The Green Deal Will Make or Break Europe

The European Union’s new leadership has decided to invest much of its political capital in a plan to position Europe as the global leader in the transition to a carbon-neutral economy. But if too many constituencies feel as though they are being sacrificed on a green alter, the plan will never even get off the ground.

BERLIN – European Commission President Ursula von der Leyen’s  to lead a “geopolitical commission” is about to face its first big test. European heads of state are meeting to discuss her proposed European Green Deal, a sweeping project that could either unite the European Union and strengthen its position on the world stage, or generate a new intra-European political cleavage that leaves the bloc fractured and vulnerable.

The need for concerted action is clear. The Green Deal is a response to accelerating climate change, which poses an existential threat not just to Europe but to the entire planet. The problem does not observe national borders, and thus requires collective global action. But the transition to a carbon-neutral economy also offers far-reaching opportunities. With the right strategy in place, Europe can boost its own technological innovation and deploy carbon pricing and other fiscal policies to protect European labor markets from being undercut by lower-cost production in China and elsewhere.

Moreover, through the European Investment Bank, the EU already has a tool for  massive stores of capital for investments in infrastructure, research and development, and other essential areas. And, as Adam Tooze has argued, by issuing green bonds and other “safe assets,” Europe can secure greater economic independence from other powers and start to establish the euro as a global currency.

But alongside this positive vision are more dystopian scenarios in which the climate-policy debate creates geographic and socioeconomic divisions and fuels a populist backlash. Although climate change touches everyone, its effects are asymmetric, as are the costs of undertaking a transition to a carbon-neutral economy. The danger for Europeans is that the unequal distribution of the costs and opportunities will fuel a culture war between

  • east and west,
  • urban and rural, and so forth.

This European debate is an echo of a broader global challenge. Many Eastern European countries still depend heavily on coal for energy generation, and thus fear that the push for carbon neutrality is an underhanded form of protectionism by advanced economies like Germany. Poland’s energy minister, Krzysztof Tchórzewski, has dismissed as “a fantasy” the notion that Poland – which relies on coal for 80% of its electricity – could achieve carbon neutrality by 2050, and estimates that the costs of such a transition would approach €1 trillion ($1.1 trillion).

But, in addition to the east-west divide, the Green Deal could also create political rifts within every EU member state. French President Emmanuel Macron has tried to position France as a global climate leader. But his government’s attempt to raise taxes on fuel last year backfired when millions of gilets jaunes (“yellow vests”) took to the streets in protest in late 2018.

The European Council on Foreign Relations has conducted in-depth polling to understand policy preferences across Europe, and we have found climate policy to be a particularly divisive issue. On the surface, around two-thirds of Europeans in most countries polled think that tackling climate change should be a priority, even if it means curtailing economic growth. But up to one in four people do not think that climate change is a real threat, and are far more worried about Islamic radicalism and the rise of nationalism.

The gilets jaunes are not an isolated phenomenon. Recent elections have shown how a program like the Green Deal could become a useful punching bag for populists and parties like the Alternative für Deutschland (AfD) in Germany and Rassemblement National (National Rally, formerly the National Front) in France.

Critically, once you move from asking people whether climate change is a problem to how it should be addressed, concerns about socioeconomic fairness and the distribution of costs prove hugely divisive. Even in the European Parliament, where 62% of MEPs were elected on green-inspired platforms, only 56% agree that the EU should be pursuing a rapid transition to a low-emissions economy. Moreover, only one-third of MEPs are prepared to take tough action against companies with large carbon footprints.

Generally speaking, then, there are two possible futures for European climate policy. The Green Deal could become Europe’s chief new cause, lending momentum to European integration and strengthening the EU’s global position vis-à-vis China and the United States. Or, it could become the next “refugee crisis,” a singularly potent issue that divides Europe between east and west, and that mobilizes populist forces within countries across the bloc.

To make the first scenario more likely, EU leaders need to listen less to moralists like the young climate activist Greta Thunberg, and more to  who understand that paying off reactionary forces has long been part of the price of progress. The only way to shepherd the Green Deal to successful implementation will be to offer large fiscal transfers to the laggards, so that they, too, will have a stake in the clean-energy transition. Without European unity, there can be no effective European response to climate change.

The Last Chance to Defeat China and Win Back the Cyber Domain?

