Posted by: Christian Verstraete | January 3, 2010

After Copenhagen’s failure: Should we let the market do?

Over the last couple weeks, I read through an humongous amount of articles and blog entries about Copenhagen, and was amazed to find a number of them arguing to do nothing and let market forces play. In my words, this is playing the ostrich, putting our heads in the sand. I do hope you allow me, to start the year being a little provocative.

Let market forces play, isn’t that how we ended up with the sub prime crisis? Isn’t that why we spent 2009 pumping 5000 Billion US$ in the economy? Why would the short term focused (thanks to Wall street) market solve our long term issues?

First, you have the ones who deny we even have a problem. A couple scientists (they represent less than 0.5% of the community), like Mr. Claude Allègre, keep pretending it is purely a result of a the sun’s activities. The you have the ones who try to dismiss the scientific results by pointing to stolen e-mails (that appeared by accident two weeks before the opening of the Copenhagen conference). Sites as climategate even compare these to a Hitler plot.

I’d like to point out a couple things. First, more than 99% of the climatologists agree global warming is there. They may disagree about the magnitude of the problem, as their mathematical models give different results. All point to greenhouse gasses as a primary cause. As I want to give my children and grand children a planet on which they can live, I will not take the risk to believe they are all wrong.

We actually reacted, a number of years ago, to the hole in the ozone layer by cutting CFC emissions and were quite successful at it. We invented new products that became excellent substitutes. So, why shouldn’t we push for innovation this time, establishing regulations and reduction goals that foster this innovation, creating new technologies and jobs at the same time.

Let me illustrate what I mean. In the early 70’s, after the oil crisis, both the US government and the EU established rules to reduce car consumption. In the US, the rules were bypassed through the creation of the SUV category (not submitted to the regulation) and further reductions of the regulation. In the EU, the governments stayed strong, forcing the industry to adapt. Today, 30 years later, Volkswagen is becoming the largest car manufacturer in the world, and nearly all the European brands (except the ones owned by US companies) are in reasonable shape. In the mean time the US brands created such ecological monsters as the Hummer and the Lincoln Navigator. And lately, two out of the three major US brands got through chapter 11.

Denmark decided to reduce its dependency on oil and started installing windmills. They have become the world leaders in windmill technology. Brazil took the bio fuel route, and I could go on with examples. Governments need to have the courage to give their countries a long term vision. This will foster innovation, and along with it create jobs. That’s what we need, not denial and leaving everything over to market forces, as they have proven inefficient to take care of the good of humanity.

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  1. Many of you Europeans think that everything should be driven by governments. Given the state of your failed socialistic economies (with the exception of Switzerland), haven’t you learned anything? Copenhagen failed because it was based on a rotten foundation of world elites think they can dictate to the rest of the world how to live. They were met by the reality that the so called third-world countries — a set of corrupt regimes — will not play ball. The corrupt left-wing elites met their match!

    • Interesting you speak about the continental European economies as being socialistic and failed. It’s definitely all about perceptions. Without wanting to go in a pointless debate, let me put the record somewhat straight. In 1960, one US$ was worth the local currency equivalent of 1.5 Euro, the British Pound was worth 3.5 Euro. Today, one US$ is worth 0.693 Euro and one GBP 1.1 Euro. This to me does not sound like a failed economy at all, rather the contrary. Copenhagen was finally decided between the President of the US and China, with very little involvement of anybody else. This is a fact we have to live with. What I argue is tha seriously looking at creating a more sustainable world fosters innovation and creates jobs. And that is what Europe is doing, with gentle governmental push. We have enough of a deregulated world that only seems to bring recession, large discrepancies in wealth, and poverty.

  2. […] previous post on Copenhagen and Innovation demonstrated how sensitive the subject is. I strongly believe that human activities have an effect […]

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