The recently announced Green New Deal (GND), fronted most publicly by Alexandria Ocasio-Cortez (the new congresswoman from New York), is receiving a lot of attention in the media. As The Economist puts it in the article in the first url below, the proposal is both popular and controversial, having "been met with surprising enthusiasm in Washington." In more substantive (i.e., non-political) circles, however, the GND has been received less enthusiastically. The theme that seems to unite the skeptical commentaries I have read is the accusation that the proponents of the GND misunderstand the fundamental nature of the problem and, as such, have responded with an ineffective solution. In short, if the goal is to tackle climate change, then the GND is unlikely to be successful. Rather than seeing climate change as a "straightforward … market failure" that can be fixed through pricing (i.e., including the externalized costs of carbon into the price we pay to consume it), the GND instead sees climate change as a social problem that must be fixed through government intervention. Given the nature of the proposed intervention (in particular, the scale), skeptics expect numerous unintended consequences:
"… the Green New Deal largely dispenses with analysis of the costs and benefits of climate policy. It would create large opportunities for rent-seeking and protectionism, with no guarantee that the promised climate benefits will follow. It might chuck growth-throttling tax rises and dangerously high deficits into the bargain as well."
You can read about the GND here. Suffice it to say, it proposes a substantial increase in government involvement in the economy, at the expense of market forces. David Brooks tackles the topic in the article in the second url below, highlighting the massive reorganization of government responsibility:
"[The GND] would definitely represent the greatest centralization of power in the hands of the Washington elite in our history. … Under the Green New Deal, the government would provide a job to any person who wanted one. The government would oversee the renovation of every building in America. The government would put sector after sector under partial or complete federal control: the energy sector, the transportation system, the farm economy, capital markets, the health care system."
Unfortunately, as he notes, the proposal is both lacking in detail ("Exactly which agency would inspect and oversee the renovation of every building in America? Exactly which agency would hire every worker?") and is highly implausible. After all, "This is from people who couldn't even organize the successful release of their own background document":
"The authors of this fantasy are right that we need to do something about global warming and inequality. But simple attempts to realign incentives, like the carbon tax, would be more effective and more realistic than government efforts to reorganize vast industries."
Ultimately, Brooks concludes that the consequence of greatly expanding the role of government in society is that it just replaces one elite (capitalists) with another elite (politicians). And it is not clear that a political elite would generate better outcomes than a capitalist elite:
"But the underlying faith of the Green New Deal is a faith in the guiding wisdom of the political elite. The authors of the Green New Deal assume that technocratic planners can master the movements of 328 million Americans. … They assume that congressional leaders have the ability to direct what in effect would be gigantic energy firms and gigantic investment houses without giving sweetheart deals to vested interests, without getting corrupted by this newfound power, without letting the whole thing get swallowed up by incompetence. (This is a Congress that can't pass a budget.)"
Unfortunately, if we are looking for the efficient (and, for that matter, fair and ethical) allocation of resources, the empirics side with the market. Recent corruptions have produced the distorted outcomes that many are justifiably angry about. But, the solution is to eradicate the corruptions; not to get rid of the whole system and replace it with something that has been proven to be less effective. Any proposed solutions have to grapple with this complexity, rather than resort to unrealistic ideals. This brings me to the article in the third url below, which reviews a recently published book on climate change and brings a little more realism to the debate. In short, it relates how complicated it is for a society to shift from one dominant energy source to another:
"Some years ago, while studying how societies transitioned from one energy source to another over the past 200 years, the Italian physicist Cesare Marchetti and his colleagues discovered a hard truth: It takes almost a century for a new source of primary energy — coal, petroleum, natural gas, nuclear power — to command half the world market. Just to grow to 10 percent from 1 percent takes almost 50 years."
Rather than technology, the main barrier to progress is usually related logistics and infrastructure:
"You would expect suppliers to switch quickly to a better (more abundant, cheaper, cleaner) source. But infrastructure has to catch up: In America, natural gas needed long-distance pipelines to go national; electric cars need still-scarce charging stations. People have to adapt: Elizabethan preachers condemned coal as literally the Devil's excrement; some Victorian homeowners comfortable with gaslight thought Edison's light bulbs too bright. Competition from heavily invested older sources has to be overcome, as with fossil fuels today. These and other changes take time."
As the article continues, we do not have that much time to switch to a non-carbon-based energy. While the GND is important in terms of raising awareness, therefore, it does little to demonstrate an appreciation of the scale of the problem we face. It also fails to grapple with the realities of any necessary changes, such as which energy sources can possibly provide the supply we need in the available time-frame. To the authors of the book being reviewed, there is only one answer (logically and technically)—one that many environmentalists will find unacceptable:
"… worldwide energy consumption 30 years from now is projected to be about 50 percent higher than it is today. If that number sounds exaggerated, think of four billion Asians installing air-conditioning. For [the authors], the only possible solution to this double dilemma is a rapid, worldwide expansion of nuclear power. No other source or collection of sources of energy, they argue, is positioned to meet these challenges in time."
I am not sure how that would be possible (since nuclear power stations take time to build, largely because they are subject to political oversight) but, from everything I have read, there is no escaping the fact that nuclear has to be a big part of the solution. However, you won't find this sort of nuance in the GND.
Take care
David
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Brave new deal
Brave new deal
February 9, 2019
The Economist
How the Left Embraced Elitism
By David Brooks
February 12, 2019
The New York Times
Nuclear Option
By Richard Rhodes
February 10, 2019
The New York Times Book Review
