Climate Change – Where Are Our Economic Elites Headed?

10 December 2019 (Wall Street International)*  — As William Nordhaus illustrated in his Nobel award address in December last year, the free-rider problem is particularly severe for climate change. Those who do nothing ride free, while those who undertake costly reductions pay dearly. If an important player does not go along, the others could establish a climate club with penalties in the form of tariffs for the free rider.

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On June 1, 2017, President Trump announced his intent to withdraw the United States from the Paris Agreement. This intent was reiterated in a December 2018 meeting of the Parties. Thus, the US is on the trajectory of becoming that free rider.

From a strategic point of view, we are reminded that “economic elites and organized groups representing business interests have substantial and independent impact on US government policy, while average citizens and mass-based interest groups have little or no independent influence.” (Gilens 2014)

Given the present situation and dynamics of free riders, the critical question is: where are the US economic elites going? Strangely, my impression is that our economic elites are in a bind.