Greek Lessons

(UPDATE ON JUNE 29TH: Thursday's failed negotiations were indeed a crucial point. We will now spend this week wondering whether Greece will collapse - and if it does, whether it will trigger another meltdown in the banking system. As discussed below, the lesson I take from this mess is that to resolve a large crisis through international negotiations, it is not enough to present the right plan and be supported by facts. You must make it possible for others to agree with your view, even if it runs contrary to what those same people have supported in the past.)

Today marks a crucial point in the Greek debt crisis. The result will be very consequential for the world economy, with some potential for catastrophe to result. 

But economic policy isn't on my mind right now. Instead, I'm thinking about what we can learn from this mess, particularly to improve our work on climate change. 

You might wonder - what's the connection? Although environment and economics are very different topics, I see a real similarity in the political processes that grapple with them.  

The Greek crisis revolves around a big and contentious set of decisions being taken by a small set of people to fix a calamity. Seeing how that happens for Greece is a great window into understanding what might happen for far more consequential decisions in the future - and there's no more consequential decision on the horizon that what to do about carbon emissions. 

To be clear, I say "in the future" because humans generally won’t do today what doesn’t seem necessary until tomorrow. With my partners, I have taken this to mean that our ultimate clients are the future political and business leaders who will be called on to react when the shit really starts to hit the proverbial fan.

Obviously, we can’t exactly predict how messy that’s going to be, but what we can surmise is that they will have to make very big decisions under a lot of time pressure, and with little margin for error.

We think those decisions will be far more successful if they have systems that:

  1. Make it possible to eliminate emissions from the way we produce energy and use land;
  2. Do this without major economic blowback or revolutionary political change;
  3. Have been tested, and show a solid set of evidence to back up 1 and 2.

Which brings me back to Greece. Seeing this play out, I am tempted to add a requirement to our three-part list. I’m not exactly sure about how to phrase this yet, but it’s something like saying that the aforementioned systems also:

     4.  Must not overtly challenge important social norms or deeply-held political beliefs.

Why?  Because the big lesson to be learned from Greece's current negotiations is that the entire process – proposals, counter-proposals and the like – has not been defined by evidence as much as beliefs and norms.

It's not ideology to say that the past five years of austerity have failed. It's just a fact: the policies have failed economically by causing a massive recession in Greece to no useful end (that includes for Greece's creditors).  The policies have therefore failed politically, pushing Greek voters to eject their long-standing leadership class in favor of Syriza.

So when Yanis Varoufakis and Alexis Tsipras entered a new round of negotiations this year, they had the facts on their side. They had a clear political mandate. And by many accounts (including several Nobel economists), they also had the right policies.

Despite this, it appears that they will not achieve anything better for the Greek people than their predecessors. Either some form of austerity will be imposed, or Greece will leave the euro, but in no situation will Greece's leaders have convinced their counterparts across the EU to change course. This, despite having the facts, politics and proposals in hand.

Which makes me wonder, how can we avoid this happening when we have to tackle climate change? Because there, our proposals may be quite radical. They will, indeed, necessarily require big changes. And we will not have the option to create confidence or kick things to a future bailout; we will have to take decisive and correct actions, or suffer the consequences. 

What we learn from the Greek situation is that Syriza's style – open-collared, casual, frank, blogging, and younger than the norm – does not match the social norms of how the European Union conducts its business. Since this style also fits the stereotype of a disorganized left that lacks business sense, they have been classed as “unserious” and left major counterparties in their negotiations (like IMF head Christine Lagarde) calling for “adults in the room”.

I'm not saying the norms are effective, but norms they are, and in this case, it seems that thumbing their noses at these has made life harder for the Greeks. The lesson we take from this is that when presenting a case for doing something new to reduce emissions in a crisis, we should be mindful to have already convinced some people within these social norms that the systems we propose are a good idea.

The politics also matter, and we can learn something from that as well. In the face of all evidence showing it not to work, austerity is a strongly held political belief across Europe's governments.

Even countries governed from the left, like France or Italy, are not pushing against austerity by proposing deficit spending, but rather, trying to reduce the amount of cuts imposed. That is, the question is not whether to accept low deficits, but rather, how low those deficits should be. 

By challenging that belief, the Greek government is effectively telling all of the other Eurozone members that they are wrong. This might well be true - and it is a very effective campaign strategy for national elections - but it's not effective in a system of international negotiation, where those other members can only be influenced by persuasion.

I take this as a lesson in how countries will deal with each other when push comes to shove on climate. There will likely be a more enlightened set of nations (likely in Europe, ironically enough) who will have to persuade others that the policies they've pursued for decades are wrong. When that happens, we need to give them systems that allow them to be persuasive without forcing others to admit they were wrong.

Even if it's true.

 

-Lou