Secretary of the Treasury Steven Mnuchin insulted environmental activist Greta Thunberg at the World Economic Forum in Davos, saying she should study economics. Although I’m no economist, it seems to me that the cost of intensified earthquakes, hurricanes, rising seas, and the health risks associated with extreme climate events far outweighs the profits of the fossil fuel industry. But then, I’m no economist.
The Washington Post consulted an economist:
Speaking to reporters at the World Economic Forum’s annual gathering in Switzerland, Treasury Secretary Steven Mnuchin was asked about calls from climate change activists such as Greta Thunberg for investors to pull their money out of fossil fuel stocks.
Mnuchin jokingly pretended to be unfamiliar with Thunberg, who even while still a teenager has become a leading global proponent of addressing the warming planet. Last year, she was Time magazine’s “Person of the Year.”
“Is she the chief economist or who is she? I’m confused,” Mnuchin said of Thunberg. He questioned her credentials to offer solutions: “After she goes and studies economics in college, she can come back and explain that to us.”
The Washington Post contacted someone who did study economics in college and asked him to explain it to us. Gernot Wagner is an economist who has a joint A.B. in economics and environmental science in public policy from Harvard University, a master’s degree in economics from Stanford University, a master’s in political economy in government from Harvard, and a PhD in political economy and government from Harvard.
According to Wagner, Thunberg doesn’t need to go much further than Economics 101 to make her case.
Speaking specifically about calls to divest, Wagner pointed to a letter released this month by BlackRock chief executive Larry Fink. In it, Fink announced the asset management firm he controls will divest — move investments away — from companies like those that are centered on fossil fuels and contribute to climate change.
The evidence on climate risk is compelling investors to reassess core assumptions about modern finance,” Fink wrote in the letter, according to the New York Times.
“It’s precisely this scenario of having fossil fuels go the way of tobacco that makes fossil fuel execs the most nervous,” Wagner told The Post. He noted that Shell Oil Co. predicted the rise of activists focused on climate change — back in 1998.
But, again, the question is economics, not politics.
Wagner, who spent nearly a decade working for the Environmental Defense Fund, explained the economic argument for applying pressure on oil companies. “It’s Economics 101 that tells us that when there is a difference between private costs and costs to society, that difference ought to be included in one’s decision-making,” Wagner said.
“And when I say ought, of course the private individual won’t; it’s up to somebody in a position of power — let’s say the secretary of Treasury — to want to guide economic policy in the right direction.”
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