Wednesday, November 17, 2010

Political Issues on the Horizon, Part 3

In my last two posts, we explored four political issues that are likely to be important in the next decade. To wrap up this political trilogy, I’m going to talk about two issues that are often discussed as vitally important for our future…which I nevertheless think will soon fade from the political landscape.

Cap and Trade. For the past decade, the climate change debate in the United States has focused on the wrong issues. One side of this debate has tended to overhype the worst-case climate change scenario, arguing for immediate, draconian carbon cuts which would harm the economy while doing almost nothing to avert climate change. The other side has flatly denied climate change even exists, despite a huge amount of scientific evidence indicating otherwise.

Yet technological advancement, not political decrees, will determine the fate of our climate. As it becomes clear that none of the common prescriptions for climate change are politically feasible and scientifically plausible, we can and must stop focusing on policies like cap-and-trade and instead turn to the real solution: technology.

Fossil fuel combustion is responsible for 96.5% of all man-made carbon dioxide emissions. Addressing the need for fossil fuel combustion is of paramount importance to stop clogging our atmosphere with carbon dioxide. Fortunately, solar power will soon supplant fossil fuels as our primary source of energy. Any political policies to fix climate change must instead focus on making this happen as soon as possible, through subsidies and tax credits for solar energy pioneers.

Furthermore, research into geoengineering must be heavily funded to determine if there are any plausible ways to counteract the harmful effects of carbon dioxide, without unleashing even worse environmental damage in the process. Some of the more promising ideas include stationing powerful underwater turbines in the ocean to spray water high into the atmosphere, injecting chemicals underneath large glaciers to prevent them from sliding into the ocean, seeding the ocean with iron flakes to encourage carbon-eating plankton to grow, and spraying sulfur dioxide into the stratosphere to mimic the cooling effects of volcanoes. Any of these solutions would cool the earth, but they carry environmental risks of their own that may make them unpalatable. In many ways, we would be picking our poison: do the risks of geoengineering outweigh the risks of climate change, or vice versa? Governments should commit to researching these geoengineering techniques in depth to determine the answer.

Ultimately, political debates over cap-and-trade or possible successors to the Kyoto Protocol are a dead-end. They are unproductive and unlikely to succeed. I expect them to disappear from the political landscape in the very near future, as more voters realize that a more practical approach is necessary to truly combat climate change.

National Debt. In 2006, the Democratic Party gained control of Congress, in part, by campaigning on deficit reduction. In 2010, the Republican Party did the same. Yet there is no evidence that either party in the United States has any actual interest in reducing the debt. Both parties value their other priorities – cutting taxes in the case of Republicans, and increasing spending in the case of Democrats – much more highly than deficit reduction.

And that is not entirely a bad thing. For all the hype that surrounds our debt, it is still not at dangerous levels. Even after the worst recession in recent history, our debt stands at about 94%. This is high by American standards, but still much lower than many other developed nations which are at no risk of defaulting. The interest rate on treasury bonds is at an all-time low, meaning that the idea of the US government defaulting on its debt is barely even in the minds of investors.

To be sure, we cannot continue running large deficits forever. We need a medium-term plan to get our deficits under control, but even so, we don’t need to balance the budget entirely. Running a small annual deficit is fine. Between 1940 and 1980, the United States cut its debt-to-GDP ratio from 120% to 35%, despite running an annual deficit for most of the intervening years. There is no reason we cannot do this again in the next few decades. As long as our economy grows faster than our debt, our debt-to-GDP ratio will fall, eventually returning to more typical levels.

Although the national debt will probably continue to be a complaint of the out-party, I am skeptical that it will be more than a political tactic anytime soon. Neither party has shown any interest in seriously addressing the debt, and as long as we can get our deficits down to a more reasonable level once the economy picks up, neither party will need to.

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