look at the table below shows us that the advanced economies in the world are lagging behind the achieved average growth of the world economy:
It is not abnormal. It is not even strange. But history tells us that in the longer run to keep being developed a country needs to be competitive economically. Otherwise, any country earlier or later comes to the point where it can enjoy in the geopolitical competition only the picture of its own sunset. No country might be an economic leader throughout endless periods of human history, but to preserve a decent standard and quality of living it should continue to be always competitive. The competitive capacity is necessary for its national security all the time, too.
Roughly speaking, nowadays the advanced economies are the Western ones. If they lag behind the rest of the world, it does not mean that they are not competitive anymore. However, they should be prepared to become only a part of the club and not the whole club of advanced economies in the next decades. It is an inevitable perspective and it is the best opportunity that history could offer to the West currently. A good example of how good this opportunity seems to be is the Great Britain. Earlier, it was an empire, the biggest one in the world for its time. Naturally, it had the most powerful economy globally. After WW I and especially after WW II, the situation has been changed significantly. Great Britain is again a developed country with a strong economy but its economy is far not the strongest in the world up to date. Even so, the average citizen of His Majesty has today a much higher standard and better quality of life than its predecessor let us say at the onset of the 20th century in the strongest empire of the world at that time. Probably it would be the case with the modern West after a few decades, too.
Therefore, the West must choose a sustainable economic development model if it strives for sustainable geopolitical competitiveness and continuous well-being in any situation at any time. This model should be the green one. In it, we may include also the circular economy. Why exactly is this the suggested model? At a minimum, because there is no serious scientist at present who doubts the need for carrying out at least some radical changes in the global economic processes aimed at limiting the harmful impact of human activities on the climate. From this outlook, it is a matter of fundamental justice for each human being to live under such a model. Then the same model provides productivity improvements for the economies or can positively influence their overall mid-term competitiveness firmly projected in the West now as lagging. Oxford Economics estimated that the new green activities will create an opportunity worth $10.3 trillion to 2050 Global GDP, in 2020 prices, or 5.2% of the global GDP that year. The lion’s share of the opportunity is in the manufacturing of electric vehicles (EV) and the generation of renewable electricity, plus their vast supply chains. Quantitatively this seems more or less so:
The green economy is an economic model that not only reduces the impact of production and consumption on the environment but also creates a virtuous relationship between economic growth and environmental well-being. It is an economy, long anticipated, that meets specific environmental objectives (primary objectives making direct impacts, see their estimated value in the chart above), and in the process creates additional prosperity and social benefits (secondary objectives conceiving indirect impacts, see their estimated value again in the chart above):
The green economy is indeed about far more than emissions reduction. It also builds a capacity to adapt to climate change, develop circular systems, and reduce waste and material consumption. It leads to greater reuse of materials and not just protection but promotion of greater biodiversity. It optimizes considerably energy autonomy and neutrality, furthermore.
However, the green economy can and should provide economic and social benefits as well. As the last graphic above shows, the green economy is also meant to foster greater prosperity, boost local growth and innovation, and foster competitiveness, as well as provide a more just and inclusive society.
But after all, why does the green economy make an essential difference for the lagging West in the global economic competition nowadays? The difference comes from the GDP growth and the related perspectives. Oxford Economics as shown above estimates the world GDP growth in 2050 based on prices of 2020 will reach 5.2%. This growth, in fact, presents a potential added value to the world economy on an annual base measured by PPP. And this added value solely surpasses the entire world GDP growth attained presently (see the upper table with the IMF data)! Then the global competition goes to the chunks appropriation of the same added value within the next decades. It is a good perspective for lagging economies if participating in the competition they would be enabled to put a grip on solid chunks of its booty. Due to the same reasons China tries today to weaponize its deliberately maintained industrial surplus of EV and renewable electricity production equipment, intending thus to deindustrialize the West for tomorrow’s booty distribution. This business objective apart from the expected purely economic benefits, of course, has a geopolitical dimension on its own, but if the West really wants to assert its business competitiveness and geopolitical weight in the years to come, it has to accept the Chinese challenge. It is its most genuine chance to compete on a pitch where it could win the competition. If for no other reasons, at least because the competition is still relatively fresh, has a long-term horizon, is structurally important, rather profitable, and is under the influence of government policies and regulations. Further, if earlier democracy won against totalitarian communism by beating it mainly in the military and technological fields, nowadays it needs to win against the autocracies of China, Russia, and the other repressive regimes in the world by beating them down in the same fields but in the niche of the green economy, too. The green economy promises prosperity and that is why it is a new strategic weapon of competition. Who does object to it? Some entities of Chinese industry, Putin with his economy of a gasoline station, vodka, and military stores, Trump with his friends from the petroleum business, and the right populists in the EU who pretend to nourish an enormous concern about jobs disappearing and inflation hikes in the West as a result of the green economy development. Can you notice that practically, the opponents of the green economic model in the global elites come to a team of obvious or shaded opponents of democracy, too? Among them, perhaps the most camouflaged opponents are some right politicians in Europe who although conservatives, unscrupulously overtook the barricades of leftist and nationalist propaganda for the sake of their own career promotion (Who knows whether it is not sometimes also linked with a bit of cash-smelling evaporations from carbons?).
