#1306 Steve Keen: The Existential Risk of Climate Change, and the War in Iran

00:00 Ricardo Lopes: Hello everyone. Welcome to a new episode of The Dissenter. I'm your host, as always, Ricardo Lops, and today I'm joined for a second time by Dr. Steve Kin. Uh, LAST time we talked about some of the topics he explores in his book Rebuilding Economics from the Top Down, and today we're going to focus a little bit more on the economic, the economics or the economic consequences of climate change and the, the Iran war and its impact on the global market. So Dr. Kin, welcome back to the show. It's a pleasure to everyone.

00:33 Steve Keen: Thank you.

00:35 Ricardo Lopes: Uh, OK, so last time we touched a little bit on this topic, but I would like to explore it with you today a little bit more. So when it comes to, uh, climate change, what are the most probable Economic consequences that can derive from it. I mean, and of course if you want to talk about the risks associated with climate change that are not exclusively economic, please feel free to do so. But what would you say about that?

01:08 Steve Keen: Well, in a simple line, it's the extinction of humanity. That's what's in life, that's what's at stake. And there's been the, the way in which it's been put across by economists has completely trivialized the scale of what we're going through, and that's what I've been working on and exposing for the last 6 or 7 years so far unsuccessfully. But if economists, if we continue down the path we're on now, human civilization will not exist by 2100. And humanity itself will be a question mark as well.

01:38 Ricardo Lopes: But I mean, would you put a number of that on that? What is the likelihood that by the end of the century or by the beginning of next century, humanity will no longer be here?

01:53 Steve Keen: I won't go for humanity's extinction, but I say the potential if we continue on the current course, that the chance of extinction of human civilization by 2100 is 100%.

02:03 Ricardo Lopes: Uh, HUMAN civilization. So I, I mean, what would that imply exactly? Would that imply that the kind of, uh, societies as they operate today, at least the more advanced industrialized

02:17 Steve Keen: opposed to there'll be hunters and gatherers, there'll be hunters and gatherers left somewhere in the world. One or two countries might survive, perhaps, but fundamentally, and what I'm saying, I mean, that that's OK, that sounds outrageous, the guy's a nutcase, yada yada yada, usual sort of thing. I'm channeling uh Tim Lenton, who's a professor of climate science at Exeter University, and like Tim, who's quite a, you know, quite a reserved person in general, was asked at a conference about six months ago, you can find it on YouTube, what's the chance of human civilization existing by 2100 if we continue on our current course, he said not a chance. But

02:54 Ricardo Lopes: if we continue in our current course, what does that imply? I mean, how many degrees of warming are we talking about?

03:02 Steve Keen: 2 or 3.

03:04 Ricardo Lopes: 2 or 3, so 2 or 3 degrees, uh, above pre-industrial levels is enough for civilization to collapse, wipe

03:13 Steve Keen: civilization out,

03:14 Ricardo Lopes: yes. Yeah, and, uh, I, I, I mean, we're already above 1.5 degrees, right? So we're

03:22 Steve Keen: approaching, we're probably going to hit 1.9 next year courtesy of the El Nino, which is going to boost temperatures by at least 0.2 of a degree and maybe 0.4 only temporarily, of course, it won't be a permanent kick, but that particular. El Nino coming our way. I've seen estimates that it will raise global temperatures by up to 0.4 of one degree.

03:40 Ricardo Lopes: But is this reversible at all, and if it is res reversible,

03:45 Steve Keen: we, we wait 20 or maybe 20 or 30 million years for a new species to evolve, and then there'll be, you know, then we'll be wait for the carbon to to be taken out of the atmosphere. It it only, it took 65 million years to go from the dinosaurs to us, so let's say another 65 million years from us to the next intelligent species.

04:03 Ricardo Lopes: OK, but what I'm asking you is the way that our societies currently operate, would it be, what kinds of changes would we need to our economy, to our, I don't know, transport systems and to everything that uses energy for us to be able to keep this down to 1.5 degrees or even possibly reverse it.

