Has global warming stopped?

'The global temperature of 2007 is statistically the same as 2006 and every year since"

'The fact is that the global temperature of 2007 is statistically the same as 2006 and every year since 2001'. Plus read Mark Lynas's response

Global warming stopped? Surely not. What heresy is this? Haven’t we been told that the science of global warming is settled beyond doubt and that all that’s left to the so-called sceptics is the odd errant glacier that refuses to melt?

Aren’t we told that if we don’t act now rising temperatures will render most of the surface of the Earth uninhabitable within our lifetimes? But as we digest these apocalyptic comments, read the recent IPCC’s Synthesis report that says climate change could become irreversible. Witness the drama at Bali as news emerges that something is not quite right in the global warming camp.

With only few days remaining in 2007, the indications are the global temperature for this year is the same as that for 2006 – there has been no warming over the 12 months.

But is this just a blip in the ever upward trend you may ask? No.

The fact is that the global temperature of 2007 is statistically the same as 2006 as well as every year since 2001. Global warming has, temporarily or permanently, ceased. Temperatures across the world are not increasing as they should according to the fundamental theory behind global warming – the greenhouse effect. Something else is happening and it is vital that we find out what or else we may spend hundreds of billions of pounds needlessly.

In principle the greenhouse effect is simple. Gases like carbon dioxide present in the atmosphere absorb outgoing infrared radiation from the earth’s surface causing some heat to be retained.

Consequently an increase in the atmospheric concentration of greenhouse gases from human activities such as burning fossil fuels leads to an enhanced greenhouse effect. Thus the world warms, the climate changes and we are in trouble.

The evidence for this hypothesis is the well established physics of the greenhouse effect itself and the correlation of increasing global carbon dioxide concentration with rising global temperature. Carbon dioxide is clearly increasing in the Earth’s atmosphere. It’s a straight line upward. It is currently about 390 parts per million. Pre-industrial levels were about 285 ppm. Since 1960 when accurate annual measurements became more reliable it has increased steadily from about 315 ppm. If the greenhouse effect is working as we think then the Earth’s temperature will rise as the carbon dioxide levels increase.

But here it starts getting messy and, perhaps, a little inconvenient for some. Looking at the global temperatures as used by the US National Oceanic and Atmospheric Administration, the UK’s Met Office and the IPCC (and indeed Al Gore) it’s apparent that there has been a sharp rise since about 1980.

The period 1980-98 was one of rapid warming – a temperature increase of about 0.5 degrees C (CO2 rose from 340ppm to 370ppm). But since then the global temperature has been flat (whilst the CO2 has relentlessly risen from 370ppm to 380ppm). This means that the global temperature today is about 0.3 deg less than it would have been had the rapid increase continued.

For the past decade the world has not warmed. Global warming has stopped. It’s not a viewpoint or a sceptic’s inaccuracy. It’s an observational fact. Clearly the world of the past 30 years is warmer than the previous decades and there is abundant evidence (in the northern hemisphere at least) that the world is responding to those elevated temperatures. But the evidence shows that global warming as such has ceased.

The explanation for the standstill has been attributed to aerosols in the atmosphere produced as a by-product of greenhouse gas emission and volcanic activity. They would have the effect of reflecting some of the incidental sunlight into space thereby reducing the greenhouse effect. Such an explanation was proposed to account for the global cooling observed between 1940 and 1978.

But things cannot be that simple. The fact that the global temperature has remained unchanged for a decade requires that the quantity of reflecting aerosols dumped put in our atmosphere must be increasing year on year at precisely the exact rate needed to offset the accumulating carbon dioxide that wants to drive the temperature higher. This precise balance seems highly unlikely. Other explanations have been proposed such as the ocean cooling effect of the Interdecadal Pacific Oscillation or the Atlantic Multidecadal Oscillation.

But they are also difficult to adjust so that they exactly compensate for the increasing upward temperature drag of rising CO2. So we are led to the conclusion that either the hypothesis of carbon dioxide induced global warming holds but its effects are being modified in what seems to be an improbable though not impossible way, or, and this really is heresy according to some, the working hypothesis does not stand the test of data.

