In the Globe and Mail today Konrad Yakabuski writes that Pope Francis should show a little faith in economics. Yakabuski is missing one major fact about how the world works.
Capitalism can work pretty well when capitalists know the rules that will be enforced. The problem is that we have to change the rules about burning fossil fuels. This isn’t something capitalist firms can do and it isn’t something that the Pope can do – it is the job of government, and government has been failing.
The same issue of the Globe that contains Yakabuski’s advice for the Pope has another significant report. An article in the business section says Canadian companies are beginning to realize that they can’t go on relying on the tar sands and on oil exports for growth.
They have been pretty slow to see which way the wind is blowing (largely because business has been waiting for a clear signal from government) but companies are now signalling that they know that the rules will change and they wish the Canadian government would get on with the job of moving Canada into the 21st Century. Unfortunately, in Canada we have had a government that is either seriously deluded or lying about the state of the world. The government is to blame for the fact that business doesn’t know what the rules will be. As a result, Candadian capitalism has not been seriously engaging the problem of decarbonizing the world economy.
To be fair, market forces are working to some extent and technology is developing. Solar panels are getting cheaper. And some governments have mandated fuel efficiency. Some governments have made major commitments to electic vehicles. Others have committed to wind power on a serious scale. A very few have implemented effective cabon taxes. Momentum is building.
The Pope’s big contribution is to give a signal to cowardly governments like ours. He is basically saying that one of the most conservative forces in the wolrld has made up its mind that the rules will change. It is now safe for even cowardly politicians to act.
And, Konrad, once the governments give really clear signals, markets will do a lot better than they have been doing. The world still won’t be fair, and there will still be a lot of suffering and corruption, but we won’t be hell bent for extinction.