If you read the latest OECD publication, “Employment Outlook 2024: The Net Zero Transition and the Labour Market,” you would imagine that the world has not gone through the largest monetary and fiscal stimulus in decades.
![Net zero will make you poorer. Negative real wage growth is a consequence of Keynesian policies.](https://www.dlacalle.com/wp-content/uploads/2024/07/Keynesian.jpg)
The results are so poor, they are embarrassing. Furthermore, the report illustrates the impoverishment of citizens and subtly suggests that achieving the net zero goal will present an even greater challenge. Translation: You will be even poorer.
According to the OECD report, 20% of the global workforce is in jobs that will expand due to the net-zero transition. The report basically tells us that the remaining 80% will face significant challenges.
Furthermore, it highlights that “low-income and rural households usually spend more on goods and services with larger carbon footprints, such as energy and food, because they are typically necessary goods.
Therefore, climate-mitigation policies, by increasing the relative price of carbon-intensive goods, will tend to affect these households as consumers disproportionally, with a strong impact on the real value of their income and wages. Recent carbon pricing reforms in many countries have indeed proved regressive. Recycling the revenue from carbon taxes in the form of transfers to households, however, can make this type of reform progressive. Yet targeting these transfers towards household needs is key to cost efficiency. ” Thus, we are doomed. Just look at the disastrous result of the carbon tax in the European Union, what it has done to inflation of non-replaceable goods and services and the widespread increase in discontent among citizens.
Why do we know that policymakers will not counteract Keynesian policies’ regressive impact? Because they have never done it. To argue that this time will be different is irresponsible when the same OECD report shows the disastrous results of “inclusive” and redistributive policies since 2019.
The report hails the good news of low unemployment rates. However, this publication fails to acknowledge the ease of manipulating unemployment rates. Indeed, the report does not make that connection but highlights how labour force participation has stagnated or declined and how real wages have fallen while average working hours per employee have slumped in the United States.
If the unemployment rate has fallen but the average hours worked per worker are flat, the labour participation rate has slumped, and real wages have declined, then there is no real improvement in employment.
According to the OECD report, average hours worked per worker have declined in all countries except three of the entire OECD, and real wage growth is negative in the United States as well as many other economies.
Now remember that these dreadful statistics come after the largest so-called “stimulus package” in decades. The largest monetary experiment, combined with an unprecedented level of public debt increase, has left workers poorer. The worst is yet to come.
The OECD report warns that the net zero transition will increase inflation in essential goods and services as well as generate significant displacement of low-skilled labor. They even warn that low-skilled jobs in high-emission sectors pay better, and this will create challenges for citizens.
There is no way in which one can defend this social engineering. Keynesianism always leads to malinvestment, misallocation of capital, higher indebtedness, and worse outcomes for workers and the middle class for a very simple reason: governments do not have better or more information about the requirements of society, and they spend money that comes from somebody else.
Malinvestment does happen in an open economy. However, creative destruction takes care of it. Malinvestment when the government controls the economy is the norm. And instead of creative destruction, we get subsidized misallocation of capital.
The era of constant Keynesian stimulus plans has eroded the middle class and created record levels of public debt. The net zero plan, which is the ultimate Keynesian top-down government-imposed system, will add scarcity, persistent inflation, and impoverishment.
The only way to achieve net zero is to let technology flourish, allow free competition and open markets to work their way, and create a transition that benefits the majority with cheaper and cleaner goods and services. When governments make decisions with public funds, they ensure a negative result. They will overspend, perpetuate inflation, and impoverish the same ones they claim to defend. Socialism never works. Climate socialism is bound to fail miserably, resulting in increased poverty.
Keynes was a sicko too. His name is synonymous with Rothchilds.
https://www.winterwatch.net/2019/08/john-maynard-keynes-famed-economist-was-gay-pedophile/
“The report basically tells us that the remaining 80% will face significant challenges.”
It most definitely doesn’t say that. What it says is: “The net-zero transition induces a contraction of high-emission sectors, which account for 80% of GHG emissions but only 7% of employment.”
And in fact, in order to have energy savings in some sectors, it may mean that it’s easier to roll back automation in some tasks, which would create additional employment. Expensive machinery can be too expensive.
Dear Dolly,
Sorry, but the report does not say what you imply.It clearly states thatthe poorest will suffer higher prices and bets on transfers to mitigate it (something that we know never works). It certainly implies that the 80% of jobs that do not have direct exposure to green policies may continue to suffer negative real wage geowth and declining labour force participation. In fact, the sentence you mention only applies to high emission sectors (7% of jobs), so 20% of jobs will thrive, 7% will suffer and the rest will face significant challenges, which is what I say (80% of jobs face significant challenges). I believe I am right when I conclude that the report, diplomatically, shows that 80% of jobs will have significant challenges and we are living it right now. I believe it is evident that transfers and government intervention will not make those challenges easier, but worse. Thank you for the comment.
Monsieur Lacalle, your mistake is believing that governments seek an effective outcome for their citizens. what the past 40 years has taught us is that governments seek only absolute power over their citizens. as such, the net zero scam is a perfect vehicle to make them sound virtuous while remaining greedy and self-serving.
Dear Daniel, I always enjoy your articles. One economic question.
We know governments manipulate the CPI.
I look around at family and society generally and cannot believe the government data on GDP.
Surely the government under estimate the “GDP deflator” and in fact our GDP has been in decline for decades. It sure feels that way. Odd that the governments and media are so obsessed with GDP anyway. Society used to cope with huge drops in GDP in the past eg. famines. ~30% drop
GDP must have dropped 30% some years before
Thank you Daniel for the clarity you offer in your analysis of economics.US citizens are malnourished in their understanding of how the money system works… especially with regard to the pitfalls of Keynesian economics.You a gift to the middle class.