“A well-known dictum of macroeconomics is Say’s Law: that supply creates demand.”
I independently discovered this, I didn’t know it was called Say’s Law.
Before I created the Pet Foil Hat Technology, no one bought foil hats for pets. My supply, created the demand.
The same can be said for plenty of things in dollar stores, and even Value Village shelves at Halloween.
The Bank of England explains how it’s liable to overlook climate change action, until it’s too late.
Human drivers are judged extremely likely to have been the dominant cause of global warming since the mid-20th century.
The horizon for monetary policy extends out to 2-3 years. For financial stability it is a bit longer, but typically only to the outer boundaries of the credit cycle – about a decade.
In other words, once climate change becomes a defining issue for financial stability, it may already be too late.
This paradox is deeper, as Lord Stern and others have amply demonstrated. As risks are a function of cumulative emissions, earlier action will mean less costly adjustment.
The desirability of restricting climate change to 2 degrees above pre-industrial levels leads to the notion of a carbon ‘budget’, an assessment of the amount of emissions the world can ‘afford’.
Such a budget – like the one produced by the IPCC – highlights the consequences of inaction today for the scale of reaction required tomorrow.