The Great Climate Change Race Between The Rising Threat and Our Increasing Ability to "Take a Punch"

In their important book: The Race Between Education and Technology,  Claudia Goldin and Larry Katz use a supply and demand framework to discuss changes in the U.S labor markets over the last 100 years.   For decades in the middle of the 20th Century when manufacturing was thriving in the U.S,  the wage premium for being highly educated was steady over time and more Americans were graduating from high school and these two facts combined meant that income inequality was declining.   My old friend Bob Margo wrote this great paper with Claudia on the “Great Compression”. Most of our income is generated from renting our time to an employer.  Our skill determines the value per hour of our time (our wage).

Professors Goldin and Katz argue that in recent decades that technological shifts in our economy have meant that the economic returns to skill have sharply increased and this has created an unequal superstars economy where a declining share of workers earn a rising share of total income.  The “race” they discuss focuses on the relative speed of how fast society trains skilled workers versus what is the demand for skilled workers.  Prices rise when a commodity is increasingly demanded and there is scarce supply.

I have sketched out this importance race because it helps to set up the pitch for my new Yale Press book “Adapting to Climate Change”.    My book emphasizes that an important race is now taking place.  Greenhouse gas emissions will continue to rise over the next decades and this will exacerbate climate change risk in both predictable and unpredictable ways.  This is the  bad news.

The Good News is that each day we are becoming better at building up a more resilient economy so that Mother Nature’s increasingly hard punches cause less damage.

How does this occur?  My 300 page book sketches out the unsexy microeconomics about how the people, firms, places and governments who are the pieces of an economy make new investments that together add up to build up resilience.  

I face a challenge that climate change adaptation isn’t sexy and it happens quite quietly.  The CIA claims that we will never know the disasters their brave agents have stopped so we can’t estimate their benefits since we don’t have the “what if” — What if the CIA didn’t exist, what extra damage would the USA suffer?  In a similar sense, as we adapt we don’t know what would have happened to our economy if we hadn’t made these investments. 

Even the Texas Freeze in February (a $100 billion dollar event) is a small percentage in a $21 Trillion dollar U.S economy.  The next Texas Freeze will cause much less damage as optimizing economic actors learn from the experience. That’s the adaptation hypothesis.

In 2017, Dora and I published a paper focused on how the news media covers public health progress.  Bad news generates media coverage while public health progress “isn’t” news.  We understand why this is the case.  Policy activists seek to capitalize on salient events to gain the upper hand in interest group competition to enact new regulations.  The acknowledgement that we are now making significant adaptation progress should be celebrated.  My book makes this case. Our living standard improves as our risk exposure declines.

I have been working on this broad topic for 20 years now. My 2005 RESTAT paper on the Death Toll from Natural Disasters was my first paper on rising resilience.