‘Sound finance’ prevents available climate solution with massive jobs potential

When the governments in the advanced nations abandoned full employment as an overarching macroeconomic objective, and instead, starting pursuing what I have called full employability, they stopped seeing unemployment as a policy target (to be minimised) and began using it as a policy tool to suppress inflation. As mass unemployment rose, the politics were massaged by the mainstream of my profession who claimed that the level of unemployment that constituted full employment had risen (this was the NAIRU era) and so there was really no problem. Governments adopted the neoliberal line that they ‘didn’t create jobs’ and had to target fiscal surpluses to ensure their position was ‘sustainable’. The costs in lost income and human suffering have been enormous – most people would not have any idea of the massive scale of these losses that accumulate day after day. Now, it seems, the ‘sound finance’ school is going a step further. We are probably facing an environmental emergency in the coming period (years, decades) but the question commentators keep asking is not what we can do about it but ‘how can we pay for it’? So ‘sound finance’ has already destroyed the lives of millions of people around the world as a result of mass unemployment and poverty, now it is turning its focus on the rest of us. Madness. Paradigm change has to come sooner rather than later.

The mass unemployment problem

I discussed the shift from full employment to full employability in this blog post among others – A new progressive agenda? (September 28, 2010).

We also discussed the shift in policy approach to unemployment under neoliberalism in our 2008 book – Full Employment abandoned.

I also discussed the costs of unemployment in these blog posts (among others):

1. The daily losses from unemployment (January 13, 2010).

2. The costs of unemployment – again (January 13, 2012).

As a reminder, sustained unemployment imposes significant economic, personal and social costs that include:

  • loss of current output;
  • social exclusion and the loss of freedom;
  • skill loss;
  • psychological harm;
  • ill health and reduced life expectancy;
  • loss of motivation;
  • the undermining of human relations and family life;
  • racial and gender inequality; and
  • loss of social values and responsibility.

These costs are enormous and dwarf the measures that various governments have come up with to estimate losses arising from so-called microeconomic inefficiencies (such as transport systems not running on time etc).

When I last did these estimates I found that in the September-quarter 2009, the daily GDP losses that the US economy was enduring, for example, as a result of the decline in economy activity below it previous peak stood at $US10.3 billion per day.

So over one month, they were losing $US310 billion approximately and that was just in lost GDP from the lack of jobs.

If one added in those other costs identified above, then the daily losses would be much more than this.

Even under conservative assumptions, the economic and social costs of sustained high unemployment are extremely high. The inability of unemployed individuals and their families to function in the market economy gives rise to many forms of social dysfunction, in addition to output loss.

The apparent failure of neo-liberal supply side policies to reduce unemployment prior to the crisis is now highlighted during the crisis. There is now an urgent need to address the large pools of unemployment in world economies.

There is never a financial reason why currency-issuing governments should allow mass unemployment to endure in the way they have over the last three decades.

The first response that governments can always introduce, as a base case defense against these losses is a – Job Guarantee.

However, spurious arguments about governments not having sufficient ‘fiscal space’ or ‘fiscal headroom’ or ‘how are they going to pay for it’ and all the rest of the nonsense, has condemned citizens to unnecessarily endure the massive costs of extended periods of unemployment.

Our social concern for their welfare has been diminished because we have bought the ‘sound finance’ narrative that governments are performing well if they run fiscal surpluses irrespective of the situation, and, further, by the relentless divide-and-conquer strategies deployed to make it look as though the unemployed have ‘choices’ but are lazy and desire to be supported by the rest of us.

Neither part of the story is correct.

If unemployment impacted on more of us then the situation would be different for sure. It would be less easy to demonise the victims of the deliberate choice by governments not to net spend at levels that are required to sustain full employment.

When we come to discussions of climate change, however, we are talking about an issue that can impact on all of us, even though it is clear that poorer communities tend to be hit the worst by environmental degradation.

This is especially the case in poorer nations where their real resource bases have been pillaged by richer nations under spurious export-led growth strategies under the aegis of the World Bank and the IMF.

But it still remains that climate change is a global threat that cannot be as easily dismissed as mass unemployment in the neoliberal rhetoric.