Two months ago, when Zooming In did a story on Huawei and global 5G deployment, Huawei was poised to take control of much of the world’s cyber domain. We talked about the national security implications of that prospect. And we observed the U.S. efforts to raise awareness of that risk. Two months later, when we did another story on this topic, we realized the world knows Huawei a lot better through these efforts, but Huawei’s momentum has not stopped. In fact, Huawei and China are playing a grander game. They have a brilliant strategy that is working well with the very nature of a crony capitalism. Can this battle still be won by the free world? And what does it take to win? Let’s find out in this edition of Zooming In.
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Getting Real About Rural America

Nobody knows how to reverse the heartland’s decline.

But it’s also important to get real. There are powerful forces behind the relative and in some cases absolute economic decline of rural America — and the truth is that nobody knows how to reverse those forces.

.. But reviving declining regions is really hard. Many countries have tried, but it’s difficult to find any convincing success stories.

Southern Italy remains backward after generations of effort. Despite vast sums spent on reconstruction, the former East Germany is still depressed three decades after the fall of the Berlin Wall.

Maybe we could do better, but history is not on our side.

What’s the matter with rural America? Major urban centers have always been magnets for economic growth. They offer large markets, ready availability of specialized suppliers, large pools of workers with specialized skills, and the invisible exchange of information that comes from face-to-face contact. As the Victorian economist Alfred Marshall put it, “The mysteries of the trade become no mysteries; but are as it were in the air.”

But the gravitational pull of big cities used to be counteracted by the need to locate farming where the good land was. In 1950 U.S. agriculture directly employed more than six million people; these farmers supported a network of small towns providing local services, and some of these small towns served as seeds around which various specialized industries grew.

Nor was farming the only activity giving people a reason to live far from major metropolitan areas. There were, for example, almost half a million coal miners.

Even then, rural areas and small towns weren’t the “real America,” somehow morally superior to the rest of us. But they were a major part of the demographic, social and cultural landscape.

Since then, however, while America’s population has doubled, the number of farmers has fallen by two-thirds. There are only around 50,000 coal miners. The incentives for business to locate far from the metropolitan action have greatly diminished. And the people still living in rural areas increasingly feel left behind.

Some of the consequences have been tragic. Not that long ago we used to think of social collapse as an inner-city problem. Nowadays phenomena like the prevalence of jobless men in their prime working years, or worse yet, the surge in “deaths of despair” by drugs, alcohol or suicide are concentrated in declining rural areas.

And politically, rural America is increasingly a world apart. For example, overall U.S. public opinion is increasingly positive toward immigrants. But rural Americans — many of whom rarely encounter immigrants in their daily lives — have a vastly more negative view.

Not surprisingly, rural America is also pretty much the only place where Donald Trump remains popular; despite the damage his trade wars have done to the farm economy, his net approval is vastly higherin rural areas than it is in the rest of the country.

So what can be done to help rural America? We can and should make sure that all Americans have good health care, access to good education, and so on wherever they live. We can try to promote economic development in lagging regions with public investment, employment subsidies and, possibly, job guarantees.

But as I said, experience abroad isn’t encouraging. West Germany invested $1.7 trillion in an attempt to revive the former East Germany — more than $100,000 per capita — yet the region is still lagging, with many young people leaving.

I’m sure that some rural readers will be angered by everything I’ve just said, seeing it as typical big-city condescension. But that’s neither my intention nor the point. I’m simply trying to get real. We can’t help rural America without understanding that the role it used to play in our nation is being undermined by powerful economic forces that nobody knows how to stop.

 

In about 20 years, half the population will live in eight states

..  the 16 most populous states will be home to about 70 percent of Americans.

.. Geographically, most of those 16 states will be on or near the East Coast. Only three — Arizona, Texas and Colorado — will be west of the Mississippi and not on the West Coast.

.. 30 percent of the population of the country will control 68 percent of the seats in the U.S. Senate. Or, more starkly, half the population of the country will control 84 percent of those seats.

.. His tweet goes further, suggesting that the demographics of those states will differ from the larger states, as well, and, therefore, so will their politics.

.. It’s self-evident that the 34 smaller states will be more rural than the 16 largest; a key part of the reason those states will be so much more populous is the centralization of Americans in cities. It’s true, too, that this movement to cities has reinforced partisan divisions in a process called the Big Sort.

.. In the current political context, older voters means more Republican voters. By 2040, though, those 65-year-olds will be Generation X, a generation that currently skews more Democratic than the two generations that preceded it,

.. By 2046, even some millennials — a group that is much more Democratic-leaning — will be at retirement age (!!!).

.. White male millennials are the only demographic group within that generational bracket to lean more heavily to the Republicans.

.. The gray states on the map below — states that make up more than two-thirds of the land area of the United States — will similarly control enough of the Senate to overcome any filibuster.