How climate change could create stronger central governments

In Wednesday’s article, Tony highlighted an underappreciated tension lurking in the policy programs of left-of-center governments.  

While such governments, like the new Labour administration in the UK, are wedded to ambitious, economy-wide decarbonization targets, they are also allied with the union movement and small ‘l’ labor in general.  The problem is that the same so-called ‘hard-to-abate’ industries that need to be decarbonized are the same ones that historically have high numbers of union members.  By greening these industries, governments may inadvertently weaken unions, since climate-friendly methods of creating durable goods generally require fewer workers – and in some cases different skills, which unionized employees may not have.

Tony’s insight got me thinking more broadly about how climate risks could reshape political economy.  My musings led me to the following conclusion: government is likely to become increasingly centralized as climate shocks escalate, reversing a decades-long trend in the UK and Europe, and in the US further strengthening the federal government at the expense of states and municipalities. 

Why?  Because central governments are the biggest boys in the playground – the ones best able to protect communities from climate shocks and help them bounce back from disasters.  Central governments have the biggest budgets and (usually) are the ones best able to tap capital markets for debt financing when the going gets tough.  They are the governments able to draw on the resources of entire nations to deal with the scale of problems that climate change is likely to unleash. 

In this they stand apart from municipal and regional governments, which have limited revenue-raising powers and debt issuance powers of their own (if at all).