Alexandria Ocasio-Cortez's Baffling Idiotic "Green New Deal," and why it will harm efforts to combat Global Warming
So, after much teasing, the Progressive wunderkind Alexandria Ocasio-Cortez has released a draft proposal of her much hyped "Green New Deal" legislation. Immediately, the right wing has seized upon this, cherry picking specific passages, like providing welfare to those who are "unwilling to work," and docking her for getting basic facts wrong. One part, for example, suggests that during WW2, we invested between 40-50% of our GDP in our economy. Forgetting of course that 1) our GDP is our economy, and instead that she means that Federal Net Outlays, and 2) government expenditure peaked at 40% for two years, and 3) that this was an exceedingly exceptional spending program that was unsustainable in the long run. The document, particularly the FAQ that was released to NPR from AOC's office, is riddled with basic errors and bad math. Comically, it also refers to "cow farts" as being a major producer of Greenhouse gases. Agricultural byproducts account for, at most, 13% of all global methane emissions, which are themselves a fraction of total carbon emissions. However, aside from nitpicks, few--if any people--are concerned with actually assessing the core facts and broad strokes of her policies.
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So, I will begin to do so.
First Criticism: Much of the Green New Deal has nothing to do with the Environment
Most new Green Deal Proposals have about 2/3s of their proposals being things OTHER than actual environmental activism. Most include heavy regulation or outright nationalization of the Financial Sector, broad critiques of international trade, austerity, modern economic theory, and advocate in favor of leaner military budgets, and a guaranteed minimum income. The Green Party US (which surprisingly is not nearly as retarded), advocated paying for this by slashing 50% off of the US Military budget. Considering that it would free up $500 billion in additional income off of the $1 Trillion of the annual defense budget, this is at least workable.We will begin work immediately on Green New Deal bills to put the nuts and bolts on the plan described in this resolution (important to say so someone else can’t claim this mantle).
This is a massive transformation of our society with clear goals and a timeline.
The Green New Deal resolution a 10-year plan to mobilize every aspect of American society at a scale not seen since World War 2 to achieve net-zero greenhouse gas emissions and create economic prosperity for all.
It will:
Move America to 100% clean and renewable energy
Create millions of family supporting-wage, union jobs
Ensure a just transition for all communities and workers to ensure economic security for people and communities that have historically relied on fossil fuel industries
Ensure justice and equity for frontline communities by prioritizing investment, training, climate and community resiliency, economic and environmental benefits in these communities. Build on FDR’s second bill of rights by guaranteeing:
A job with a family-sustaining wage, family and medical leave, vacations, and retirement security
High-quality education, including higher education and trade schools
Clean air and water and access to nature
Healthy food
High-quality health care
Safe, affordable, adequate housing
Economic environment free of monopolies
Economic security for all who are unable or unwilling to work
I made a similar post in the Political Academy critiquing most Green New Deals. Overwhelmingly they seem to have an entirely inaccurate view of the actual New Deal (which was largely ineffective at eliminating unemployment, as the US still had 14.2% unemployment in 1940), conflate it with massive Keynesian spending during WW2, and then tack on a number of largely irrelevant political and economic objectives that is more just Progressive/Leftist wishful thinking rather than actually having anything to do with the environment.
Second Criticism: It relies on Junk Economics that is widely discredited
At face-value, I don't have many complaints against her aims. However, her actual policies on how to achieve these are completely bonkers, and the GND relies upon a heterodox school of Economics known as Modern Monetary Theory. Essentially, MMT is Neo-Chartalism, and is predicated on the assumption that since a nation-state owns its own currency, it can counteract fiscal crises with debts denominated in its own currency. In short, it can inflate away its debt. Since it can do that, therefore deficits do not matter, and they can simply use monetary policy as a substitute for fiscal policy. This, however, requires the government to own and coordinate all means of monetary production, which would include nationalizing the Central Bank (in this case the Fed), as well as all depository institutions (literally every major bank/credit union, and many insurance companies), implement a full 100% reserve system, and then just pump money into the system.