It was a pity that the delegates at Bali didn’t discuss this or that the recent IPCC Synthesis report did not look in more detail at this recent warming standstill. Had it not occurred, or if the flatlining of temperature had occurred just five years earlier we would have no talk of global warming and perhaps, as happened in the 1970’s, we would fear a new Ice Age! Scientists and politicians talk of future projected temperature increases. But if the world has stopped warming what use these projections then?

Some media commentators say that the science of global warming is now beyond doubt and those who advocate alternative approaches or indeed modifications to the carbon dioxide greenhouse warming effect had lost the scientific argument. Not so.

Certainly the working hypothesis of CO2 induced global warming is a good one that stands on good physical principles but let us not pretend our understanding extends too far or that the working hypothesis is a sufficient explanation for what is going on.

I have heard it said, by scientists, journalists and politicians, that the time for argument is over and that further scientific debate only causes delay in action. But the wish to know exactly what is going on is independent of politics and scientists must never bend their desire for knowledge to any political cause, however noble.

The science is fascinating, the ramifications profound, but we are fools if we think we have a sufficient understanding of such a complicated system as the Earth’s atmosphere’s interaction with sunlight to decide. We know far less than many think we do or would like you to think we do. We must explain why global warming has stopped.

David Whitehosue was BBC Science Correspondent 1988–1998, Science Editor BBC News Online 1998–2006 and the 2004 European Internet Journalist of the Year. He has a doctorate in astrophysics and is the author of The Sun: A Biography (John Wiley, 2005).] His website is www.davidwhitehouse.com

MILES COLE
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The new Brexit economics

George Osborne’s austerity plan – now abandoned by the Tories – was the most costly macroeconomic policy mistake since the 1930s.

George Osborne is no longer chancellor, sacked by the post-Brexit Prime Minister, Theresa May. Philip Hammond, the new Chancellor, has yet to announce detailed plans but he has indicated that the real economy rather than the deficit is his priority. The senior Conservatives Sajid Javid and Stephen Crabb have advocated substantial increases in public-sector infrastructure investment, noting how cheap it is for the government to borrow. The argument that Osborne and the Conservatives had been making since 2010 – that the priority for macroeconomic policy had to be to reduce the government’s budget deficit – seems to have been brushed aside.

Is there a good economic reason why Brexit in particular should require abandoning austerity economics? I would argue that the Tory obsession with the budget deficit has had very little to do with economics for the past four or five years. Instead, it has been a political ruse with two intentions: to help win elections and to reduce the size of the state. That Britain’s macroeconomic policy was dictated by politics rather than economics was a precursor for the Brexit vote. However, austerity had already begun to reach its political sell-by date, and Brexit marks its end.

To understand why austerity today is opposed by nearly all economists, and to grasp the partial nature of any Conservative rethink, it is important to know why it began and how it evolved. By 2010 the biggest recession since the Second World War had led to rapid increases in government budget deficits around the world. It is inevitable that deficits (the difference between government spending and tax receipts) increase in a recession, because taxes fall as incomes fall, but government spending rises further because benefit payments increase with rising unemployment. We experienced record deficits in 2010 simply because the recession was unusually severe.

In 2009 governments had raised spending and cut taxes in an effort to moderate the recession. This was done because the macroeconomic stabilisation tool of choice, nominal short-term interest rates, had become impotent once these rates hit their lower bound near zero. Keynes described the same situation in the 1930s as a liquidity trap, but most economists today use a more straightforward description: the problem of the zero lower bound (ZLB). Cutting rates below this lower bound might not stimulate demand because people could avoid them by holding cash. The textbook response to the problem is to use fiscal policy to stimulate the economy, which involves raising spending and cutting taxes. Most studies suggest that the recession would have been even worse without this expansionary fiscal policy in 2009.