04:33 Steve Keen: We're not going to do that. OK, this is, this, this we can have fantasy conversations about what would happen if we did X, Y, and Z. Are we going to do X, Y, and Z? The answer obviously is no. Uh, WE'RE, we're putting, we're putting 40 billion tons of carbon dioxide into the atmosphere every year now, roughly speaking. Uh, IF you plot back to, uh, 1750 when fundamentally when we began, uh, the industrial revolution and fit, uh, fit an exponential curve from the level and in, in, um, 1750. At, at the rate of growth, uh, it, it's just for an exponential curve, it fits it like a glove. So what it's basically saying, all, all we've done with what, with what we've, we've, we've produced hot air about reducing carbon dioxide. In terms of impacting the trend from 1750, we've done nothing whatsoever. We're still on that trend. And that means we're going to continue pumping, pumping carbon dioxide into the atmosphere. The temperature is going to continue rising, and then we're going to start triggering the carbon sinks that are currently or carbon reservoirs that are currently in some of the tipping points. So, uh, the amount of carbon in the permafrost is of the order of twice the amount of carbon already in the atmosphere. A similar thing applies to ocean and methane hydrates. Everything we're doing is about we've we've done our bit and now nature's going to show what it can do. So the whole idea that we can limit the uh carbon dioxide to, um, as if we're the as if our inputs are the only source of it, it it's clearly it's a major source, it's it's a tiny source compared to the carbon cycle, but adding, it's a bit like a bath, if you've got a, if you've got your bath running, and you've got to set it up so that the rate of inflow from the tap is exactly equal to the rate of outflow through the bottom. And it stays at its constant level, and then you put a thimbleful of of water every, every minute from your own hands. That thimbleful of water will make sure you over overfill the bath, the bath. So the whole idea that, um, you know, it's our tiny contributions. I've I've seen so many denials, I just get used to responding to the talking points they put to me, and one of them is it's such a tiny, how that's so small compared to the carbon cycle. But the carbon cycle was balanced, we've had a tiny amount to it. And we're getting to the point where those with previous storage systems for carbon are now reaching the point where they might be tipped as well, and when they get tipped, we really don't know. Well, scientists will have some idea of estimating it, but the amount of carbon, that's gonna mean that the natural sinks would start adding carbon if we stop. So we are, it's absolutely critical that we stop putting carbon dioxide into the atmosphere and reduce our energy consumptions radically. We will not do anything about it until events like we saw in Nepal, which may or may not have been a climate change event. I'm aware there is a dispute at the moment as to whether that was triggered by climate change or not, but events like that will become commonplace around the world. Now what that means is forget about the the industrial structures will be washed away in serious storms, fields destroyed in droughts. I mean this, this is all the sort of stuff which you can't normally talk about because you're seen as a lunatic. I just thought I'd start in a lunatic mode now and then go back and explain why the trivial estimates of damages from climate change that economists have made are complete garbage.

07:46 Ricardo Lopes: But if we look at a country like China where people have been investing a lot on renewable energy and decarbonizing their energy systems, do you think, and of course again this is a hypothetical, but do you think that if at least In Europe and North America, people would invest as much in renewable energy and decarbonization as they're doing in China. That that could make a difference.

08:16 Steve Keen: That could make a difference, but we're not going to do it, OK. We're not gonna do it until large numbers of white people start to die. That's the we will, we will not realize how serious this is until what happened in Nepal, and again I'm saying I don't know that that's global warming cause, what happens in Nepal happens regularly to white people. In rich countries, and then we realized holy shit, this is serious, and we might finally realize this is not a case of cost-benefit analysis, which is the way the economists put it across, it's a case of existentialism. Do we exist or not as a civilization? And with the amount of energy we're putting into the atmosphere by trapping sun's energy, not letting it escape courtesy of the absorbing of the capacity of, pardon me, of greenhouse gasses to retain more of the sun's energy. Keep on doing this and, The stability that was the basis of our civilization, the stable temperature, we're destroying that so rapidly. The rate of, there's only one time in the history of the planet since since animals evolved that the temperature has risen more quickly than it's rising right now, and that's in the 10 to 30 years, or maybe not quite sure how many years, but maybe 3 to 30 years after the meteor that wiped out the dinosaurs. Because that meteor, as well as devastation it did on its impact, hit a Carboniferous set of rocks and increased the carbon content of the planet by a factor of 5, roughly speaking, from say about 500 parts per million to 2000, 2.500. And 100,000 years of global warming. The rate of increase in temperature there was in terms of raising the rate of increase in temperature in million degrees per million years. That was a rate of 600,000 degrees per million years. We are only doing 6000 degrees per million years, our increase in temperature right now, but that is faster than the other 5, the other major extinctions on the planet. So we are increasing temperature. 10 to 60 times faster than all the other, all the natural events which led to rising temperature and hence extinction, and we are imagining that we will be able to do things which in the past sent 80% of of of uh animal species extinct. We're imagining we can do that while maintaining the economy at the same time. Yeah,

10:31 Ricardo Lopes: what would you say to those people who over the years have been saying that, oh we don't need to worry about climate change that much, just let the capitalist economic system work as freely as possible and eventually we will have a Technological solution to it because someone, an innovator out there will come up with something to solve this issue. I mean, do you think that just letting things play out without much intervention is a good idea at this point? Oh, it's

