Today's Observer

Today's Observer has a number of articles relevant to recent posts.

Andrew Rawnsley casts a sceptical eye over George Osborne's enthusiasm for gas. Specifically, he says that there is scant evidence that the reserves of shale gas in the UK are economically recoverable. If the "dash for gas" proceeds and the home-grown shale gas bonanza fails to materialise, the UK will find itself dependent on potentially unstable foreign sources of supply. Meanwhile, investment in gas will crowd out investment in renewables and the UK will find itself unable to meet its commitments on emissions reductions.

George Osborne also comes under attack from Will Hutton, who adds his weight to a suspicion I have had  for a long time: that Osborne is economically illiterate. Hutton puts it very succinctly:

"Osborne insists it would be a "disaster" to turn back from his target of balancing the budget within five years and social spending must share the burden. He is an economic illiterate. Economics 101's first principle is that if households, companies and banks are simultaneously saving and building up surpluses, as they are at present, then someone in the system has to have a deficit to compensate, otherwise there is a downward depressive economic vortex. That someone necessarily is the government. Its deficit is the counterpart of surpluses elsewhere."

This may seem a little off-topic for this blog but it isn't. Transitioning to a low-carbon economy presents huge economic challenges and I don't like to see the leadership on this in the hands of economic illiterates. Also, if Osborne has such a tenuous grasp of economics, is he capable of understanding the complex issues around climate change? Furthermore, I'm not confident that the transition is compatible with continuing economic growth. In the absence of growth, issues around the the distribution of wealth and social cohesion become starker. These issues form the main subject of Hutton's article.

Which brings me to the third article I noticed - the report of an interview with Vince Cable. Here is the passage that particularly caught my eye:-

"Cable instead focuses on what will be a 'long hard slog', lasting years, with no guarantee of good times around the corner. Even a return to growth, he warns, will not deliver the feelgood factor that coalition politicians pray will arrive before the next general election. When the economy starts to pick up, interest rates will have to rise. 'Interest rates will go back to normal and that will affect a lot of people whose mortgages are hanging by a thread at the moment. Even the recovery is going to be very painful.'"

Cable is one politician who is not saying that good times are just round the corner. He hints at something I have been thinking for some years: that economic growth does not necessarily mean generally higher living standards, though, to be honest, his reasoning is quite different from mine. My hypothesis is that economic growth could be stimulated for a time by heavy investment in renewal energy and the infrastructure to support it. This might directly reduce unemployment, and hence increase economic growth, but the costs would have to be met from either taxation or higher energy bills or both, perhaps leaving no scope for higher personal consumption of other goods and services. Meanwhile, population growth, economic growth in the developing world, resource depletion and the climate change that is already occurring are likely to put pressure on food and raw material prices.

Both Cable and Hutton say things about social cohesion and about running an economy that resonate with me. However, neither seems hell-bent on a rapid transition to a low-carbon economy. They are left-wing without being conspicuously green. I wonder if this is because they know things that I don't know or because I know things that they don't know.