In today's political climate, economic debates are increasingly dominated by short-term wins, emotional appeals, and zero-sum thinking. From the standpoint of fundamental economic principles, many widely supported policies—such as high taxation on productivity, nationalism, protectionism, populism, and anti-immigration sentiment—carry long-term consequences that ultimately harm everyone, regardless of class or ideology.
Even more urgent is the systemic threat posed by climate change. 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 has warned that accelerating climate losses threaten to break the insurance sector’s ability to function. If insurance falters, cascading impacts could destabilize markets, investment systems, and the viability of capitalism itself.
The State of the Union: Insurance
Homeowners and property insurance are the canary in the coal mine—and the canary is dying.
In high-risk states including Florida, Louisiana, California, Texas, Arizona, Colorado, Washington, and others, rising premiums, frequent disasters, and declining property values are creating a compounding financial crisis. In several states, taxpayer-backed insurers now serve as insurers of last resort as private companies withdraw from unsustainable risk exposure.
As hurricanes, wildfires, floods, and extreme heat intensify, the economic strain on insurers and taxpayers grows. Hurricane Ian (2022) exposed the scale of potential liability. Continued bailouts and premium spikes divert resources from public services and increase fiscal instability.
In 2024, our model projected that 25% of U.S. real estate could become uninsurable within the next decade. By 2025, insurers had already canceled at least 10% of policies in the most vulnerable zip codes. As former California Insurance Commissioner David Jones stated, “We are marching toward an uninsurable future.”
Agriculture, transportation, and infrastructure insurance costs are also rising as climate risk becomes central to underwriting. Without systemic reform—including resilience investments and smarter land-use policy—the insurance spiral will continue.
- The Age of Loss and Damage
- Insurance: Costs, Availability, and Systemic Collapse
- Climate Collapse Will Break Capitalism
Climate and Public Health
Health feedback loops, violent rain, and deadly humid heat are driving an exponential rise in climate-related mortality. This interaction between disease spread, extreme heat, air quality degradation, and infrastructure stress is no longer theoretical—it is measurable.
All 50 U.S. states are experiencing deadly humid heat advisories. Wet-bulb temperatures are approaching 31°C (87.8°F)—a physiological threshold beyond which sustained human survival outdoors becomes impossible. Meanwhile, intensified rainfall events cause billions in damage annually.
Climate-driven health feedback loops are destabilizing healthcare systems and increasing insurance costs nationwide. Addressing climate change is now an economic and public health necessity.
Taxes and Productivity
Taxes are necessary to fund public goods—but taxes on productivity, such as income taxes, reduce incentives for labor, investment, and innovation. In contrast, taxes that discourage pollution or overconsumption of finite resources can align markets with long-term sustainability.
Rather than traditional carbon taxes tied to offsets and net-zero narratives, a more direct approach would tax fossil fuels at the point of extraction or sale. A phased system—50% on natural gas, 100% on oil, and 1,000% on coal—would send a clear price signal and accelerate energy transition.
Air pollution alone contributes to approximately 7 million premature deaths globally each year. Climate-driven disease burdens are straining public and private healthcare systems, raising premiums and threatening fiscal sustainability.
Trade, Nationalism, and Immigration
Protectionism and nationalist economic policy historically increase consumer costs and reduce global competitiveness. Tariffs trigger retaliation, suppress growth, and undermine cooperation needed to address global crises.
Immigration, particularly of working-age individuals, remains essential for sustaining workforce growth and supporting aging populations. As birth rates decline, economic math requires either expanded immigration or systemic fiscal reform.
Over the past five years, immigration has contributed substantially to U.S. GDP growth. Restricting it risks long-term stagnation.
AI, Immigration, and Productivity
Protectionist, nationalist, and anti-immigration economic policies are interacting with — and in some cases accelerating — the rapid deployment of artificial intelligence and automation technologies. Trillions of dollars in public and private capital are now being directed toward AI infrastructure, robotics, machine learning systems, and computational hardware. These investments are fundamentally reshaping labor markets.
Since 2025, both the supply of and the demand for human labor have undergone systemic structural change. On the supply side, immigration restrictions, demographic aging, and declining labor force participation in some sectors have constrained available workers. On the demand side, firms are increasingly substituting capital for labor, deploying AI systems capable of performing cognitive, analytical, logistical, and even creative tasks once thought uniquely human.
Paradoxically, aggregate productivity has continued to rise. Automation has reduced marginal labor costs, accelerated production cycles, optimized logistics, and expanded scalable digital services. In macroeconomic terms, output per worker has increased even as the total demand for certain categories of labor has stagnated or declined. Economic expansion, therefore, is increasingly decoupled from broad-based employment growth.
This structural shift raises critical distributional questions. When capital deepening replaces labor, the gains from productivity growth tend to accrue disproportionately to asset owners, technology firms, and high-skill workers, while mid- and low-skill labor markets face displacement pressures. Anti-immigration policies may temporarily tighten certain labor markets, but in combination with automation incentives, they also encourage firms to accelerate capital substitution strategies.
The result is not the literal “elimination” of humans, but the progressive redefinition of human economic value within production systems. Entire sectors — transportation, customer service, finance, logistics, manufacturing, and portions of professional services — are undergoing rapid task automation. The long-term trajectory suggests a restructuring of work itself, with fewer routine roles and a growing premium on adaptability, creativity, and system-level oversight.
The central economic question is no longer whether productivity will increase — it already has — but whether policy frameworks will adapt to manage labor displacement, income concentration, and social stability in an era where technological capital scales faster than human employment.
Artificial intelligence adds another layer of complexity to the climate system—not physically, but socio-economically. AI development is energy-intensive, requiring vast data centers powered by electricity that, in many regions, is still generated from fossil fuels. Training large-scale models can consume significant amounts of electricity and water for cooling, contributing to emissions and local resource strain. At the same time, AI can accelerate climate solutions by optimizing grid management, improving energy efficiency, enhancing climate modeling, and supporting precision agriculture. The net impact depends on governance, energy sourcing, hardware efficiency, and deployment priorities. In other words, AI is neither inherently climate-positive nor climate-negative; it is a force multiplier whose trajectory will amplify either decarbonization efforts or fossil-fuel dependence, depending on how intelligently—and ethically—it is integrated into the global energy system.
Systemic Risk and Accelerating Warming
Our latest climate model, incorporating nonlinear feedback loops and social-ecological dynamics, projects the possibility of temperature increases approaching 9°C (16.2°F) under cascading tipping-point scenarios.
At such levels, extreme heat, sea level rise, agricultural collapse, and mass migration would render large regions uninhabitable. Wet-bulb temperatures near 31°C already threaten human survivability in parts of the United States.
The climate system is entering a phase of compound risk and cascading instability. Disruptions in food systems, health systems, and infrastructure are interconnected and amplifying.
Immediate, radical action is essential—not only to reduce emissions but to adapt infrastructure, protect food systems, and preserve habitable zones. Delay increases economic, social, and human costs.