The question of how to pay for the Green New Deal was the focus of a day-long conference at Harvard Law School on Friday, May 24. The intensive set of presentations and discussions from experts in many disciplines drew approximately 200 people. JCAN supporters David Lowe, Judith Mabel, and David Schreiber attended, along with activist Robin Bergman. This article combines insights from these participants.
Although critics like to complain, with little understanding of economics or climate issues, that it would cost too much to fund a shift to renewables and sustainable practices, that cost is actually not a burden for economically advanced societies. Large projects, notably wars and social safety nets, have been funded before. The New Deal and the Second World War were not approached on a “pay as you go” basis, and we can fund the Green New Deal with equal poise. The real difficulty is shifting societies away from fossil fuels that underlie everything we do—manufacturing, food production, transportation, and so on—and our dependence on practices disastrous to the climate, such as the industrial farming of animals for food. Naturally, no cost for averting climate change could compare to the costs the world is already suffering from, due to storms and the loss of livelihoods.
Modern monetary theory holds that legal reasoning and legal institutions are inescapably political, rather than natural or autonomous. Laws inherently cannot be purely neutral or objective rules. A familiar Keynesian insight reassures us that the US Government, along with other governments with fiat currencies (backed by the government) and floating exchange rates, cannot “go broke.” What matters is not cash on hand but the capacity of the economy to cover the cost, that is, to minimize inflation.
“Pay as you go” assumes that the money must come from somewhere first: that it must come out of someone’s pocket, and thus that a gain in one area must imply a loss in another. In other words, it reflects the zero-sum assumption that there is a limited pie and each slice taken out reduces the amount left over. If that were the case, then what is the point of investment? We invest with the assumption that it will increase production and thereby grow the pie, repaying our initial investment.
The recent disasters associated with climate change have accompanies a growing wealth gap in our country, which must be addressed if we are to continue as a democracy. We must rethink how we source the energy required to maintain a modern, complex society while reducing that gap of wealth and power. Only the restoration of democracy and sharing of resources can mobilize the world's population to make the enormous changes we need to save civilization, and perhaps life on Earth. Climate mitigation must be inclusive, just, and restorative. Technology must serve the growing demands of populations emerging from poverty without straining the physical resources of the world still more.
The new paradigm of Modern Monetary Theory (MMT) canreorient the economy to fair and sustainable activity: instead of the GDP, measure the economy by a Genuine Progress Indicator (GPI). This is similar to the UNDP's Human Development Index (HDI). An example of the weakness of the GDP is that it looks better when people spend money to pay for illnesses caused by pollution.
The importance of engaging the labor movement in the GND was emphasized at the symposium by Sara Nelson, president of the Association of Flight Attendants. She also pointed out how climate change disrupts flying by creating more turbulence and storms. Labor’s enormous power has not been wielded enough over the past half-century, but when workers come to life politically, they make an impact. For instance, although Nelson did not take credit for this, she took the lead in ending the government shutdown of unprecedented length in 2018-2019. Nelson called publicly for a general strike on January 20. On January 24, the LaGuardia air traffic controllers held a sick-out, and within a couple of hours the instigator of the shutdown called it off.
Nelson turned the seminar toward discussion of the power that a resurgent union movement could add to realizing the social and economic justice goals of the GND. This would require overcoming the objections of the more tradition unions that currently dominate the AFL-CIO. (She did not mention explicitly which unions, but they include many construction unions, and the United Mine Workers and International Brotherhood of Electrical Workers that are heavily employed in fossil fuel industries and utilities).
Hence the Job Guarantee Framework in the Green New Deal:
- · Engage people where they are psychologically, intellectually, and spiritually
- · Guarantee jobs for all unemployed, combining on-the-job paid training (which is less expensive than formal academic education) with a living wage, and providing a safety net for those who can’t find new jobs
- · Build a broad support network
- · Fund centrally but implement locally
Although any expenditure is justified to avoid the existential threat of crop failures, ocean inundations, and storm activity caused by climate change, the job and health guarantees aren't even expensive in absolute terms. For instance, to employ all the 23 million workers who were unemployed in the U.S. at the height of the 2008 fiscal collapse, we would have had to pay about 600 billion dollars, which would have been less than 4 percent of GDP.
In contrast, carbon pricing is too slow. We no longer have time for the market to react to prices.
We have known for a long time that the technical means to move to a sustainable society were available. Although many people assumed that financial barriers stood in the way, “Paying for the Green New Deal” showed that finance is not the issue. What stands in the way is a combination of complex factors that include political manipulation, ignorance, and feelings among the disenfranchised population that they cannot call for change. But the cost of inaction will be extinction.