Flipping for climate change — can we keep the brand?

John Key has flipped. John Howard has flipped. Now George Bush has flipped. What does it mean for our brand?

The flip is on climate change. Voters have shifted, business has been shifting and once-scoffing politicians are running to catch up.

Howard’s and Bush’s goal is to keep their countries rich. Howard says no jobs, even coal jobs, are to be jeopardised. Bush’s aim is security of energy supply for Americans, including, if needed, coal-petrol.

So he is throwing subsidies at farmers to grow corn for ethanol. Yet American corn ethanol has little effect on greenhouse gas emissions. Nearly the same emissions are released growing the corn and processing it as by burning petrol. It looks green but isn’t.

It also uses up food land for fuel. Fine for Americans, who can afford to buy what they want. But competition for food land pushes up prices for food, especially grain. That is not fine for poor people in poor countries.

And as the biofuels craze grows, not least in this country, pressure will grow to convert more tropical forest land either for biofuel crops (palm oil in south-east Asia) or for food crops displaced by biofuel crops (sugar in ethanol pioneer Brazil). The carbon footprint might diminish in rich countries but as a result grow in the less-well-off supplying countries. That is hardly the point of an international greenhouse deal.

Our rich country is about to join in. We will buy greenhouse credits on the international market to meet our 2008-12 Kyoto obligations. That doesn’t polish the clean-green, exemplary-climate-good-citizen brand.

And if we want that brand, we meet a deeper question. Will climate change action worsen international inequalities? If Bush gets his coalition of the willing among rich and getting-rich (such as China) countries, will that embed poverty in the poorest countries?

Rich countries could meet their greenhouse obligations with climate-friendly spending in the poorest countries. Africa could grow material for cellulosic ethanol, if that technology can be commercialised.

But that will work only if the poorest countries can overcome the obstacles such as poor governance, rickety legal systems and graft that now deny them wins from economic globalisation.

Inequality is an ingredient of economic growth. It results from growth and, if managed so that there is high opportunity for upward mobility within lifetimes and between generations, it fuels growth.

Rich nations last century introduced mechanisms to redistribute wealth and improve the potential (for example, through education) for upward economic mobility. It was found that quite high levels of inequality could be tolerated if there was also relatively high potential for mobility.

The lesson is that all boats rise — but only if governments intervene (carefully). If as a result social capital rises, the tide rises faster. This at least is what a growing strand of “development economics” thinkers claim to have found.

They say that where preconditions existed for individuals’ economic mobility, as in east Asia countries’ education, hard work and saving, poor countries have turned into getting-rich countries. Hundreds of millions have escaped poverty. Globalisation helped.

Conversely, where preconditions don’t exist, as in most of Latin America, economies have stagnated. At the bottom of the heap, as in most of Africa and much of the Middle East, poverty numbers have risen.

Globalisation and trade have brought this into starker relief. The gap between average incomes in Europe and Africa has been widening.

Within developed countries, a worry for policymakers is that the mobility potential in the past 20 years may have been decreasing. Key, for example, focused on a “growing” underclass in January. That, so the reasoning goes, would be bad for business. And crime.

Put that in an international frame. Growing inequality reflects world economic growth. But without mobility, that inequality creates conditions for despair and disharmony in the poorest countries. In a global world, as the United States found on 9/11, disharmony can export its discontents.

Climate change, being a globalisation of climate-related downsides, potentially compounds this. Rich and getting-rich countries can buy a fix. Poor countries can’t.

The answer, if last century’s formula for national success is a guide, would be to replicate globally rich countries’ national mobility-enhancing mechanisms.

That is unlikely while rich countries see staying rich as the implicit objective of a climate deal and refuse all redistribution except charity (aid).

What is the implication for us, if we want an exemplary climate-good-citizen brand to keep rich-country carbon-footprint-conscious consumers buying New Zealand? No buying credits abroad, no palm oil ethanol shortcuts, no sleight of hand involving poor countries. Actually cutting emissions. And promoting international economic mobility.

That’s a very big call. Easier to let the brand go.