The problem is that while climate change denial is rampant an even more insidious problem is that the ‘how are we going to pay for it’ ruse is alive and well in this debate, even among progressives who are demanding immediate action.

Climate action solution – plant some trees

I read an article in the latest edition of the Science journal (published July 5, 2019) – The global tree restoration potential – which was a research report written by Jean-Francois Bastin, Yelena Finegold, Claude Garcia, Danilo Mollicone, Marcelo Rezende, Devin Routh, Constantin M. Zohner, and Thomas W. Crowther, all of whom are associated with various environmental, biological, agricultural and forestry research institutions across Europe.

The article requires library access but the summary points are clear enough.

The authors note at the outset that:

Photosynthetic carbon capture by trees is likely to be among our most effective strategies to limit the rise of CO2 concentrations across the globe.

Accordingly – “The restoration of trees remains among the most effective strategies for climate change mitigation.”

The authors note that the current estimates in this regard suggest that “an increase of 1 billion ha of forest will be necessary to limit global warming to 1.5°C by 2050”.

The research question then is:

… whether these restoration goals are achievable because we do not know how much tree cover might be possible under current or future climate conditions or where these trees could exist.

They then “build models using direct measurements of tree cover (independent of satellite-derived models) from protected areas, where vegetation cover has been relatively unaffected by human activity.”

And then they “interpolate these “natural tree cover” estimates across the globe to generate a predictive understanding of the potential tree cover in the absence of human activity.”

They used “78,774 direct photo-interpretation measurements …. of tree cover across all protected regions of the world.”

They found that “about two-thirds of terrestial land, 8.7 billion ha, could support forest” which is “3.2 billion ha more than the current forested area”.

Around “1.4 billion ha of this potential forest is located in croplands (>99%) and urban areas (<1%)" which means that approximately:

… 1.7 to 1.8 billion ha of potential forest land (defined as >10% tree cover) exists in areas that were previously degraded, dominated by sparse vegetation, grasslands, and degraded bare soils.

Some further modifications in the technique then produced a final estimate of “0.9 billion hectares are found outside cropland and urban regions … and may represent regions for potential restoration”.

In other words, they essentially subtracted existing forest and existing agricultural and urban areas to derive a final estimate.

It turns out that:

More than 50% of the tree restoration potential can be found in only six countries (in million hectares: Russia, +151; United States, +103; Canada, +78.4; Australia, +58; Brazil, +49.7; and China, +40.2) … stressing the important responsibility of some of the world’s leading economies.

The problem is that only 10 per cent of the 48 countries that signed up for the Bonn Challenge to “bring 150 million hectares of deforested and degraded land into restoration by 2020 and 350 million hectares by 2030” have plans in place to actually achieve their targets.

The authors find that “over 43% of the countries have committed to restore an area that is less than 50% of the area available for restoration.”

So a lot of work to be done, but prior national commitments have to be stronger.

If you go to the Bonn Challenge Home Page you can see a map of the commitments currently in place.

My own country Australia, led by a government of climate change deniers, has made zero commitments.

In the UK, only Scotland has made a modest commitment.

None of the Western European nations have made a commitment. The EU is not leading the charge here.

The authors concluded that the restoration project would be “overwhelmingly more powerful than all of the other climate change solutions proposed.”

That last quote came from a UK Guardian article (July 4, 2019) – from its environmental editor – Tree planting ‘has mind-blowing potential’ to tackle climate crisis – which considered the Science report.

The Guardian interviewed the authors and made the point that the most powerful solution to climate change does not require any new technologies – “It is available now”.

Just plant trees!

The Science report is silent on how such a restoration project would be made operational.

The Guardian article introduces this topic in this way:

The study, published in the journal Science, determines the potential for tree planting but does not address how a global tree planting programme would be paid for and delivered.

They ask the authors for suggestions and we learn that “we could restore 1tn trees for $300bn”.

One author proposed that “$300bn would be within reach of a coalition of billionaire philanthropists and the public”.

Once again we have a disconnect in the public debate between climate action discussions and the capacities of the governments in modern monetary systems.

No-one asked the US government ‘how will we pay for it’ when it introduced the – Troubled Asset Relief Program – in October 2008, which was designed to “purchase toxic assets and equity from financial institutions to strengthen its financial sector”.