11:06 Steve Keen: a great idea if you want to go extinct. OK, uh, the, the, the, I can actually illustrate why, why we're being deluded about it with a cartoon that I did with a colleague of mine, Miguel Guerre, which I'm putting in my book, um, uh, How Economists will destroy Capitalism. So this, this is showing, this is the temperature profile over the last 300,000 years or 4 roughly 400,000 years of human, of of of human existence. That's what we're doing right now, that's the temperature spike rating at the moment, OK. Uh, SO these are the parts of the slightly blacker bit you can see this because those are actual measurements. Uh, THEN there's estimates, uh, in the year between 0 and 2000. That's when civilization began, roughly here at civilization. We climbed out of an ice age to reach it, OK, so the ice age was about 8 °C as an average temperature, whereas ours is about 14 degrees, so it's a 6 degree change in temperature to go from the ice age. And we all have knowledge at least to some extent of what that was like, and there was a previous peak which is called the Emian 130,000 years ago. You can see that average temperature then was higher during the Amian, then these two little peaks down here. Humanity evolved around here. OK, now we didn't create civilization until we got up here. OK. And the question is why? OK, well, down here, the moisture content of the of the air was about 50% lower than it is up here. So there was, you couldn't, you didn't have enough moisture to maintain agriculture. Here, it was probably too hot, too volatile. Too radical, unstable a climate system, we're heading right for it. We're going to blast past that one in the next 10 or 20 years quite probably. Now that's just a peak, it didn't cause extinctions obviously because we, we as a civilizer, as a species we evolved here and made it to here, but, In none of these previous peaks did we develop anything resembling a civilization. So the fact we developed a civilization relies upon what you might call Goldilocks conditions that applied across the, the, this particular peak. These are all called Milankovic cycles, by the way. These are cycles caused by the change in the rotation of the Earth around the sun. Now if you look at this is taking a longer look, this is the last 20,000 years. So that's the period that we managed to develop civilization, highly stable. And what economists have done, and this is I'm making a bit of a a little um Um, no, sort of parody of, of time versus space here because if you look at what we've done over time, then we've gone through this way. That's as bad as, um, hunter-gatherers. We start developing civilization when we get the, we start climbing up the hill. This is going through time. We finally get to modern civilization and in modern civilization we range from Eskimos at -7 to people in the Caribbean at +35, that's the sort of range. Now. William Nordhaus looked at that and all economists can see is the current system, they don't see through time, so they saw the pattern across space, and he said, oh, that looks like a parabola. So he said what we can do is get all our young students to go and measure the shape of the of of the economy over space and then we can build an estimate of the shape of this parabola. And all we have to do then is pretend that the shape of the hill this way is exactly the same as the shape through time. So you pretend what we find through space. It's exactly the same as we find through time. Now we know from climate scientists that's absolutely false, OK, because the slope of the hill in terms of going through time is very steep, 6 degrees to go between ice ages when there's 1 kilometer of ice over Chicago and over London and Boston, London and all the rest of the western world, 6 degrees from that to our current situation. This would imply we'd have to go from 30 degrees, so it's completely false, but that's what they do. Uh, ECONOMISTS think that's really clever, so they gave him the Nobel Prize, you can see what I think of the Nobel Prize there, and he's now encouraging us to walk along a road that doesn't exist. And so we're gonna walk along expecting everything's gonna be fine and we're all gonna start dying from the climate catastrophes that uh uh that climate scientists have been warning about for ages and economists trivialize by treating, What happens over space as a proxy for what happens through time, that's why they're so dangerous. So that's why the, the, there's, there's no, um, no chance of persuading politicians to change their direction at the moment. Every attempt to warn, uh, is treated as, oh, that's just somebody being alarmist, OK. So, OK, so but it's like watching somebody in a car racing towards a brick wall, and you're trying to say to them slow down and they're saying there's no brick wall, I can't see a brick wall. Yeah, the brick wall that I'm looking at is uh 200 miles away, yeah. Bang, you hit the one that's 50 m in front of you at high speed, so you basically, OK, what are you gonna do after you hit the wall? And that's the situation we're in right now.

16:27 Ricardo Lopes: Oh, OK, so if that is not enough to scare people and make them really get the message, let me just try to make this a little bit more, uh, emotional. So, uh, I'm about, I'm about to turn 36. I, I will turn 36 on September 26th. So, uh, the the average. Uh, LIFESPAN in Portugal for men is 79. So let's say that I live 43 more years until 2069, around there. So for the rest of my life, economically speaking, civilizationally speaking, what, what should I look for, for, uh, what should I look forward to?

17:14 Steve Keen: The gradual breakdown of our capacity to produce goods and services on the planet. We'll be able, we'll we'll continue producing them, we'll continue pumping our carbon dioxide in terms of in response to the first major crises that hit Western countries and killed lots of white people. We're like to continue doing the same thing. We're then likely to fight wars over it like we're doing over Iran at the moment, totally futile wars, adding military deaths to climate deaths. So brace yourself for a far too exciting final few years.

17:47 Ricardo Lopes: Uh, BUT, but the, uh, I, I mean for these next, let's say 43 years, should we expect already huge economic consequences and economic breakdown?

