As global temperatures rise, are liberal democracies on trial?

As global temperatures rise, are liberal democracies on trial?
  • PublishedJune 3, 2024

It will be World Environment Day on Wednesday this week.

UN secretary-general António Guterres will be delivering a “pivotal speech” in New York, which is being billed like this:

“As climate records are shattered, and emissions continue to rise … the Secretary-General will set out some hard-hitting truths about the state of the climate, the grotesque risk leaders are running, and what companies and countries … need to do over the next 18 months to salvage humanity’s chances of a liveable future.”

What climate records are being shattered? You don’t have to look far.

April was the 11th consecutive month of record-high global temperatures, according to the National Oceanic and Atmospheric Administration (NOAA).

April was also the warmest April on record since global records began in 1850, with the global surface temperature being 1.32 degrees Celsius above the 20th-century average.

See the graph below.

Individual countries have been hit by record-breaking heatwaves recently too.

In India last week, temperatures hit a new record high of 49.9C in Delhi, one of the most populous cities on Earth.

One weather station even recorded a high of 52.9C, although authorities from the India Meteorological Department (IMD) said that might have been due to a faulty sensor. The heatwave led to headlines like this:

In Mexico, a country with more than 127 million people, more temperature records have been broken.

Mexico City experienced a record temperature of 34.7C at the end of month, leading to heat-related deaths of humans, and howler monkeys reportedly falling dead from trees. Scientists say intensifying heat could bring new record temperatures to Mexico in coming weeks.

In the United States, parts of central Florida recorded their hottest May on record.

That’s just some of the climate background to Mr Guterres’s speech in New York this week.

Markets won’t stop climate change on their own 

But there’s something else that’s worth noting.

The Forum New Economy, a non-partisan platform founded in Berlin in 2019, which is supported by the OECD, held its 2024 summit in Germany last week.

It was attended by a wide range of experts from different political and disciplinary positions, including economists and historians.

According to British historian Adam Tooze, who attended, the conference had a dual-mission.

“To consolidate our understanding of the new industrial policy, specifically with regard to the green energy transition on both sides of the Atlantic, and to discuss its future in the testing political times of the moment,” he wrote afterwards.

The group issued a “declaration” after the summit ended:

“Liberal democracies are today confronted with a wave of popular distrust in their ability to serve the majority of their citizens and solve the multiple crises that threaten our future,” it read.

“This threatens to lead us into a world of dangerous populist policies exploiting the anger without addressing the real risks, ranging from climate change to unbearable inequalities, or major global conflicts. 

“To avert major damages to humanity and the planet, we must urgently get to the root causes of people’s resentment.

“There is ample evidence today that this distrust is not only, but to a large extent, driven by the widely shared experience of a real or perceived loss of control over one’s own livelihood and the trajectory of societal changes. 

“This sense of powerlessness has been triggered by shocks stemming from globalisation and technological shifts, now amplified by climate change, AI and the inflation shock. 

“And, decades of poorly managed globalisation, overconfidence in the self-regulation of markets and austerity have hollowed out the ability of governments to respond to such crises effectively.”

The declaration went on to say that, to win back people’s trust in liberal democratic institutions, policymakers must understand why people were so angry, and they must rebuild governments’ capacity to respond properly to different shocks, including climate-related crises:

“We are living through a critical period,” it read.

“Markets on their own will neither stop climate change nor lead to a less unequal distribution of wealth. Trickle-down has failed. 

“We now face a choice between a conflictual protectionist backlash and a new suite of policies that are responsive to people’s concerns. 

“There is a whole body of groundbreaking research on how to design new industrial policies, good jobs, better global governance and modern climate policies for all. It is now critical to develop them further and put them into practice. 

“What is needed is a new political consensus addressing the deep drivers of people’s distrust instead of merely focusing on the symptoms, or falling into the trap of populists who pretend to have simple answers […]

“Any attempt to durably get citizens and their governments back into the driver’s seat has the potential to not only promote wellbeing for the many. It will help to once again foster trust in the ability of our societies to solve crises and secure a better future.”

The 163 signatories on the declaration included well-known names.

Dani Rodrik, Olivier Blanchard, Thomas Piketty, Gabriel Zucman, Isabella Weber, Mariana Mazzucato, Branko Milanovic, Anatole Kaletsky, Jens Südekum, Catherine Fieschi, Maja Göpel, and Pascal Lamy (the former director-general of the World Trade Organisation), were among them.

They said they didn’t pretend to have all the answers, but considering the root causes of people’s distrust with liberal democratic institutions today, it seemed clear that we had to:

  • Reorient our policies and institutions from targeting economic efficiency above all to focusing on the creation of shared prosperity and secure quality jobs
  • Develop industrial policies to proactively address imminent regional disruptions by supporting new industries and direct innovation toward wealth-creation for the many
  • Make sure industrial strategy is less about giving out subsidies and loans to sectors to stay in place and more about helping those invest and innovate towards achieving goals like net zero
  • Design a healthier form of globalisation that balances the advantages of free trade against the need to protect the vulnerable and coordinate climate policies while allowing for national control over crucial strategic interests
  • Address income and wealth inequalities that are reinforced via inheritance and financial market automatism, be it by strengthening the power of poorly paid, appropriately taxing high incomes and wealth, or securing less unequal initial conditions through instruments like a social inheritance
  • Redesign climate policies combining reasonable carbon pricing with strong positive incentives to reduce carbon emissions and ambitious infrastructure investment
  • Ensure developing nations have the financial and technological resources they need to embark on the climate transition and the mitigation and adaptation measures without compromising their prospects
  • Generally establish a new balance between markets and collective action, avoiding self-defeating austerity while investing in an effective innovative state
  • Reduce market power in highly concentrated markets

Looking at the list of signatories on the declaration, trans-Atlantic names are heavily represented. 

But it’s still interesting to know what that network of well-respected people are getting up to. They were gathering to discuss what they consider to be “the new paradigm” of economic policy.

According to Professor Tooze, this is what Professor Rodrik said at the summit:

“Six years ago a conference like this would have been impossible. The agreement we now have on industrial policy, the lack of fundamental criticism … when I think about it, when I hear myself saying this out loud, I’m amazed.”

It’s more background for World Environment Day this week, and it feeds into the major policy shifts we’re seeing globally that are tied to the transition to renewables, and the reordering of geopolitics.


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