How much was immediately authorised under the TARP?

Answer: $US700 billion. The actual amount ended up less than that but the point is obvious.

Here we have a solution:

1. That is available now.

2. Is considered the most effective response that can be made to combat the climate issue.

3. Involves a small investment in relative terms to accomplish.

And the ‘environmental editor’ of the Guardian hasn’t thought to suggest that fiat currency-issuing governments have all the capacity they need to immediately authorise the required expenditures.

After all, we are only talking about saving the planet here.

The reason the debate gets locked down like this – when it comes to financial implications – is the same reason we have tolerated elevated levels of unemployment and the massive wastage that has accompanied the joblessness – the public debate has become locked down by neoliberal notions of public finance – so-called ‘sound finance’.

It is why climate change activists have to learn Modern Monetary Theory (MMT) to overcome this economic ignorance.

The perfect match – tree planting and job creation

Clearly tree planting is not rocket science and the skills necessary to undertake these reafforestation projects would be within the reach of most workers.

A progressive editor or commentator should never be questioning how we can pay for a tree planting project. They should be lobbying at every chance governments to end their ‘sound finance’ mindsets.

This particular climate solution would also help create thousands of low-skill (but highly valued) jobs especially in nations that have high levels of unemployment or hidden unemployment in the informal economy.

It is clear that the private sector or the ‘market’ system is not going to undertake such a project.

And the jobs are perfect for a Job Guarantee program.

A total win-win.

All we need is the political will and some education.


The neoliberals continually drown the populace in a swathe of austerity myths:

  • The government has run out of money.
  • Deficits will drive up interest rates.
  • Deficits will cause hyperinflation.
  • Deficits will rack up unsustainable debts on our grandchildren.
  • Bond markets will punish governments who run continuous deficits.
  • Deficits undermine growth because the private sector thwarts their intent by increasing saving to pay for higher implied taxes in the future.
  • Direct job creation creates unreal jobs that are worthless.
  • A Job Guarantee would undermine the capacity of private employers to attract labour and drive down productivity.
  • ETC, the list goes on.

None of them have any credence.

We are continually being drawn towards conclusions that unemployment is not really a problem because people choose to remain jobless. The culprit is singled as the income support system which subsidises those choices. Or depending on the day of the week, the other culprit is excessive real wages. Or then, on another day, it might be hiring and firing protections. ETC.

We are told that if the labour market was deregulated and the income support system abandoned then we would quickly eliminate unemployment. Put people on the margin of starvation and they will work out of desperation.

We see that approach in the poorest nations where families scavenge through rubbish and sewerage heaps for the barest scraps of food. That is what desperation and a lack of jobs ends up leading to.

Hopefully, the climate urgency will help groups in society that might otherwise not seek to understand macroeconomics to seek out such an understanding.

Modern Monetary Theory (MMT) provides an empowering framework for designing effective responses that can link the needs for more work with available and effective solutions for those interested in climate action.

Now is the time.

A superior, empowering understanding is available.

An effective climate solution (trees) is available.

That is enough for today!

(c) Copyright 2019 William Mitchell. All Rights Reserved.

This Post Has 27 Comments

  1. Bill,

    Sweden is and have always been an netimporter of CO2 due to it’s large woodlands. That is a fact if you count the photosynthesis and biosphere-sink process by the numbers. Looking at the reality I think up to around 40% of the CO2-emissions (in Sweden and in general) will “leave the country” through the atmosphere (wind or let us say the global weather-systems) though making local forestation not the big win-win as you think. In reality Sweden is still a netimporter from the biggest “pollutors” like i.e China.

    Conclusion: Should local “taxpayers” pay for what other countries in Asia and Africa or even european countries like Germany (no room for large forest while they are dependent on fossils due to their large intermittent windpower-sources) “polluts”? New financial resources should still be used wisely, are they not?
    How to encounter deforestation in areas like Amazonas and Asia? They are moving fast!