18:00 Steve Keen: Yes. Now I I can't time and I'm not a climate scientist. I'm going what I'm reading of climate scientist on that front, and the only work to sort of pretend to match the climate temperature rise to impact on the economy is done by economists because economists think in terms of GDP scientists do not. So they've translated it into the terms that that that, uh, politicians are used to thinking about what's going to be the impact on GDP. But because they pretend, because they believe, and this is the trouble, ASIC sincerely believe this nonsense, they sincerely believe that what happens across space can be used as a proxy of what happens through time. They are basically expecting trivial effects until 2300. OK, you have to go that far in the future to get any and and continue the current course in terms of rising temperatures as well before they get any estimates of serious damages. So for example, William Nordhaus, who's got the Nobel Prize, bullshit Prize for his work on climate change, he said that 3 degrees of warming by 2100 will reduce GDP in 2100 by I think 3.12%. He was very precise, 3.12%. Now what that means is the GDP in 2100 according to his model would be 3.12% lower than GDP would be in 2100 if there was no global warming at all. That's, that's where you get that figure from. OK, so that means in 2100, let's say GDP now is 20, OK, so GDP in roughly speaking, GDP in 2100, you say will be 100 with no climate change or 97. 96.8 with 3 degrees of global warming. Now that is such a tiny difference that we're talking 80 years in the future, that if you convert that into a rate of economic growth, he's telling us the 3 degrees of global warming. Will reduce the annual rate of economic growth by about 0.01%. Now we can't even measure modern GDP change to that accuracy. OK. Modern, when you do it, when you see the figures for the, for, um, GDP growth, measured GDP growth is in 1%. He's saying the damages from 3 degrees of warming are being measured in 100%. Of GDP change, OK, which is saying it's completely trivial. Only when you get to 10 or 20 degrees of warming will you see a significant impact. Now 10 or 20 degrees of warming, there's certainly even 6 degrees of warming, Climate scientists say that's an existential threat to to not just to us but to all the species on the planet. So economists have been telling policymakers that 3 degrees are quite livable and in fact he, when he did his Nobel Prize speech, he said 4 degrees of warming was the optimal temperature rise. Now, climate scientists described 3 as catastrophic and 5 is 5 degrees or more as existential. So that's the level of mismatch between what the economists are telling politicians, what the politicians and journalists are taking seriously, thinking, thinking, as I did before I read the literature I might add, that the economists were taking the work of climate scientists and turning it into estimates of economic damages. Now I took a look and I found that in fact they were making this ridiculous assumption. The temperature, the temperature and GDP relationship across space could be used to as a proxy, what was going to happen as temperature rose over time. Now that is like imagining that a gully has got, has got the same shape in all directions, OK, uh, and I use a little analogy in this particular chapter, so imagine you're blind and you're going for a trek from one side of America to the other and you come to a gully. And the, your guide, you've got to rely on a guide, of course, and the guide said, look, it's quite a gradual slope. It's only 1 in 50, you can comfortably walk straight across this gully. So you take one step and almost almost break your neck, and you say, what the hell, this is much steeper than you told me it would be. What the hell did you do? And the guide says, well, it was really hard to survey the gully from east to west, so I checked it out from north to south, and I assumed it had the same shape east to west as it has north to south. Now you'd know you're dealing because you, because we both have sight and we know what landforms look like, we know that that that guy is a lunatic, crazy, OK, OK, but economists have done exactly the same thing. They've told us the shape of the global warming and economic hill is the same through time as it is through space, is it if it's uniform, symmetrical. Now that is garbage, OK, it is just ridiculous, but what it means is they make trivial estimates for the damages we face, and that's the sort of thing that's factored into all the various official agreements, so the IPCC, um, COP 26, etc. ETC. All the damage estimates are taken from economists, and they're so trivial that it justifies continuing to mine fossil fuels and use them as if we can continue doing it with very little impact upon civilization. So I've given up being polite about it. I thought I'd be rude in this one and simply say, look, this is a path to extinction, that's what we're on. Now that'll be, that'll be put across as a lunatic and a nutcase in the current state of discussion over these issues. Give it 10 years if we're lucky. And I won't be seen as a lunatic anymore.

23:28 Ricardo Lopes: So even if luckily this doesn't end up being an existential threat in the sense that humanity just goes completely extinct, if temperatures rise 2 degrees, 2 degrees, 3 degrees, 4 degrees, we're talking certainly about billions of deaths already, right?

23:53 Steve Keen: Yes, yes.

