Harvard Economists Join Policy Proposal to Combat Climate Change

More than 3,300 economists, a number of whom are Harvard affiliates, signed the “Economists’ Statement on Carbon Dividends,” calling for a bipartisan climate change solution, the Climate Leadership Council announced last month.

The economists are specifically supporting the Baker-Schulz plan, which was authored by former Republican Secretaries of State James Baker and George Schultz in 2017. The statement comprises four main pillars: gradually increasing a carbon fee, returning all proceeds from the fee to Americans via dividends, instituting border carbon adjustments, and eliminating regulations that are no longer necessary upon the fee’s enactment.

The statement is the largest of its kind, with a historic number of economists signing onto it, including 27 Nobel Laureates, four former Federal Reserve Chairs, 15 former Chairs of the Council of Economic Advisers, and two former Secretaries of the Treasury, one of whom is former University President and current Economics Professor Lawrence H. Summers. Other Harvard signatories include Economics Professors N. Gregory Mankiw, Jason Furman '92, John Y. Campbell, Claudia D. Goldin, and Martin S. Feldstein '61.

“I’ve been working with the Secretary of State on the so-called carbon dividends plan with the four parts inscribed in the statement for the last several years,” Summers said in an interview. “And there’s a broader and broader coalition that has supported this idea. It seemed like a natural idea to mobilize the support of Congress over a broader swathe of economists to show that this wasn’t a left wing idea or a right wing idea, it was just a good idea.”

The economists’ carbon dividends plan aims to be a first step in solving climate change through a carbon tax based on basic economic principles. Campbell said the focus of the policy is using a price mechanism to deter carbon emissions.

Campbell added that he believes the field of economics must help contribute to a solution to climate change, which he called “perhaps the most serious problem facing humanity at this point.” He noted that a large part of the statement’s success arose from mobilizing support from economists from both political parties.

Summers said having a breadth of economists display their support is crucial to illustrating that climate change is not only a pressing issue, but one that can be combated.

“It reflects both a belief that climate change is a profoundly important issue and a kind of optimism that it’s an issue that can be addressed and so that’s why I was pleased to sign on it,” Summers said.

Campbell said the carbon tax cannot be the only solution in mitigating climate change issues, but it is a valuable “tool” in the process.

“The task of reducing carbon emissions is such a heavy lift that trying to do it without a carbon tax is like trying to lift a heavy weight without a lever,” Campbell explained. “Economists know something about how the price mechanism can be used as a tool.”

The Students for Carbon Dividends organization — a national bipartisan coalition organized around the carbon dividends plan — helped the Climate Leadership Council rally economists to sign the statement, according to S4CD’s Vice President Kiera E. O’Brien ’20.

“We do recognize that as young people we are the people who have the most at stake with the issue of climate change,” O’Brien said regarding S4CD's stake in the issue. “I felt it was so crucial that young voices be a made a part of the conversation.”

Alexander Posner, a Yale University student and President of S4CD, said the organization worked “hundreds and hundreds of hours” to garner support for the statement.

“The Climate Leadership Council reached out to us in December and said, ‘We’re organizing what we hope to be a historic statement of economists, and we need your help,’” Posner said. “So our student team got together and worked on that over winter break. Hundreds and hundreds of hours. Thousands and thousands of websites, scraping for information.”

The extent of support represents a groundbreaking show of force from the economics profession, Posner said.

"What’s exciting about this is that it’s an opportunity to marry theory and practice," Posner said. "It drives emission reductions while adhering to free market principles which creates a basis of bipartisan interest."

In terms of the prospects of the carbon dividends statement, Summers said he is hopeful that it will soon come to fruition.

“I don’t think it’s terribly likely to happen during the Trump Administration, but I hope at some point the world will move in this direction,” Summers said. “This has the potential to show that we can do big things, that we can do bipartisan things, and that economic tools and the environment don’t have to be in conflict.”

— Staff writer Sophia S. Armenakas can be reached at sophia.armenakas@thecrimson.com.