The Reemergence of the Club of Rome

In the early 1970s a group called the Club of Rome published Limits to Growth, which based on a complex computer model predicted the exhaustion of natural resources and mass starvation resulting from population growing faster than food production.

All of these catastrophic events were to take place before the century.  Of course, none did.  The entire Club of Rome agenda was based on what Austrian economist Friedrich Hayek termed the fatal conceit and the failure to understand how markets work and the benefits of technology.

Today’s Club of Rome is the Vatican and Pope Francis’ encyclical on humans, climate, and nature.

Pope Francis has captured the imagination and respect of people around the globe because he is holy, humble, and the embodiment of Christian principles.  Clearly, the world would be a better place if more of us reflected his core values.  But, humility, caring, and spirituality do not equate with understanding of The Wealth of Nations, much less how the climate system works.  Even if we were all angels, his call for a “global political body” is impractical and shows the limits of his understanding of how the world works.

The Pope identifies two globally important problems—poverty and environmental degradation—but then misdiagnoses them.  Actually, environmental degradation is not a separate problem; it is directly linked to poverty.  And, fossil fuels are not an unnecessary evil.  In his book, The Moral Case for Fossil Fuels, Alex Epstein says the core issue is “What will promote human flourishing—realizing the full potential of life?”  He also makes a critical point: “Ultimately, the moral case for fossil fuels is not about fossil fuels; it’s about the moral case for using cheap, plentiful, reliable energy to amplify our abilities to make the world a better place—a better place for human beings.”

There is a compelling body of economic literature that refutes the Pope’s hypothesis that wealth and capitalism lead to environmental degradation.  Simon Kuznets was awarded the Nobel Prize for research demonstrating that that as per capita income increases, income inequality initially increases but then reaches a turning point and starts declining.  This is shown as an inverted bell shaped curve.  Since then, economists have marshaled environmental data for a large sample of countries and income levels.  They have presented evidence that as countries develop the environment might initially deteriorate but then improve.  This empirical work is known as the “environmental Kuznets curve”.

The most devastating examples of poverty afflicting well over 1 billion people are in developing countries where people subsist on about $1 a day, have no potable water, no access to commercial energy, and have extremely high sickness and mortality rates.  These countries also have the highest levels of environmental degradation.  Research has shown that one of the greatest threats to the world’s environment is the compounding numbers of rural poor who turn increasingly to the rainforests to feed and shelter themselves.

Many of these countries also have the highest concentration of wealth.  African nations that are controlled by dictators and military elites exploit their people for personal gain.  Many Latin American countries have far greater income disparity than developed ones.  In the Pope’s homeland, Argentina, the top 10% control 32% of the nation’s wealth.  In Brazil it is 41% and 26% in Chile.  In Europe and the US wealth concentration runs from 7% to 16%.  And, developed countries have do the best job of environmental protection, validating the environmental Kuznets curve.

Economic development and fossil fuel use go hand in hand.  The Industrial Revolution was fueled by fossil fuels and with it came improved standards of living, increasing life spans and improved quality of life.

The US is often cited as an example of profligacy and  energy waste.  But, the US also has one of the best records in terms of environmental quality and compassion.  The Charity Aid Foundation ranks the US as the most generous country in the world.

Unfortunately, the Pope has accepted the climate orthodoxy that CO2 from fossil fuel use is responsible for climate change.  He then worked back to condemn capitalism as if it is the cause of greed that leads people to exploit and be uncaring.  In 1979, Milton Friedman asked Phil Donahue, “ is there some society …that doesn’t run on greed? … Of course none of us are greedy.  It’s only the other fellow who is greedy.  The world runs on individuals pursuing their separate interests.  The great achievements of civilization have not come from government bureaus.” Or, from a “global political body”

The Pope needs to substitute realities for the illusions of climate change.  A good place to start is the reality that CO2 is a nutrient whose warming potential, based on physics, diminishes as atmospheric concentrations increase.   The most potent and largest greenhouse gas is water vapor but of course environmental advocates can’t control that to accumulate political power.
This article appeared on the Manhattan Institute’s E21 weblog at http://www.economics21.org/commentary/reemergence-club-rome

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