23:56 Ricardo Lopes: So I, I mean, humanity could go, uh, could, uh, uh, could go down by, I don't know, 50% or more even,

24:05 Steve Keen: yep, yep, that's, I mean, that's, that's, that's sort of, you know, ballpark figures. That's the, you know, English activist called Roger Hallam who who would have played a major role in forming Extinction Rebellion. He's now formed another organization called 4 Billion Deaths. And that's trying to get people to realize this is what we're talking about, we're not talking about a slight decrease in GDP, OK, we're not talking about a slight slowdown, we're talking about large numbers of humans dying, it's two reasons, climate catastrophes which kill them, and also, uh, the impact of climate catastrophes on food production in particular, which will mean people starve to death because there won't be enough food produced at the global level. To give you an idea of what I mean by that one, there's one research paper published by the OECD. Which uses a model done by Tim Linton, Tim wrote the chapter, and they asked him to consider what would happen with the, if the AMOC shut down. Do you know what the AMOC stands for?

25:00 Ricardo Lopes: Uh, NO, not exactly.

25:02 Steve Keen: Atlantic meridional overturning circulation. Most people mistake it for the Gulf Stream, OK, it's what transfers warm water from the south of the, of the Atlantic to the north, and that makes a 10 degree difference to the average temperature of Europe. Without that running temperature it will fall by 10 degrees. Now Tim did a study of what happens if the AOL shuts down at a 2.5 degree increase in global average temperature as well, bearing in mind that Europe will actually get much colder because of the AOL shutting down. And that said, there'd be a, there'd be a fall in the area of the planet which can support wheat, a grain, a grain of growing, wheat and wheat and corn by 70%. So that means a 70% decline in our capacity to feed people. Now, we produce, we waste a fair bit of food, we waste about 30% of what we produce roughly speaking. So we've got a bit of headroom, but that still means 40% of the population is not going to get sufficient food if it's unevenly distributed. So we have a potential famine. On a grand scale coming out of the loss of the AMOC and 2.5 degrees of warming. Now people used to the climate scientists originally when they started studying this because there was no climate science study about what happens to in variations of temperature to, you know, major geographic formations like the AMOC until we started making huge changes. So the first models started coming out in the late 1990s, early 2000s, and then those days they thought it would take 3 to 5 degrees of warming. And and several centuries for the process to complete. Most recent work says 1.2 degrees of warming is enough, we're already passed 1.2, and if it does flip, it'll flip in 30 years, which means, uh, this is the bizarre thing. If it, if it does, if the AMOC does get turned off by global warming, it's now seen as an almost certain event before 2095, and when it happens, The temperature in Europe, and again, again this is all estimated from models, but the temperature in Europe will fall by 3 degrees per decade for 3 decades. Now that will mean civilization in Europe is impossible. There's no way we, we, we have, we, we, we, we're managing to cope with 0.0.1 or 0.0.2 increase in temperature per decade at the moment, OK. It's not sure causing major infrastructural changes though you saw what happened with England with this drought just recently, so the infrastructure is not, not, not, not designed for radical changes in temperature. Now if the temperature is radically changing for 3 decades at 33 degrees per decade. Europe will just be unable to maintain its infrastructure and it will be uninhabitable, so Europeans will be refugees.

27:48 Ricardo Lopes: So we're talking about over the next few decades potentially people in Europe, at least people I would imagine who are already poor or part of the middle class living in extreme poverty. Yes,

28:06 Steve Keen: right.

28:08 Ricardo Lopes: Yeah, I, I mean, and, and by the way, since, and of course this is not directly to do with climate change, but Uh, with rising levels of economic inequality, do you think that the living conditions of the average person, and by that I mean, uh, everyone who's not, let's say, a centimillionaire or a billionaire, uh, will, will decrease even further and people will be even more impacted by, uh, the economic consequences of climate change.

28:43 Steve Keen: Yeah, well, at some stage we, we, we can't allow the market system to set incomes anymore because we're going to, with climate change, it's on that scale and people face starvation. If they, if, if we leave it to the market price, market price is to be set, then food will be too expensive for the poor. Now we know what the last time that happened we called it the French Revolution. OK, OK, um, so you you I think frankly there was more capacity to make those sorts of changes in, in the, you know, previous centuries than now obviously because the, at least the, the public could carry equivalent weapons to the, except for cannons, equivalent weapons to the forces they were fighting. Well now, of course, we're you know humans are completely outclassed by by their security forces and most of the planet. Um, SO, uh, I don't expect a possibility for Porter overthrow in that situation, I don't expect a repeat of the French Revolution on that front, but there will be social breakdown if, if you leave it to the market system and food gets too expensive for people on the bottom, say 20% of the population to afford or 20, 30%, then there'll be riots. And, and this is the sort of world that we're on the edge of.