Fiscal stimulus changed to fiscal contraction, more popularly known as austerity, in most of the major economies in 2010, but the reasons for this change varied from country to country. George Osborne used three different arguments to justify substantial spending cuts and tax increases before and after the coalition government was formed. The first was that unconventional monetary policy (quantitative easing, or QE) could replace the role of lower interest rates in stimulating the economy. As QE was completely untested, this was wishful thinking: the Bank of England was bound to act cautiously, because it had no idea what impact QE would have. The second was that a fiscal policy contraction would in fact expand the economy because it would inspire consumer and business confidence. This idea, disputed by most economists at the time, has now lost all credibility.

***

The third reason for trying to cut the deficit was that the financial markets would not buy government debt without it. At first, this rationale seemed to be confirmed by events as the eurozone crisis developed, and so it became the main justification for the policy. However, by 2012 it was becoming clear to many economists that the debt crisis in Ireland, Portugal and Spain was peculiar to the eurozone, and in particular to the failure of the European Central Bank (ECB) to act as a lender of last resort, buying government debt when the market failed to.

In September 2012 the ECB changed its policy and the eurozone crisis beyond Greece came to an end. This was the main reason why renewed problems in Greece last year did not lead to any contagion in the markets. Yet it is not something that the ECB will admit, because it places responsibility for the crisis at its door.

By 2012 two other things had also become clear to economists. First, governments outside the eurozone were having no problems selling their debt, as interest rates on this reached record lows. There was an obvious reason why this should be so: with central banks buying large quantities of government debt as a result of QE, there was absolutely no chance that governments would default. Nor have I ever seen any evidence that there was any likelihood of a UK debt funding crisis in 2010, beyond the irrelevant warnings of those “close to the markets”. Second, the austerity policy had done considerable harm. In macroeconomic terms the recovery from recession had been derailed. With the help of analysis from the Office for Budget Responsibility, I calculated that the GDP lost as a result of austerity implied an average cost for each UK household of at least £4,000.

Following these events, the number of academic economists who supported austerity became very small (they had always been a minority). How much of the UK deficit was cyclical or structural was irrelevant: at the ZLB, fiscal policy should stimulate, and the deficit should be dealt with once the recession was over.

Yet you would not know this from the public debate. Osborne continued to insist that deficit reduction be a priority, and his belief seemed to have become hard-wired into nearly all media discussion. So perverse was this for standard macroeconomics that I christened it “mediamacro”: the reduction of macroeconomics to the logic of household finance. Even parts of the Labour Party seemed to be succumbing to a mediamacro view, until the fiscal credibility rule introduced in March by the shadow chancellor, John McDonnell. (This included an explicit knockout from the deficit target if interest rates hit the ZLB, allowing fiscal policy to focus on recovering from recession.)

It is obvious why a focus on the deficit was politically attractive for Osborne. After 2010 the coalition government adopted the mantra that the deficit had been caused by the previous Labour government’s profligacy, even though it was almost entirely a consequence of the recession. The Tories were “clearing up the mess Labour left”, and so austerity could be blamed on their predecessors. Labour foolishly decided not to challenge this myth, and so it became what could be termed a “politicised truth”. It allowed the media to say that Osborne was more competent at running the economy than his predecessors. Much of the public, hearing only mediamacro, agreed.

An obsession with cutting the deficit was attractive to the Tories, as it helped them to appear competent. It also enabled them to achieve their ideological goal of shrinking the state. I have described this elsewhere as “deficit deceit”: using manufactured fear about the deficit to achieve otherwise unpopular reductions in public spending.

The UK recovery from the 2008/2009 recession was the weakest on record. Although employment showed strong growth from 2013, this may have owed much to an unprecedented decline in real wages and stagnant productivity growth. By the main metrics by which economists judge the success of an economy, the period of the coalition government looked very poor. Many economists tried to point this out during the 2015 election but they were largely ignored. When a survey of macroeconomists showed that most thought austerity had been harmful, the broadcast media found letters from business leaders supporting the Conservative position more newsworthy.

