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© Frank


Ignoring Reality

by Gernot Wagner
April 29, 2020

Gernot Wagner is a professor at New York University and the author of the book Climate Shock: The Economic Consequences of a Hotter Planet. This interview was conducted and condensed by frank news. 

Would you tell me about your work and how you see it particularly relating to this moment.

I'm a climate economist. I have focused on climate risk my entire life.

COVID-19 is basically climate change at warp speed. Instead of decades and centuries, we are living through it in days and weeks.

To begin with, the pandemic itself was not unforeseen. We've all seen the 2015 Bill Gates TedTalk where he describes precisely what we are going through. Then there was a peer reviewed paper published in 2007 that previews the current Coronavirus, one originating in a wet market in central China. What we are going through was eminently foreseeable.

The biggest lesson to take away from this is that risks and uncertainties, as surprising as events may sometimes seem, ought to be at the front and center of what policy makers and policy analysts focus on and act on. 

Political leaders, elected by us, and accountable to us, should take the steps that we, as individuals, wouldn't ordinarily do. That is the definition of government.

Some level of functioning and trusted government during a moment of crisis is imperative. What does the U.S. response tell us? 

Even those who favor the most limited government form imaginable, hold the view that government should only be in the business of "catastrophic insurance" and that everything else should be up to us. Well, at the very least the government should be in the business of catastrophic insurance, and it is failing at even that right now, both on the public health front with COVID-19, and of course, on the climate change front.

On the federal level there is a deep misunderstanding of the core function of government. There is a role and a function of government that ought to go well above the role the government has right now. We are now living through the consequences of 40 years of demonizing government, and rhetoric like "starving the beast."

It is easy to make fun of the White House right now. The idea that Jared Kushner is taking care of things is laughable. But COVID has shown us that even rational leaders can be surprised by an event like this. Even Emmanuel Macron, who is not a Boris Johnson or Donald Trump figure, who is someone who listens to science and seems to be a rational leader, was downplaying the threat of Coronavirus. On March 6th, a Friday, he went to the theater with his wife demonstrating normalcy and encouraging us to do the same. On Sunday of that same week, he is seen strolling around Paris and encouraging everyone to support local business. On Tuesday, two days later, his culture minister contracts COVID-19, and by Thursday the country is shut down. That is exponential growth right there. That is what 33% daily growth rates will do.


Of course it is hard to make these decisions. Usually it takes a week for the government to even organize the meeting to figure out how to respond. Well, in this case, waiting a week or even two or three days doubles the cases in your jurisdiction. We have 200,000 cases in New York. One in every 800 New Yorkers in New York City died because of Coronavirus. Reacting even a week earlier would have made a big difference. 

It was a failure to prepare, a failure to invest in excess ICU capacities, in facemasks. That preparation is costly both in time and money, and it is certainly not something that private individuals or private businesses can be expected to do on their own. They simply won't. It is the role of the government to have that kind of foresight and to act on it.

Economic efficiency typically means getting rid of all the redundancies in the system. Well, no redundancy means no resiliency. If what we need to be is more resilient, that is the opposite of economic efficiency. It is costly. It is politically difficult.

And yes, there are real debates to be had about how to go about doing this. Let's have those debates. It is doubtful there is a single right response to these things, but what we do need to agree on, is that there ought to be a response that goes well beyond basically saying that the government cannot possibly be the answer. With something like this – with enormous externalities – government, by definition, has to be the answer.

Do you feel like this perception of the government, as an important actor in crisis, is becoming more accepted by the public? 

There is a common understanding that we need policy to get us out of this. Individual action just isn't going to cut it. If we rely on individual action, we get Rand Paul using the Senate swimming pool while he has COVID. That's not to say that there is no room for that particular libertarian viewpoint in the policy debate, but dude, there are limits. There are market failures, there are externalities. 

We can debate how to internalize the externality. But let's not debate whether the externality exists or whether it needs to be internalized.

You touched on this a little bit here and also in a piece for Bloomberg – you're saying, we can't make economic considerations without considering the impact that public health has on the economy. 

Let me bring this back to climate. On the extreme end there is climate denial, to which I say, you've got to be kidding me. We've known about this since the 19th century. This is not debatable. There are parallels with COVID. There are people on Twitter saying that this is just as bad as the seasonal flu (one of those people being an elected leader of a state). In both cases, we see an abject denial of facts. One of the good things coming out of this crisis, hopefully, is a realization among a majority of the electorate that facts matter. 

At the end of the day you can only deny reality so long before it comes back to bite you. That is true for COVID, and that is true for climate change.

Once we realize that facts matter and have a common understanding of the problem we are facing, we have to turn to the experts. I am not an epidemiologist, even though we all play them now on Twitter. We were all constitutional scholars in January and February of this year, and suddenly we are all epidemiologists. That is not how the world works, and that is not how government works. What the government should be expected to do is to listen to those who have studied this topic.

To be clear, that does not mean there is only going to be one answer. In Sweden, the Chief Epidemiologist happens to believe that the economy should remain open and the typically socially distant Swedes can go on with their lives. If you are the Swedish prime minister you are under enormous pressure to take that particular point of view seriously, because your version of Dr. Fauci is saying one thing while other countries' versions of Dr. Fauci are saying another. At the end of the day, it takes political leadership to take scientific advice into consideration when making hard decisions. And those are very hard decisions that apply to COVID, it applies to public health more broadly, and it clearly applies to climate change.

There is no one answer. But what we do know is that the Don Rumsfeldian known knowns say we need to act. The known unknowns point to one and only one direction. The big question is the unknown unknowns. And frankly for something like COVID and for something like climate change, it seems pretty darn clear that these entirely unknowns and unknowables point is in one and only one direction, and that is of more action.

One important realization that comes out of all this, is that delayed action doesn't just lead to more cost, delayed action leads to a completely different pathway to begin with. Take the epidemiological simulation. It shows that shutting down New York city two weeks earlier would not just have only cost less in terms of lives and livelihoods, it would have meant a completely different path. Projected deaths go down by an order of magnitude of difference, and the projected future path becomes very very different. 

Austria right now is talking about reopening its economy next week because they just followed a very different path. They also have completely different leadership. The president happens to be an economist – the only world leader with a publication in Econometrica – one of the top journals in our discipline. Let’s just say he has an easier time standing up in front of a national audience and explaining exponential growth to everyone. Angela Merkel of Germany did so. It’s amazing to watch, a case where the government is using science to respond to a crisis, and to communicate clearly. I remember my parents, in Austria, explaining exponential growth to me on one of our calls. They heard it from the Vice Chancellor. All that’s crucial for topics like this that are quite difficult to understand. Few have an intituitive grasp of the way exponential growth works, how it dwarfs everything else. It also increases the burden on politicians to explain these things...exponentially.

I am stifling a laugh thinking about the resume of American political leadership right now in comparison to the resumes you just paraphrased.

For a long time in this country we have made fun of experts and expertise. Of course, I'm biased here, because I like to think I’m one of the experts on a couple of these topics. But on the other hand, it is blatantly a frightening reality.

There is a false equivalency between what 99% of climate scientists tell us and what some random person on Twitter who disagrees tells us.

Yes we should have debates on lots of things, but let's trynot to argue with scientific truths themselves.