30:00 Ricardo Lopes: By the way, before we move on to the war in Iran, let me just ask you about this because particularly in recent years, probably this is older than just recent years, but Uh, I've been hearing from some people who I think we could label as climate change skeptics that, oh, OK, climate change, it, it, it is bad for most of the world, but actually if you, if we look at the numbers of people who live in colder areas. Actually, climate change can help them because, uh, because the, um, the temperatures get warmer where they live and so, uh, deaths by cold do not occur as much. I mean, I've been hearing arguments like that. I mean, what,

30:53 Steve Keen: what idiots, yeah, yeah, yeah, yeah, yeah, exactly. Uh, Bjorn Lomborg will happily, uh, dive inside a scientific paper and pull it apart and point out errors and what he sees as errors and statistical indiscrepancies. He never pulls apart the economist. He just says, look, the Nobel Prize winning economist tells us X, Y, and Z. If you look at the work that Nordhaus has done, it's garbage. Uh, IT'S, it's pulling apart a scientific paper you've got to read a look to find something you might regard as a flaw. Pulling apart, uh, Nordhaus's work, an, an eight year old child could do it. The reason being that he makes simple, uh, logical errors which are ludicrous, but economists let him get away with it, and Longborg doesn't even mention. So for example, when he, when Nordhaus tried first tried to impact to, to guess. What he thought the impact of 3 degrees of warming would be by 2100, he came out that it would cause GDP in 2100 to fall by 0.25 of 1%. So rather than like being rather than being 100 being 100 because of 3 degrees, it'll be 99.75, OK. So that was one in terms of a prediction of the decline in the rate of economic growth because of 3 degrees of warming, it's about 0.001%, almost unmeasurable, OK. That's that now now in that he had a, what he did was he had a table of industries that are severely exposed, moderately exposed, and negligibly exposed to climate change, and he had water transportation in the moderately exposed category. He had road transportation in negligibly exposed. OK. He had mining in negligibly exposed. OK, then somebody pointed out to him that what about open cut mining? So he'd reduced his estimate by 2%, so that rather than 87% of industry being uh negligibly affected, it'll be 85%. He took across, took out the 2% related to uh open uh open cut mining. But what he basically was doing, it's quite obvious, he's mistaking the weather for climate. He's thinking if you're exposed to the weather, therefore you're exposed to climate change. If you happen under a roof or undercover as underground mining does, you won't be affected by climate change. That was his thinking. Now roads. So far as I'm aware, are exposed to the climate, they're exposed to the weather. He assumed they were negatively affected. OK, that's a juvenile error. OK, an eight year old could have said, hang on, aren't roads exposed? Shouldn't they be with water transportation and at least moderately affected, OK, so it's, it's that bad work. That he put together and he said that he couldn't see anything that was going to affect manufacturing or services, well, unless there's one factory making all the goods on the planet, you need roads to connect different factories together. So if the roads are exposed and roads are affected, and so is manufacturing going to be. He didn't factor that in. Yeah, so they were simply trying to find ways to trivialize the dangers we face because according to economists, the market can solve all problems. So therefore climate change can't be a big problem. That's really was the thinking. So they then use numbers across space where vary vary varying your latitude has a minor effect upon how much GDP can be created in that latitude. You get wealthy countries in hot regions like Singapore and, And equally wealthy countries in in cold, cold regions like like uh Boston, um, They, that's basically implies there's not much relationship between temperature and GDP across across space. They've said therefore there's not much of a relationship between temperature and GDP across time either. And that's it's completely wrong, but that's, that's the basis of the guidance they've given us that climate change is a trivial problem. Yeah,

34:52 Ricardo Lopes: so let's talk a little bit about the war in Iran, and of course I want to tackle it with you more from an economics perspective. So, uh, what has been and what could be the impact on the global market and on the global economy? I mean, what could be the impact of this war?

35:16 Steve Keen: Well, we're losing about 10% of our oil. Coming through the Strait of Iran, Strait of the Strait of um um um Hormuz, yeah, and 30% of our fertilizer, about 30% or more of uh helium, a large proportion of sulfur dioxide, all these things are essential inputs to production processes. Now, when we run out of the stocks of those products, then our capacity to produce goods and services that need those inputs will decline. So in terms of energy, it's about maybe 3% of global energy, that implies a 3% fall in global GDP and the other factors will turn up in all sorts of industries and make it very difficult for firms that have have uh working capital debts to be able to service their debts because they can't make the goods to sell them anymore. Uh, THERE'LL be a complete drop in the volume of sales they can make. The price will increase a bit but not enough to compensate, so we can expect bankruptcies coming out of that, and we can also expect that many goods and services will end up in short supply. Now that includes things like microchips and copper, for example, microchips need helium, chopper needs sulfuric acid. If we have this, if this war's going to continue until Donald Trump dies, I think that's obvious. All the talk about it ending, uh, it's, it's not a temporary shutdown of the Strait of Hormuz, it's a permanent one until Donald Trump dies. Now that means we can face maybe another couple of years of this, if he, if he, if he lives until the end of his term, which is possible, um, then we have another 2 years of this restriction. On output from the Strait of Hormuz, and that will ultimately exhaust all the stocks we've used so far to avoid immediate consequences. So one of the reasons that oil is still available, even though it's now finally getting more expensive, is that China ran down its reserves quite radically. It had 1.5 years' worth of reserves. It ran it down. Now they're rebuilding them. Um, THAT those stocks will certainly be exhausted except for China by the time we get to another 2 years from now, and when that happens, uh, we then we'll be basically living with 2 or 3% less energy. And there's a one for one link between energy and GDP, uh, we'll have less sulfur, we can't produce, we'll probably be able to make some substitutions there, but sulfur's produced as a byproduct of, of mining oil in the first instance, so you need to have oil producers producing oil to make the sulfur in the first instance, uh, but they'll lose that capacity, we'll lose the helium, uh, the helium is something which once it's used, it disappears from the planet. You can't, you can't store it indefinitely, so all these essential inputs will disappear. And not the whole lot, not the complete, uh, proportion, there is some capacity to compensate for production systems elsewhere, but it really means serious disruption to the global economy.

