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Title:Weather is again determining economic outcomes

“Now the rains had really come,” writes Chinua Achebe, in “Things Fall Apart”, a novel set in 19th-century Nigeria, “so heavy and persistent that even the village rainmaker no longer claimed to be able to intervene. He could not stop the rain now, just as he would not attempt to start it in the heart of the dry season, without serious danger to his own health.” In agrarian economies, of the sort depicted in Achebe’s novel, the economic cycle and weather move in tandem. When the rains arrive at the right time, the harvest is bountiful and prosperity follows. In contrast, drought brings the risk of starvation and death. The rainmaker - much like the modern-day central banker - may attempt to smooth out the business cycle, literally dampening things down when they get too hot. Ultimately, though, it is the power of nature that decides the outcome.

Europe’s energy crisis has brought the return of weather-based economics. The crisis is a reminder that, for all their technological sophistication, even rich-world economies must rely on the munificence of nature. European economists, financiers and policymakers are watching forecasts closely: a balmy winter will bring relief, requiring less gas to be burned in order to keep houses warm. If temperatures are not too punishing, energy prices will fall and growth be given a boost. A frosty winter, on the other hand, will bring misery: pushing millions into poverty, increasing inflationary pressures and keeping industries shuttered.

Fossil fuels originally promised to free economies from the vagaries of the seasons. Instead of relying on ambient solar power - captured in grain, preserved in livestock or photosynthesised into biomass and then consumed as firewood - humanity could burn coal, releasing the prehistoric solar power contained within. The use of fossil fuels allowed energy to be stored, transported and released exactly when required. They placed the power of the sun at the beck and call of mankind,...

Date Added:11/24/2022 6:37:35 AM