Janet Yellen On Climate Change and Inequality
Climate change is “an urgent problem,” according to Yellen, and she believes the United States needs to adopt “a sensible strategy” for combating greenhouse gas emissions.
“It is hard to envision a successful worldwide effort with the US not cooperating,” said Yellen, who testified to Congress in support of the Kyoto Protocol when she chaired US president Bill Clinton’s Council of Economic Advisers and is currently a member of the Climate Leadership Council.
She believes instituting a tax on carbon emissions is a logical approach, and supports the Climate Leadership Council’s Baker-Shultz Carbon Dividends Solution.
“We need to price emissions and there needs to be a price that penalizes emissions of greenhouse gases,” she said. “We favor a carbon tax that would start off at around $40 a ton.”
Yellen expects climate change concerns to foster more innovation and improve productivity, but she “was less clear” that the related efforts will be a “productivity game changer.” …
Advances in productivity tend to benefit skilled workers while their less-skilled counterparts often see their jobs replaced.
“I think inequality is one of the most serious issues affecting American society,” Yellen said. “The character of this technological change has been the driver of this inequality.”
She pointed out the median wage of American men has hardly budged since 1979.
“There are people who are doing very, very well but most of the gains have gone to the top 10% and the top 1% and the median has been absolutely flat,” she said. “It looks like the economy is doing well but there are a lot of people who aren’t doing well.” …
Yellen referenced a McKinsey report on automation, artificial intelligence (AI), and the future of work that estimates about half of current jobs could be automated by new technologies.
What happens to the people who are displaced? Many are likely to end up in low productivity jobs. And that, Yellen said, is “a scary prospect.”