By Daniel Brouse
June 21, 2025
In today's political climate, economic debates are increasingly dominated by short-term wins, emotional appeals, and zero-sum thinking. But from the standpoint of fundamental economic principles, many widely supported policies--such as high taxation, nationalism, protectionism, populism, and anti-immigration sentiment--have long-term consequences that ultimately harm everyone, regardless of class or ideology.
Even more urgent is the looming threat of climate change, which economists and financial experts--including myself--agree poses a systemic risk to global capitalism. As climate-driven disasters grow in frequency and severity, the costs are beginning to overwhelm the financial infrastructure that underpins modern economies. Gunther Thallinger of Allianz SE, one of the world's largest insurers, has issued a stark warning: the accelerating pace and scale of climate-related losses threaten to break the insurance sector's ability to function. If the insurance industry falters, it could trigger a cascading collapse across the broader financial system, with profound implications for markets, investment, and the viability of capitalism itself.
Taxes are necessary to fund public goods, but not all taxes are created equal. Income taxes, in particular, punish productivity by taxing labor and innovation. They create disincentives to work, invest, and grow businesses--core drivers of economic growth. Even when targeted at the wealthy, income taxes reduce the efficiency of capital allocation and suppress job creation. The impact ripples through the economy, lowering wages, slowing innovation, and ultimately limiting opportunity for all.
That's not to say all taxation should be eliminated--but the structure and purpose of taxation matter greatly. Taxes that discourage pollution or the overconsumption of finite resources can create positive market incentives and help align economic activity with long-term sustainability. However, taxes that penalize productivity--such as those on wages or hiring--are inherently regressive in their impact on growth, regardless of intent.
That said, I'm not a proponent of traditional carbon taxes, largely because they are difficult to enforce effectively and are often accompanied by misleading narratives around carbon offsets and so-called "net-zero" goals. A more transparent and impactful approach would be to directly tax fossil fuels themselves. A phased-in system could include a 50% tax on natural gas, a 100% tax on each barrel of oil, and a 1,000% tax on every ton of coal. These measures would send a strong, unambiguous price signal, drive investment in cleaner alternatives, and reduce the long-term economic and environmental costs associated with fossil fuel dependency.
Beyond economic efficiency, there’s an urgent public health imperative. Pollution and climate change are now among the leading causes of death and chronic illness worldwide. Air pollution alone is responsible for an estimated 7 million premature deaths each year, according to the World Health Organization. Climate change exacerbates respiratory conditions, cardiovascular disease, heat-related illnesses, mental health crises, and the spread of infectious diseases like malaria and dengue fever.
These impacts don't just strain individual lives--they are rapidly overwhelming public and private healthcare systems. As climate-related illnesses rise, health insurance costs skyrocket, risk pools destabilize, and premiums become unaffordable for many. Meanwhile, government programs like Medicare and Medicaid face unsustainable cost burdens driven by the medical consequences of a warming world. In short, climate inaction is not only a moral and environmental failure--it's a direct threat to the economic sustainability of our entire healthcare infrastructure.
Nationalist and protectionist policies often promise to “bring jobs back” or “protect local industries,” but history shows they nearly always backfire. Tariffs and trade restrictions increase costs for consumers, limit access to global markets, and trigger retaliatory actions from trade partners. Jobs may temporarily appear in protected industries, but these gains are offset by job losses elsewhere and reduced overall competitiveness. Nationalism reduces global cooperation, which is essential for solving complex, borderless challenges like climate change, pandemics, and financial crises.
Populism adds fuel to the fire by prioritizing political expediency over economic soundness. Populist leaders often resort to unsustainable promises, distort data, and vilify economic experts. While it may deliver short-term popularity, it undermines the institutional trust and policy coherence needed for long-term economic stability.
Perhaps the most damaging myth in modern politics is that immigrants are a burden on the economy. In reality, immigration--particularly of young, working-age individuals--is essential to maintaining a stable workforce, supporting aging populations, and sustaining programs like Social Security and Medicare. As birth rates decline and the U.S. population ages, we face a demographic time bomb: fewer workers supporting more retirees. Without robust immigration, the math simply doesn't work.
Contrary to political rhetoric, immigrants pay taxes, fill critical labor shortages, start businesses at higher rates than native-born citizens, and contribute disproportionately to innovation and economic growth. In fact, over the past five years, immigration has accounted for approximately 80% of U.S. GDP growth. Turning away millions of potential contributors out of fear, misinformation, or cultural backlash isn't just economically short-sighted--it's an act of national self-sabotage.
Given these economic realities, we face two clear options. If we intend to preserve the current system--with its reliance on income taxes and entitlements--then we must embrace large-scale immigration as a non-negotiable pillar of national policy. There is no other way to maintain the workforce necessary to fuel economic growth and support retirees without collapsing the fiscal balance.
The preferable alternative, however, is systemic reform. This means rethinking how we fund government and how we measure economic health. A transition away from income taxes toward taxes on resource consumption--such as a carbon tax or pollution levy--could reduce environmental damage while encouraging innovation and efficiency. At the same time, phasing out fossil fuels and investing in a clean-energy infrastructure would position the economy for long-term resilience and competitiveness.
Whether we like it or not, basic economics doesn't bend to ideology. High taxes on productivity, closed borders, trade barriers, and emotionally driven populism all lead to the same outcome: stagnation. The path to a more prosperous, resilient future is clear--but it requires courage, clarity, and a willingness to make difficult choices. We must either open the door to millions of young workers through large-scale immigration or rethink the foundations of our economic system entirely--ideally, both.
At the same time, we face an accelerating climate emergency that threatens to overwhelm not just our economy, but the physical conditions required for human survival. Our latest climate model — now incorporating complex social-ecological feedback loops within a dynamic, nonlinear system--projects that global temperatures could rise by up to 9°C (16.2°F) within this century. This far exceeds earlier projections, which estimated a 4°C rise over the next thousand years, and signals a dramatic acceleration of planetary warming.
At this level of heating, vast regions of the Earth will become uninhabitable due to a combination of extreme temperatures, sea level rise, agricultural collapse, and mass migration. Crucially, parts of the United States are already experiencing wet-bulb temperatures approaching or exceeding 31°C (87.8°F)--a physiological threshold beyond which the human body can no longer regulate internal temperature, even in the shade with unlimited access to water. This makes extended outdoor exposure potentially fatal.
This is no longer a distant or theoretical threat. The climate system is now entering a phase of compound risk and cascading collapse, where disruptions in one area--such as crop failure--can trigger a domino effect across health systems, infrastructure, food security, and civil stability. We are already witnessing the early stages of this unraveling.
Immediate, radical action is now essential--not only to mitigate future emissions but also to adapt our societies, preserve habitable zones, safeguard food systems, and protect public health. The longer we delay, the higher the cost--economically, socially, and in terms of human life.