This has been tried numerous times to ill-effect. In moderate forms, this is the culprit between the inflation wars that plague many Latin American countries, from Chile, to Argentina, and Bolivia. It has also been used in Zimbabwe (hence why Zimbabwe's currency is literally worthless). Most recently, it was the core of Maduro's policies in Venezuela. In effect, its effective at giving the government the ability to spend money by inflating away debts, but it also inflates away everyone's incomes and savings.
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Her exact FAQ cites this:
There's so much wrong with this. The Federal Government's policies in 2008 are complicated since they deal with completely different sectors of the banking system. For starters, the Federal Government nationalized at a loss the two GSEs at the heart of the Crisis: Fannie Mae and Freddie Mac. To this day, they are still under conservatorship of the US Government and have cost Taxpayers a whopping $150 billion. Secondly, the extensions of loans made the government a net profit under TARP. To bolster the weak economy, the US engaged in tax cuts (fiscal spending) to specific industries, and Low Interest rate policies. The effects were mixed, and led to the slowest post-recession recover of any economic recession since the Great Depression. Explanations are mixed, but most center upon the high indebtedness of US Consumers, as well as the historically high excess reserves (private bank's money parked at the Federal Reserve in excess of required reserves). This peaked at $2.4 trillion in 2014, or about 22% of broad money supply (M3).How will you pay for it?
The same way we paid for the New Deal, the 2008 bank bailout and extended quantitative easing programs. The same way we paid for World War II and all our current wars. The Federal Reserve can extend credit to power these projects and investments and new public banks can be created to extend credit. There is also space for the government to take an equity stake in projects to get a return on investment. At the end of the day, this is an investment in our economy that should grow our wealth as a nation, so the question isn’t how will we pay for it, but what will we do with our new shared prosperity
Anyways, if anything, due to the historically low Velocity of Money (approximately 1.46 currently, down from 2.1 during the 1990s to 2000s, and from 1.76 from 1950-1989), there is too much money in the system. Hence, as the economy picks up, velocity is expected to pick up, and this will force excess reserves back into the economy, and will create inflationary pressure and force the Federal Reserve to raise interest rates sharply to counter act this. This will effectively pop the asset bubble (namely stocks and bonds, but also real estate) that have emerged since 2008.
Having said that, it means that this is precisely the worst time to start flooding the economy with trillions upon trillions of new dollars.
Third Criticism: It literally rules out nearly every effective policy suggested over the last 30 years
Almost universally, nearly every credible environmental activist or economist, from Al Gore, to Paul Romer (2018 Nobel Prize in Economics Recipient), to Lester Brown, and NASA Climatologist James Hansen have all argued strongly in favor of a carbon tax.
Additionally, support comes broadly from libertarians, such as Milton Friedman, conservatives like Greg Mankiw, senior fellows at AEI, former Trump Secretary of State and Exxon Mobile CEO Rex Tillerson, and former Federal Reserve Chairpersons such as Paul Volcker, Ben Bernanke, and Janet Yellen.
It is estimated that a $100 per carbon ton to $250 per carbon ton tax would reduce emissions broadly across every industry by potentially up to 60%, and would raise over $2.1 trillion over the next ten years. By comparison, even the most optimistic estimates of AOC's proposed Income tax would raise $700 billion (less than a third), while most estimates fall much shorter, such as one twelfth of the same requirement.
Secondly, they rule out explicitly cap and trade, which is the backbone of nearly every existing climate policy.The Green New Deal is a massive investment in the production of renewable energyindustries and infrastructure. We cannot simply tax gas and expect workers to figureout another way to get to work unless we’ve first created a better, more affordable option. So we’re not ruling a carbon tax out, but a carbon tax would be a tiny part ofa Green New Deal in the face of the gigantic expansion of our productive economy and would have to be preceded by first creating the solutions necessary so that workers and working class communities are not affected. While a carbon tax may bea part of the Green New Deal, it misses the point and would be off the table unless we create the clean, affordable options first.