38:14 Ricardo Lopes: Looking at the oil crisis that occurred in the 1970s, and we all know, of course, the economic consequences and the rise of neoliberalism that occurred in the aftermath of it, I mean, do you think that this could be similar in Level even worse

38:34 Steve Keen: or it's similar, similar in level. I mean, people people forget history, but the oil price was $2.50 a barrel before the 1973 war and $10 a barrel after it, and then it went from $10 a barrel to $40 in 1979, 191,980. So that is, you know, an enormous increase in the price of oil, and that's what caused the inflationary surge at the time. Uh, IT, it isn't necessarily the same, it's, it's a similar scale. I think I've seen estimates saying it's slightly larger in terms of impact on the supply of oil globally, but it's that sort of scale, and, uh, the only reason we haven't had the impact drastically at the moment is that is the existence of stocks in China in particular, selling its stocks onto the global market, which therefore made up for the decline in in passage through the Strait of Hormuz.

39:24 Ricardo Lopes: And of course we're talking here about not only a reduction in the supply of oil and of course gasoline and diesel going up, people paying more for it, but also not only through the products you mentioned their, their supply going down, but even is That also has eventually an impact on the supply of essential items that people need like food, etc. OR at least their prices going up, going up substantially.

39:59 Steve Keen: Not just prices, I mean this is about 30% of the world's fertilizer passes through the Strait of Horz. Again, I'm not, I'm not an expert, I'm taking numbers off colleagues of mine who are more experts on this right, that's what they told me, roughly 30%. Uh, THAT means at least a 30% fall in global food supply. Now at the moment we produce 30% more than we need, that's how much we waste in production and distribution systems, but that's, we're we're not going to be 100% efficient with the remainder, absolutely no way. So that means we're going to have less food than is necessary to keep the total population of the planet alive, which means there'll be famines. And it's if you, there'll be the most likely that those occur mainly in third world countries because prices will be up to the stage where they can't import the food they need. Uh, BUT it could also happen in countries like the UK. They could be forced into food rationing. And I hope that happens, frankly, because this is the wake-up call that people need. If you had to have food rationing in the UK, I think we were holy hell, what's happening here. This doesn't sound trivial to me anymore. So something of that nature, uh, that, that's the most polite wake-up call we could get of countries that have never had to consider food rationing except during times of war. Of course, the UK had rationing during World War II. To suddenly find they've got to do it during peacetime, it might make people realize, hey holy shit this is serious, at the moment we're still treating it as trivial.

41:24 Ricardo Lopes: OK, so I mean, let me ask you about this because I've read pieces that are the most optimistic things I've ever read in my life where people have been suggesting or proposing that, OK, so maybe this oil crisis will trigger an acceleration of the transformation of our energy system and people buy. More electric cars, electric vehicles, because they can no longer afford gasoline or diesel, and maybe this will have a positive impact when it comes to climate change. I mean, do you think that's real? Oh, that's, that's valid.

42:07 Steve Keen: That's valid. I mean, what has actually happened is that one of the climate denier was to say, you know, when they trivialize renewables, they say, well, the wind doesn't always blow, but the sun doesn't always shine and the wind doesn't always blow. Well, now we can say the Strait of Hormuz doesn't always flow. And it points out how dangerous it is to rely upon such a volatile part of the world for a large part of our global energy needs. The Middle East, I mean, it is, it wasn't necessarily as bad as it's turned out to be because America's meddling has made things far worse, but you can have a hard time finding a less politically stable region of the world to have an essential commodity coming out of than the Middle East. So now the people are saying, hell, you can't rely upon the petrol anymore, even if the solar is, you know, weaker and I've got a charge overnight and all this sort of jazz, it's better to have the reliability, at least, at least the sun will ultimately shine and the wind will ultimately blow. We still don't know when the Strait of Homoz is going to flow again, so I think it does, it has had an impact, but whether it's sufficient to get us to zero carbon output, no. Uh, WE'LL still, we still use coal for, uh, coal-fired power stations. We still use gas-powered power stations for, for power, and when we use, uh, we have to use the huge amounts of fossil fuels for producing things like concrete and steel and so on. So those uses are still there, still involving burning carbon. So, uh, if, if it, it will accelerate, but we're moving so slowly already. That the potential for that to replace roughly roughly 85% of our energy comes from fossil fuels, no, I can't see that having that level of an impact.