***

In my view, mediamacro and its focus on the deficit played an important role in winning the Conservatives the 2015 general election. I believe Osborne thought so, too, and so he ­decided to try to repeat his success. Although the level of government debt was close to being stabilised, he decided to embark on a further period of fiscal consolidation so that he could achieve a budget surplus.

Osborne’s austerity plans after 2015 were different from what happened in 2010 for a number of reasons. First, while 2010 austerity also occurred in the US and the eurozone, 2015 austerity was largely a UK affair. Second, by 2015 the Bank of England had decided that interest rates could go lower than their current level if need be. We are therefore no longer at the ZLB and, in theory, the impact of fiscal consolidation on demand could be offset by reducing interest rates, as long as no adverse shocks hit the economy. The argument against fiscal consolidation was rather that it increased the vulnerability of the economy if a negative shock occurred. As we have seen, Brexit is just this kind of shock.

In this respect, abandoning Osborne’s surplus target makes sense. However, there were many other strong arguments against going for surplus. The strongest of these was the case for additional public-sector investment at a time when interest rates were extremely low. Osborne loved appearing in the media wearing a hard hat and talked the talk on investment, but in reality his fiscal plans involved a steadily decreasing share of public investment in GDP. Labour’s fiscal rules, like those of the coalition government, have targeted the deficit excluding public investment, precisely so that investment could increase when the circumstances were right. In 2015 the circumstances were as right as they can be. The Organisation for Economic Co-operation and Development, the International Monetary Fund and pretty well every economist agreed.

Brexit only reinforces this argument. Yet Brexit will also almost certainly worsen the deficit. This is why the recent acceptance by the Tories that public-sector investment should rise is significant. They may have ­decided that they have got all they could hope to achieve from deficit deceit, and that now is the time to focus on the real needs of the economy, given the short- and medium-term drag on growth caused by Brexit.

It is also worth noting that although the Conservatives have, in effect, disowned Osborne’s 2015 austerity, they still insist their 2010 policy was correct. This partial change of heart is little comfort to those of us who have been arguing against austerity for the past six years. In 2015 the Conservatives persuaded voters that electing Ed Miliband as prime minister and Ed Balls as chancellor was taking a big risk with the economy. What it would have meant, in fact, is that we would already be getting the public investment the Conservatives are now calling for, and we would have avoided both the uncertainty before the EU referendum and Brexit itself.

Many economists before the 2015 election said the same thing, but they made no impact on mediamacro. The number of economists who supported Osborne’s new fiscal charter was vanishingly small but it seemed to matter not one bit. This suggests that if a leading political party wants to ignore mainstream economics and academic economists in favour of simplistic ideas, it can get away with doing so.

As I wrote in March, the failure of debate made me very concerned about the outcome of the EU referendum. Economists were as united as they ever are that Brexit would involve significant economic costs, and the scale of these costs is probably greater than the average loss due to austerity, simply because they are repeated year after year. Yet our warnings were easily deflected with the slogan “Project Fear”, borrowed from the SNP’s nickname for the No campaign in the 2014 Scottish referendum.

It remains unclear whether economists’ warnings were ignored because they were never heard fully or because they were not trusted, but in either case economics as a profession needs to think seriously about what it can do to make itself more relevant. We do not want economics in the UK to change from being called the dismal science to becoming the “I told you so” science.

Some things will not change following the Brexit vote. Mediamacro will go on obsessing about the deficit, and the Conservatives will go on wanting to cut many parts of government expenditure so that they can cut taxes. But the signs are that deficit deceit, creating an imperative that budget deficits must be cut as a pretext for reducing the size of the state, has come to an end in the UK. It will go down in history as probably the most costly macroeconomic policy mistake since the 1930s, causing a great deal of misery to many people’s lives.

Simon Wren-Lewis is a professor of economic policy at the Blavatnik School of Government, University of Oxford. He blogs at: mainlymacro.blogspot.com

 Simon Wren-Lewis is is Professor of Economic Policy in the Blavatnik School of Government at Oxford University, and a fellow of Merton College. He blogs at mainlymacro.

This article first appeared in the 21 July 2016 issue of the New Statesman, The English Revolt