What has the price of cotton got to do with the current fears around climate change? Quite a lot argues Lawrence Gosling
"How much is a reel of cotton?" my wife asked the other day.
"Two pounds?" said my eight-year-old son. "No," she said.
"Three pounds?" said the ten-year-old, "Four pounds?" said the 16-year-old, who should have known better seeing as though the cotton had been bought to sew four buttons for her AND she just completed a GCSE in textiles, or sewing to you and I.
"Six pounds," I said smugly, "the price of cotton has been going up because of global warming."
I wasn't even close. £8.50 was the answer.
Thankfully times are not that tough in our house that the price of the cotton should have put us off buying the reel but it was a tangible, everyday example of what climate change means.
Or was it?
As I mulled this over, it struck me that for many Western economies maybe we wouldn’t be having the debate about climate change unless we were so affluent relative to the developing world.
Climate change is nothing new. The overall temperature of the planet has been steadily going up for decades – that's something that most economists can agree on.
But why did we suddenly start to believe it is a problem?
I'd argue it's for purely selfish reasons.
The price of cotton is going up, the price of gas, electricity, petrol and diesel has all gone up to record highs. We've seen the price of gold close to its record high in the 1980s, having spent most of the last two decades being worthless from its historical perspective.
The price of a barrel of oil is closer to $70 a barrel than the norm of $15-$20. Even commodities many of us had ever heard of – such as palladium – are at record highs?
Why? Because of climate change? No. Because of demand.
Global demand for all these assets is increasing with the strength of the global economy, while at the same time major new discoveries of these commodities are few and far between.
If we didn't have this simple demand/supply imbalance, would be having the debate about climate change?
No, we wouldn't. We'd just carry on consuming. That we are just shows the power of the politics of affluence.
Lawrence Gosling is the founding editor of Investment Week magazine. He has a weekly column called Gosling's Grouse in the magazine.
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