    Best regards

  2. Business profs tell us that, the ideal driver, from the business perspective is the irresponsible type, who causes accidents, resulting in many billable services for healthcare providers and those involved in the restoration of damaged auto’s and property.
    Environmental damage is already creating emergencies, in many places, but that is creating opportunities for those involved involved in the repair effort.
    Were is the downside to carrying on as usual?

    It would be wonderful if our problems were as simple as controlling CO2 through tree planting efforts, but the point about redirecting labor efforts is made.
    Unfortunately, the political will seems to favor supporting the status quo though fiscal support for the path we are on via basic incomes etc; all while talking a great talk about cleaning our act up.

  3. From The Guardian article…

    “Without freeing up the billions of hectares we use to produce meat and milk, this ambition is not realisable”, said one environmental researcher at Oxford University.

    So it’s not going to happen.

    Somehow I just cannot see the “carnivore philistines” (to borrow a line…search Billy Blog) switching to a plant based diet, even to save the planet.

  4. As if on cue, 18,000 ex-Deutsche investment bankers are now available for tree-planting employment!

    At say one sapling per hour each, that’s about 35 million trees planted per annum.

    Not a bad start, and what a wonderful and character-building opportunity for them to finally engage in socially useful employment!

  5. Forestgrowth have never been bigger in Sweden than now thanks to temp and CO2.

    The biggest contribution to CO2 uptake is to harvest when ready. Not to cook but use wood as building material. Pine is better than leaf? Leaftrees are growing faster but leafs are decomposing letting CO2 out again.

    Natural forests like Amazonas is maybe not the net oxygen lungs we think in the long run. When trees breathe they do as we humans, exhaling CO2 (nigthtime). When they die CO2 goes back into the air.

    Best regards

  6. Trees. There are more trees in Europe today than 100 years ago. Thank the coal industry for that.
    Also in Europe there is a lot of rewilding happening. George Monbiot wrote about it a few years ago
    So it’s not all bad news although I imagine it’s not balancing out the destruction of forests elsewhere.
    Bob Hawke made a commitment to planting Millions of trees, but not much happened, Typical!

    On the topic of unemployment [vs a UBI] Jordan Peterson made a cogent observation; “I don’t care how open, how creative you are, without a ROUTINE people just fall apart. Money doesn’t give you a routine: a job does” That fits in with those 9 points of yours above.

  7. @Thorleif

    “Should local “taxpayers” pay for what other countries in Asia and Africa or even european countries like Germany (no room for large forest while they are dependent on fossils due to their large intermittent windpower-sources) “polluts”?”

    Only if they want the world to, you know, survive. I couldn’t think of a less appropriate time to be counting beans. And that is without even accounting for the whole “historical advantage” in regard to polluting Europe and the US hold on today’s industrializing nations. As well as the fact that a big part of the pollution in those places is due in big part to the rellocation of production and its environmental repercussions to poorer countries while the products are still destined for the European and US market. Nevermind the lobbying against labour and environmental regulations that would mitigate the problem.

    Of course, countries like Norway can keep accumulating financial claims and see what those do against climate change. The whole point is that the climate doesn’t really care much about politically drawn-up borders, deficits nor profits.

  8. Dear HermannTheGerman

    About counting beans we should wonder if decisionmakers and most scientists really are calling for our doomsday around the corner? If they were I am sure they would start i.e new nuclearpower-stations asap.
    Just to be sure we would survive. But as you know we are talking about a hypothesis that is formulated on climate-models that are not matched by reality or can not be tested backwards on real data. That is why many people are indecisive or just not convinced.

    Even worse, as far as I know it is impossible to lower global emissions in accordance with the “crisis-timetable”. And the Asians and Africans (later) will continue to expand their use of i.e cheap coal.

    Yes we should continue to renew our energy-system but do it wisely. “We are already doomed”.

  9. One of the three poisons in Buddhism is ignorance.

    And we see that so clearly now.

    MMT is so important and learning it and helping to spread it totally makes life worth living.

    On the other hand, the Guardian needs to tell me where they find money to pay for arming terrorists in the middle east to take down governments.

    I get a feeling that alot of people are either ignorant or just out to deceive. Even in their own framework, the outcome can be delivered.

  10. Vegetation and photosynthesis wasmhow most of the co2 we liberated by burning fossil fuels was captured in the first place so why not?

