Contrary to common sense, we could experience booming GDP and stock market valuations all the way to society’s imminent collapse.
With headlines proclaiming the dire effects of these disasters on local economies, it might seem reasonable to believe that the power-brokers of our economic system—investors, CEOs, Federal Reserve policymakers—will eventually recognize the danger and wield their financial might to shift our civilization’s trajectory away from climate catastrophe.
That may turn out, however, to be wishful thinking. In the short term, these disasters do indeed cause harm to the economy, but after the initial shock they’re more likely to have a net positive impact on the country’s Gross Domestic Product (GDP). In the words of U.S. Treasury Secretary Steve Mnuchin, “There clearly is going to be an impact on GDP in the short run. We will make it up as we rebuild. That will help GDP.”
Welcome to the cruel, topsy-turvy economic logic of a civilization facing the risk of collapse. As millions of people increasingly suffer the devastation of climate breakdown, we can expect the economy—as measured by conventional benchmarks—to maintain and even strengthen itself right up to its breaking point.
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