Globalist Perspective

Is Norway the New East India Company?

A tale of gas and oil, opium and hypocrisy: If climate activists are unable to convince the richest country in the world of the benefits of climate control, how do they plan to convince Mexico, Nigeria or Russia?

Takeaways


  • If we want to confront climate change, we should get rid of extreme hypocrisy and design policies that would be acceptable to people.
  • After doing disastrous harm to India, the East India Company began to sell a product to China that it could not sell elsewhere: opium.
  • Today’s Norwegian government is one of the most active governments in highlighting the threat of the climate change. Its problem is hypocrisy. After all, some 50% of the value of Norwegian goods exports consists of gas and oil.
  • Norway has recently decided to expand exploration and production of gas and oil in the Arctic Circle.
  • Norway has a per capita GDP that is 20% higher than that of the U.S., fairly equally distributed among its citizens. Norway should thus be able to give up the production of its “opium-equivalent.”

In the 18th century, the English-led East India Company gradually managed to control most of India. Its rule was a disaster for India, but made many directors and stockholders of the company exceedingly rich.

The wealth enabled many of them to play important roles in English political, intellectual and business life.

As Adam Smith, an uncompromising critic of the East India Company, wrote: “The government of an exclusive company of merchants is, perhaps, the worst of all governments for any country whatever.”

The Company switches gears

Faced with so many depredations, the British government finally took away the monopoly of Indian trade from the company in the midst of the Napoleonic wars.

This led the Company to redouble its efforts elsewhere: to trade with China. The problem with China was that nothing that company could sell to the Chinese was of interest to them.

Selling opium to foreigners

There was a lot that the company wanted to buy from China (porcelain, tea) but nothing to sell. Until it came to the idea of using opium produced in Bengal to sell to China.

Despite the ban that the Chinese government had put on opium imports, there was domestic demand for it. To overcome the ban, and in order to sell a widely addictive substance that for ethical reasons it could not sell anywhere else, the company decided to engage in a war to open Chinese ports.

The century of humiliations

This was the origin of the infamous Opium War, whose final outcomes in 1842 were the opening of five Chinese “treaty ports,” secession of Hong Kong, and extraterritoriality for foreigners living in China.

The “century of humiliations” had begun. And the company could finally sell to far-away foreigners something of whose consumption Company members in their private lives disapproved.

Norway – a major climate change hypocrite

Today’s Norwegian government is one of the most active governments in highlighting the threat of the climate change.

It tries to replace almost entirely the country’s use of gas-fueled cars by electric cars. It is proud of the decrease in the footprint of its consumption.

It funds international activities that are supposed to limit and reverse deforestation in the world.

At the same time, for half a century, Norway has been one of the significant world producers and, even more important, exporters, of oil and gas. For gas, it is the third largest in the world. Some 50% of the value of Norwegian goods exports consists of gas and oil.

Money does not smell?

Moreover, the government has recently decided to expand exploration and production of gas and oil in one of the areas that the very same government acknowledges are most sensitive to climate change — the Arctic Circle.

Norway thus increases the production and sales of a commodity that it itself deems noxious, and sells it, as the East India Company did with opium, to far-away foreigners while staying domestically clean. “Money has no smell.”

Norway’s behavior is not only surprising because it is hypocritical: the virtue-signaling stands in manifest contrast with what the government does.

Do as I say, not as I do

It is even more striking when looked at in the context of the struggle of many climate-change activists to reduce emissions, as they try to convince poorer and middle-income countries of the benefits of lower oil production and consumption.

This begs the question: If they are so clearly unable to convince the population and the government of the richest country in the world of the benefits of climate control, what arguments do they plan to use to convince Mexico, Gabon, Nigeria, Russia to reduce production of gas and oil?

These are countries whose incomes are a fraction of Norway’s. For example, the median-income person in Nigeria has one-twentieth (not a typo: 1/20) of the real income of the median-income person in Norway.

I could fully understand that Mexico or Nigeria might refuse to reduce the production of gas and oil because without it, there would be significant impoverishment of their populations.

No income lowering in my backyard

But there would be no impoverishment of the Norwegian population—by any reasonable metric.

Norway is a country with a very high income, with a GDP per capita of 66,000 international dollars, 20% higher than that of the United States. This income is fairly equally distributed among its citizens (Gini coefficient of 26).

Norway should be able to give up the production of its “opium-equivalent.”

There is apparently no political support for such a measure, as the current government in its new decision about more extensive exploration and production seems fully assured of majority support.

Economic growth vs. climate control: The trade-off

This holds a very important lesson for all climate change activists. They need, as I have many times insisted, to think much more seriously about the trade-off between economic growth and climate change control.

While their models show the incontrovertible advantages of controlling climate change, their policies face popular resistance — from taxes on airplane fuel to taxes on gas (which provoked the Gilets Jaunes movement in France).

The popular resistance is due to the unwillingness of almost anyone in the world to accept lower income.

Climate change activists might talk in their conferences about people “thriving” on lower incomes, but when offered that alternative, even the citizens of the richest country in the world decline it.

Out with hypocrisy, in with popular policies

If we want to really confront – as opposed to just talk about — climate change, we should first, get rid of extreme hypocrisy (as this one), and second, design policies that would be acceptable to people.

We should start with rich countries, not only because historically they have been the largest contributors to climate change (through historical accumulation of emissions) but also because they should be able to bear costs more easily than the rest.

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About Branko Milanovic

Branko Milanovic is the Presidential Professor at the City University of New York's Graduate Center, and Senior Scholar at Luxembourg Income Survey.

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