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Mnuchin vs. Greta on climate change: What economists think

CBS News logo CBS News 1/23/2020 Stephen Gandel

U.S. Treasury Secretary Steven Mnuchin's dismissal of Greta Thunberg's views on climate change because the teenage activist hasn't studied economics belies this: Numerous top economists largely agree with Thunberg, from a 2018 recipient of the Nobel Memorial Prize in Economics to the chief economist at Goldman Sachs, Mnuchin's former employer.

Nobel laureate William Nordhaus, a 77-year-old professor of economics at Mnuchin's alma mater, Yale University, is widely considered the "father of climate change economics" and has long argued that the economic benefits of reducing climate-harming emissions outweigh the costs. Nordhaus has shied away from mandating that companies abandon fossil fuels, but he has called on governments around the world to impose a global tax on carbon emissions as the most effective economic weapon to beat back climate change. 

Speaking at the at the World Economic Forum in Davos, Switzerland, the 17-year-old Thunberg on Tuesday called on companies and governments to halt divest from fossil fuels, as well as "immediately end all fossil fuel subsidies."

Mnuchin, also in Davos, brushed off Thunberg's comments as uninformed when asked what divestment would do to the U.S. economy. "Is she the chief economist, or who is she? I'm confused," he said. "It's a joke. After she goes and studies economics in college she can come back and explain that to us."

Mnuchin needn't wait that long. Last week Goldman Sachs published a detailed research report saying that more policies to fight climate change would in the long-run boost — not hurt — the global economy. The lead author of the report, which largely sides with Thunberg's thinking, was the firm's chief economist, Jan Hatzius. 

The report from Goldman, where Mnuchin worked for 17 years, noted that not doing anything about the changing environment is rapidly becoming an economic drag. "Our survey of the literature suggests that policies aimed at curbing emissions could trigger significant shifts and have the potential to raise welfare of current and especially future generations," Hatzius and his colleagues wrote.

On Thursday, Thunberg seemed to fire back on Twitter at Mnuchin, saying "it doesn't take a college degree in economics" to realize that the potential damage from climate change and "ongoing fossil fuel subsidies and investments don't add up."

Thunberg's thinking has other prominent economist backers. Back in 2015, Thomas Piketty, who is known for his work on capitalism and income inequality, called on investors to move their money out of fossil fuels. He wrote at the time: "Those investments are wagers on a future in which vast potentials of carbon reserves are available to be processed – a bet against the public's well­-being." 

Nobel economics laureate Joseph Stiglitz in the past has also said he favors divestment from the fossil fuel industry as a way to mitigate climate change.


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