    Of course if climate change was a rerun of the Cold War no one would be asking how we are going to pay for it!

  11. Because plants and trees grow way too slow compared to the rate of emissions, not to mention that if left rotting nothing is gained. Assuming we’d plant more than we destroy in the first place.
    <expletive self-censored>, if these commenters are the human progressives, it’s for the best we’re done for.

  12. @NGUYEN VAN TUAN i’m not sure why you’ve chosen to link to a source on climate change that is from a climate change denial think tank but i can assure you that article is full of BS assertions and misleading tropes that have been regurgitated by the CC denial
    industry and discredited by actual scientist for decades. i’m not going to waste my time pointing out all the errors in the article (there’s dozens) but it reflects poorly on you citing such a source to back up your misleading repetition of that “CO₂ is plant food” meme.

  13. If the we areas we reforested became permanent features of the landscape (that is new trees emerge at the same rate old trees die), then you have a permanent carbon sink.

    No one says planting trees is a magic bullet but every bit helps.

  14. @John Doyle
    land clearing in Australia is rampant and in QLD has returned to the levels seen in the pre-Beattie Govt era. A swath equivalent to and area 10km wide stretching from Melbourne to Cairnes is cleared each year for agricultural purposes almost entirely for livestock production, 90% of which is exported as ground frozen “burger” mince.

    Download the BZE Land Use report bze.org.au/landuse for more info in relation to the impact of the ag sector on australian emissions. if you re-catagorise to include all ag emissions in one lump (it gets hidden by dividing and obscuring clearing in the LULUCF division in standard AEGIS accounting) and use twenty year time frame (GWP₂₀) for GHGs not the 100 yr timeframe (GWP₁₀₀) typically used which tends to minimise away the short term warming from SLCPs like methane (ruminants produce methane in their gut), you arrive at a figure for At emissions being 54% of national emissions (2006-2010 which was the most recent available data when BZE LUR was written).

  15. Thorlief is correct on forest in the tropics: due to warmth and moisture they don’t have deep, rich soils – decomposition is very rapid – all the biological material is in the living plants. They would have to let the forests grow back and leave them that way. Only temperate climates develop deep, rich soils storing carbon within them.

  16. @ Thorleif
    “About counting beans we should wonder if decisionmakers and most scientists really are calling for our doomsday around the corner? If they were I am sure they would start i.e new nuclearpower-stations asap.”

    I think you are underestimating the problem and overestimating the “good faith” of politicians and industry. Also, if at all, the models used are considered to conservative(!) because of what the scientists call the “unknown unknowns”. Scientists have called loudly for action but are ignored or even silenced. Just recently Shell invited a scientist to a aconference supposed to be about “an action-oriented day of dialogue focused on accelerating the energy transition” and promptly disinvited the scientist after seeing his very simple slides the day before the conference:

    Feel free to browse the slides in the presentation.

    This is also the company that has been silencing its own researchers for over 40 years:

    Maybe I’m not getting your points correctly, but I can’t help but thinking that you are engaging in denialism or relativism at the least. At this stage it seems a huge act of stubborness or resistance to facts to me.

    @ Yok
    Which is why I wouldn’t mind “paying” the most suitable countries to become the “world’s lungs”. I think it’s a losing proposition to impose economically costly but environmentally vital measures in these countries without compensation.

  17. Arbor Day
    Chain saws are wailing.
    Mulchers scream in their grinding.
    Gums become sawdust

  18. HermannTheGerman

    Thank you for the links. I will study them in the next few days and try to respond to your call. I read The Intercept with some regularity and I am surely aware of the US Oilindustry-komplex incl Shell/BP and their personal indirect co-opt with Pentagon and Anglo-American foreign-policy objectives. Financial warfare is business as usual since WW2. That is of cource one reason to why certain scientist are “freakening out”. They are getting emotionally instable because of this hidden power wall while at the same time they lose themselfes in their own research not living up to science first rule namely always trying to falsify their own research. The biggest problem for the Alarmists in Europe and Sweden is in my view twofolded:

    1. Explain to the world how the the UN in the late 60s became a power-house for big private interests regarding managing their global financial objectives through supranational powers like IPCC. The Rockefellers i.e. The EU is another construction by american financial interests. Analyze how the concept of Peak Oil or peak cheap oil influence strategic thinking of the oligarchy. It is all about moving decision-power from national-governments making lobbying easier. TTIP is a good american example.

