Carbon Politics, American Power, and the Almighty Dollar
Mark Blyth, The William R. Rhodes '57 Professor of International Economics, Acting Director, Climate Solutions Lab, and Professor of International and Public Affairs, Brown University
Friday, February 21, 202512:30 PM
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ABOUT THE MANUSCRIPT
The US has 330 million citizens, which is less than 5% of the world’s population. Yet its GDP footprint is around 25% of global GDP. How is that possible? While leading-edge technological innovation and a giant military undoubtedly help, what’s really been the secret sauce for the past 30 plus years is the global role of the dollar. The rest of the world needs a savings asset and the US provides it through massive debt issuance and the global role of the dollar in international trade. This has enabled the US to import vast quantities of TVs, Cars, Computers, and everything else you can think of, while paying for it all with digital IOU'S that bear 2% called Treasury bills.
The problem with this model is that if you import everything you stop making your own things and you hollow out your industrial base. Both Biden and Trump saw this. Biden sought green re-industrialization through the IRA. Trump seeks re-industrialization through doubling down on the carbon-economy, which constitutes the growth model of GOP states in the US.
If a Trump administration doubles down on carbon, the short-term boost to growth through lower input prices plus deregulation will be huge. Possibly enough to propel a two-term administration. Climate denial can be profitable. But the rest of the world, China, Europe and East and South Asia, will continue to develop the green technologies needed to survive in the 21st century. The US will fall behind in this critical area as the countries involved in the green transition trade more intensely with each other. The lock on effect is that the global role of the dollar shrinks. First, because the issuer doesn’t like the side effects. Second, because in a post carbon world, who needs a currency that denominates and is back by carbon assets that no one else uses anymore? In short, our addiction to carbon and the politics that it produces risks burning down the house.
ABOUT THE AUTHOR
Mark Blyth is the William R. Rhodes ’57 Professor of International Economics and the Director of the Rhodes Centre for International Economics and Finance at the Watson Institute for International and Public Affairs at Brown University. He holds a joint appointment in the department of political science. He is the author many award-winning books including, Austerity: The History of a Dangerous Idea (New York: Oxford University Press 2015), Angrynomics (New York: Columbia University Press 2020), Diminishing Returns: The New Politics of Growth and Stagnation (Oxford University Press 2022), and forthcoming in 2025, Inflation: A Guide for Users and Losers. He writes about the politics of growth, distribution and decarbonization and why people continue to believe dubious economic ideas despite buckets of evidence to the contrary.
Blyth’s research spans three main areas. The first focuses on the political power of economic ideas as seen in his books, "Great Transformations: Economic Ideas and Institutional Change in the Twentieth Century" (2002) and "Austerity: The History of a Dangerous Idea" (2013) and Angrynomics" (2020) with Eric Lonergan, The second concerns the political economy of rich democracies as seen in his 2015 books, "The New Politics of Growth and Stagnation" (2022), with Lucio Bacarro and Jonas Pontusson, and in his forthcoming book "Inflation: A Guide for Users and Losers" (2025). The third focuses upon the distributional politics of decarbonization and the future of the US dollar. This is the subject of his current book manuscript, “Burning Down the House: Carbon Politics, American Power, and the Almighty Dollar.”
ABOUT THE MODERATOR
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Margaret Peters is Associate Director of the UCLA Burkle Center for International Relations and a Professor in the Department of Political Science and the Chair of the Global Studies major at UCLA. She is also a non-resident scholar at the Carnegie Endowment for International Peace. Her research on the political economy of migration. She is currently working on a book project on how the process of forced displacement affects migrants’ sense of dignity and how these dignity concerns affect decisions of whether to move from the crisis zone, where to move, and when to return. She is additionally writing a book on how dictators use migration, including forced migration, to remain in power. Her award-winning book, Trading Barriers: Immigration and the Remaking of Globalization, argues that the increased ability of firms to produce anywhere in the world combined with growing international competition due to lowered trade barriers has led to greater limits on immigration, as businesses no longer see a need to support open immigration at home.
Sponsor(s): Burkle Center for International Relations, Department of Political Science