When you ask people about debt, what comes to mind is credit card debt. They will say it is bad because they are thinking of huge interest payments for purchases they could not fully afford.
When you ask companies about debt, you get a different story. Debt allows businesses to grow by developing new products, diversifying into new markets or increasing sales through advertising campaigns. It generates a “return on investment”. If you understand the returns you will get, the debt is good.
This brings us to the much-debated $ 3.5 trillion reconciliation bill being drafted in Congress. Take part of this bill, the climate package. Its policies can be a quarter of the price of the bill. But what are these expenses used for?
We know from record keeping that the frequency and costs of climate-related disasters have skyrocketed over the past decade. In 2020 alone, 22 such events cost taxpayers $ 100 billion. In the past five years, 81 of these disasters cost nearly $ 650 billion.
The records also show what air pollution is costing us in hospital stays, emergency room visits, absences from work and deaths. A recent study from Duke University found that effective policies to reduce pollution from fossil fuels would reduce these costs by nearly $ 700 billion per year.
So let’s say the climate policies in the reconciliation bill cost around $ 800 billion over 10 years. Suddenly it looks like smart debt. And those numbers don’t even include the growth in new technologies, businesses and jobs that these policies would generate.
James murray
Hillsdale