    2. Stop the propaganda and start letting both sides of science meet in public to present their research.
    There are lots of useful idiots out there. And the MSM are the worst kind!

    Please also consider the following link from Judith Curry about the psychology of stress among scientists when science is getting corrupted in different ways:


    Peter Kalmus by the way is part of the interview

    Best regards

  19. Dr James Hansen and Bill McKibben, two leading activists in the fight against global warming, have many years ago defined a realistic roadmap to get atmospheric CO2 down to 350ppm and to stabilise no higher than at this level from their estimated upper limit peak of 450ppm (currently we are at 411ppm) that will likely occur during their ambitious but essential global transformation period over the next ten to twelve years.

    Stabilising at 350ppm involves many things happening in unison and it will be an extremely difficult challenge politically but is still realistic practically and economically if urgent global action proceeds in the next few years.

    Firstly all fossil fuel usage must be rapidly phased out and a rising carbon fee imposed on fossil fuel producers and a full dividend returned to citizens along with governmental intervention is believed to be the most cost effective and rapid method of doing this across the entire economy of each nation.

    James Hansen has stated that if fossil fuels remain cheap then the transition will fail.

    Government intervention includes initiating or regulating for the building of clean energy generating capacity, improving energy efficiencies, R&D expenditure, building public transport infrastructure, regulating and cross subsidising New Energy vehicles, improving urban design and infrastructure for transport alternatives like bicycle usage and walking, utilising biofuels, producing synthesised liquid and gaseous fuels from renewable sources, reducing wasteful consumerism, improving the durability and maintainability of goods, encouraging simpler lifestyles for many, population control, reducing meat consumption and so on.

    An estimate of 100ppm of CO2 must also be removed from the atmosphere by ending deforestation and the draining of swamplands, restoration and stewardship of natural habitats on a massive scale, reforestation preferably as diverse ecosystems, increasing soil carbon in the form of organic material in agricultural soils which should be regularly replenished, adding biochar to agricultural soils which improve water and nutrient retention and can remain in the soil for thousands of years and possibly by geo-engineering methods as a last resort.

    Too much reliance on a narrow range of solutions could produce other adverse consequences such as the loss of natural habitats and biodiversity and the loss of too much productive agricultural land.

  20. Thorleif, it is well beyond time for climate change denialists to be treated with the contempt they have justifiably earned. I really hope you are not one of them?

    Two relevant references:

    Policies Must Be Based on 350ppm and 1 Degree Celsius to Protect Young People and Future Generations.


    Ex-Nasa scientist: 30 years on, world is failing ‘miserably’ to address climate change.


  21. Andreas B

    “climate change denialists to be treated with the contempt they have justifiably earned”

    Please read my link above: https://judithcurry.com/2019/07/08/climate-scientists-pre-traumatic-stress-syndrome/#more-25002

    Please have respect for different views Andreas. I know how it feels when you think you have all the answers but no one is listening. Or at least those with powers.

    There are very few climate change denialists out there. At least in the science-community. Climate is always changing. The biggest problem is that we do not understand our energy-system well enough.

    Best regards

  22. We understand climate well enough to say that, at best, optimistically, we’re fucked. If our current best option gets overrun, again, and there’s a lot of theoretical reasons on how that will happen, well, it was nice knowing modern society, faulty as it is.
    Also, please and kindly, you and your fellow idiots go to hell before it comes for all of us.

  23. I am not a climate change denialist (holocaust denialist). I am skeptic about the claimed sensivity-factor on the greenhouse-effect regarding CO2. That is telling us we should not panic making bad decisions. Poor people will always lose the most. Still I agree there are a lot of sensible things to change in how our modern life affects our health and our earth. Big Pharma, Big Agro, Big Bank etc.

    If science manipulate data to market their view they will lose confidence. Lost confidence is not easy to retrieve. For starters try to enhance the debate-climate. Calling people idiots etc is no way forward.

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