43:49 Ricardo Lopes: Mhm. So let me just ask you one final question, and this is a broader question about the global economy and because we've seen that just a single country getting affected can really have a huge impact on the global market. I mean, with looking at how the global economy is structured nowadays, do you think that There's any possibility that a major economy, if a major economy gets affected, like for example, I don't know, Germany, France, the UK, the US, that another major economy like China has any possibility of being insulated from the, the economic reverberations of that.

44:41 Steve Keen: Like you're the only country I think that's gonna be gonna be um. Insulated to some degree as China, because when you look at their, their, their plans, I really think that the the underlying a lot of what they're doing is the, the sort of cultural memory that China has what they call the century of humiliation. When the people, Westerners have no idea of what happened to China in the 19th century, uh, the opium wars, I'm sure most Westerners think the opium wars a fight to keep those nasty Chinese from selling opium to the West. Of course it was the exact opposite. It was the West finding they couldn't get anything that China needed to buy. China's industry was far higher quality than the Western industries were. That's why we call crockery China, OK. West western China, OK, is that the, the Chinese stuff was far higher quality than the Western. So in those early days before the century of humiliation, there was an enormous trade imbalance between the rest of the world and China. China's exports far exceeded China's imports. Does that sound familiar? OK, at the moment, um, what then was that meant that they, they were paying, West was paying for the goods mainly in silver. Also gold but mainly silver, so Western silver stocks were plunging. China, the British then realized they could sell opium into China and they started smuggling it into China. Through, through their little enclaves, and the Chinese tried to stop it, and the the British fought the war to maintain the right to sell opium to Chinese and force them in fact to consume it in some cases. So what you have is basically the West was drug pushers to the east. Now, and that destroyed Chinese culture, put them into a horrible century, about 90 years of between the um uh beginning of the Opium War and the and the uh end of the Chinese revolution. They call that the century of humiliation. Kids learn that in school. So anybody in the Politburo who has been through learning that experience, it teaches them do not trust the West, OK, and it teaches them to be self-sufficient. So I think that's a large part, even going beyond any 55 year planning, I think it's a major focus of China to not be to make sure they're as independent as they possibly can be. So that means that even though they're getting there, it's, it's a huge task to go from being a fossil fuel powered country to a nuclear and renewable fuel country, but they're more likely to make it than anybody else, and they're more self-contained. The big weaknesses that they don't produce enough food for their entire population. And they don't have enough fossil fuel energy, of course, but it's all the more reason why they're likely to go to nuclear and renewables. So I think China's got a chance of surviving. I wouldn't back anybody else.

47:32 Ricardo Lopes: OK, so, uh, uh, let me just ask you this. If I want to really plan long term, I mean, plan for the rest for the 3 years of my life, should I move to China or should I move to a hunter-gatherer society?

47:49 Steve Keen: Depends on your tastes, um, when the hunter-gatherer, I, I reckon, uh, Papua New Guineans are going to do fine because they're Highlanders and they're already hunter-gatherers, they'll survive, OK, um, so you've got a choice New Guinea or um or China, and uh yeah I think I'll choose China.

48:06 Ricardo Lopes: OK, OK, so Doctor Kim, thank you so much for taking the time to come on the show again. And where can people find you and your work on

48:15 Steve Keen: the internet, YouTube, my YouTube channel at Prof Steve Keen. I have my sub stack and my Patreons also the same. uh, Prof Steve Keen is part of the name for Patreon and Substack, uh, and I'm doing an online course these days, which I'm actually reorganizing right now. My marketing company, uh, disappeared. So I'm having to replace them, which is a difficult, but it's also a good thing. It means I can make the marketing more consistent with what I actually deliver. But that's at Steve Keen.com. So if you go to that, you go, it's, it's a complicated, um, very commercial oriented funnel right now. I hope to replace it over time with the one talking about learning alternative economics, but that's, so those three sources are Steve Keen.com for the online course and a prof Steve Keen for YouTube, Patreon, and SubStack.

49:02 Ricardo Lopes: OK, great. I will be leaving links to that and look, it's been a fascinating conversation as always, and I really love your work, so I wish you all the best and thank you for coming on the show.

49:14 Steve Keen: Thanks, Ricardo, pop me that collaboration link too if you wouldn't mind, so.

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