Thirdly, it rules out nuclear power. To date, the only country to successfully reach its climate goals is France, which gets over 70% of its energy from Nuclear Power. (Note: Australia is about to reach this by 2020, next year, due to its heavy reliance on Hydropower and its investment in Battery Technology). By comparison, the United States receives 20% of its energy needs from Nuclear, and about 17% from renewables--half of which is Hydroelectric. By contrast, over 30% is from Coal and an additional 30% is from Natural Gas. These utilities make up over 70% of our carbon emissions, with transportation accounting for less than 20%. Merely eliminating coal fire plants would allow us to meet our Kyoto and Paris Climate Goals. So the notion that nuclear power is off the table is absolutely absurd.The Green New Deal is about creating the renewable energy economy through a massive investment in our society and economy. Cap and trade assumes the existing market will solve this problem for us, and that’s simply not true. While cap and trade may be a tiny part of the larger Green New Deal plan to mobilize our economy, any cap and trade legislation will pale in comparison to the size of the mobilization and must recognize that existing legislation can incentivize companies to create toxic hotspots in frontline communities, so anything here must ensure thatfrontline communities are prioritized.
Fourthly, our Plan B, which is to reduce the existing carbon in the atmosphere, through Carbon Capture, Utilization, and Storage, is also ruled out.
We believe the right way to capture carbon is to plant trees and restore our natural ecosystems. CCUS technology to date has not proven effective.
Fourth Criticism: The plan calls for replacing ALL air travel with high speed rail
I'm not sure if she's aware of the California High Speed Rail boondoggle, which was supposed to be built by 2015 for $30 billion, but instead won't begin construction until 2020, and will cost nearly $100 billion. Also, its insane to think that this will replace air travel. The sheer volume of freight and passengers that moves by air will be staggering, and traveling cross country--even by high speed rail--is insane. It makes Elon Musk's plan of financing the hyperloop by selling novelty flamethrowers on Ebay look like a good idea.Totally overhaul transportation by massively expanding electric vehicle manufacturing, build charging stations everywhere, build out high-speed rail at a scale where air travel stops becoming necessary, create affordable public transit available to all, with goal to replace every combustion-engine vehicle
In reality, the total price tag of this should be the complete replacement of our utility infrastructure (which is already obsolete), and would cost between $3-$4 trillion. A carbon tax alone would pay for 50-66% of the entire budget through direct government expenditures. Additionally, the real advantage of the carbon tax (internalizing the externalities) will cause a ripple effect through the entire economy and force consumers to become aware of the costs of carbon and subsitute away from carbon-intensive goods automatically. However, to avoid a Gilets Jaunes movement in France, this would come with the requirement that additional regressive taxes (such as Sales Taxes or Payroll Taxes) be swapped or reversed. This is exactly Al Gore's original plan from 1992.
Since most coal plants are unproductive, while new renewables are about half the cost of coal, this should be a relatively easy shift. Combined with modern nuclear reactors, a carbon neutral goal is certainly achievable by 2030. Additionally, with Tesla's Model 3 ratcheting up production to about 120,000 new automobiles per month, its estimated that they alone will be able to crank out about 20 million cars by 2030. This also doesn't even calculate the impact of the Big Three Automobile manufacturers to jump in and replace all cars with electric (which is certainly feasible), nor the impact of existing private sector attempts to create electric semi-trucks (which are the worst culprits for pollution).
However, the notion that we need to nationalize key industries to build decentralized(?!) networks of solar panels is also just nonsensical. This challenge is far cheaper, far more realistic than the climate skeptics imply, but the policies needed will be far different from AOC's boondoggle of a plan.
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Originally Posted by Himster