Is there, however, a realistic threat of jobs reduction and inflation increase under the green economy? The direct answer is ‘yes, but to some extent’. This extent might be much more elastic if, for example, its alternative in the energy sector is based on carbons and the carbons holders in the autocratic world decide one day to use their prized assets as strategic weapons against democracy. In this sense, the green economy offers at least partial energy autonomy to democratic countries. The most serious threat of unemployment coming primarily from the green economic model is focused on the employees in the carbon-related sectors. The EU farmers are not under a direct threat in that aspect because their problems turn up basically from the passing away small farms model of agricultural organization, the way how this model is subsidized, and the unsettled arrangements with the agricultural imports from Ukraine. An accelerated entry of Ukraine into the EU could solve many of the available problems including the ones connected with the ineffective farms’ quick bankruptcies and the need for the overall system of subsidizing in the Union to be urgently repaired. The urgency in the situation originates from facts such as that this system does not contribute to the economic growth of the EU (it has been practically entirely missing in the last 15 years!), it does not stimulate structural improvements in the most subsidized member countries, and it also enriches the Eastern European oligarchs and the Italian mafia quite regularly. No agricultural or any hereditary-pastoral sentimentality whatsoever and all kinds of political opportunism could hide these obvious facts. Then it is expected according to IEA (there is a strong carbons lobby in it!) that by 2030, the green economy would open globally about 17 million additional jobs on a net basis in areas such as EV manufacture, wind turbines production, solar panels installation and construction works related to the building of new green production plants and infrastructure. Currently, the global oil, gas, and coal sectors employ almost 18 million persons. IEA envisages that approximately 5 million of them will lose their jobs by 2030 if the world is to meet its net zero target by 2050, which is significantly less than the expected new jobs openings number in the meantime. Of course, the unemployment problem will not be equally painful in all the countries trying to adopt the green economy. For instance, it will be much more difficult to develop this economic model in Eastern Europe than in the West, because the economies in Poland, the Baltic Republics, the Czech Republic, Slovakia, Hungary, Romania, and Bulgaria are heavily dependent on carbons and the financial and institutional capacities of their governments are somewhat limited to encounter the transitional needs. But even so, the EU may introduce some flexibility to its subsidizing programmes and allow to the governments in these countries to reallocate funds from their existing subsidized schemes to transitional projects and initiatives. It is also possible for the national governments to endeavor in setting up their own supporting funding schemes pegged on the issuance of state-committed letters of guarantee that are to be insured with private insurance companies. It will permit the local banks to extend more easily loans on collaterals of state-issued letters of guarantee to compensating projects or directly to green ones without this type of backing to burden the governments’ budgets. The national governments can increase besides with 3 – 4% their excise duties on the carbons and raise extra funds to support the poorest households in the purchase and installments of solar panels, too. Additionally, the governments may use the same funding source for a partial subsidizing of leasing schemes aimed at encouraging the purchases of EVs in their countries. On the other hand, it is also important to how the EC will encourage corporate investments as FDI in the Eastern European green sector because the labour cost in the region currently is similar to the one in China. This fact and the reintroduction of TPPT (Trans-Pacific Partnership Treaty) with included in it environmental protection rules could similarly facilitate seriously the transition to the green economy in Eastern Europe and the whole democratic world, introducing a common international standard for that.
If some Western politicians today do not want to work for the green economy development as a priority over what they recognize as a present green threat to the employment and quality of life in their countries, they will perhaps get a short-term boost in the political stage. But it will be a sinful boost because it will be paid for by the quality of life of a lot of people still nowadays, the next generations, and other politicians after them. This perspective seems sufficiently certain even beyond the climate change problem if we take into consideration the fact that green energy will become cheaper and cheaper with the technological advances while the carbons mostly in the hands of autocrats, will see their prices soaring proportionally to the reduction of their natural deposits. That is why honest politicians should be able to spell out correctly and in a responsible fashion to their nations, the unavoidable need to develop the green economy as a model the global democracy should use to go forward. Otherwise, democracy can quite possibly continue to lag economically behind a world, becoming more and more fragmented geopolitically.