A Green New Deal Isn’t Ready for Prime Time

(Bloomberg Opinion) -- A lot of people are getting excited about a Green New Deal. Incoming freshman Congresswoman Alexandria Ocasio-Cortez has been building support for her idea of a plan to tackle the monumental challenge of climate change while also bettering the economic situation of poor Americans.

Such a plan is long overdue. Stopping climate change before the effects get truly severe is going to be a huge undertaking — the equivalent of a global mobilization for war. And because plenty of low-income Americans are available to furnish the necessary labor for this mobilization, compensating them fairly would give their economic situation a much-needed boost.

Rather than a laundry list of concrete policy items, Ocasio-Cortez’s proposal is to establish a committee to decide what a Green New Deal should include. That’s not a bad thing. The original New Deal wasn’t carefully planned and implemented — it evolved as it went along, with plenty of missteps along the way. And as many have pointed out, there’s a recent, successful precedent — House Speaker Nancy Pelosi’s 2007 committee on energy independence and global warming, which led to a number of energy-related pieces of legislation.

But because a Green New Deal isn’t set in stone yet, it’s useful to think about what ought to be included and what ought to be left out. There are two main dangers — first, that the plan might suffer from a lack of direction, and second, that it might choose policies that don’t effectively address the challenges at hand. Indeed, the plan as sketched out so far mentions a number of wildly ambitious and expensive ideas and goals that don’t dovetail very well with the objective of halting climate change.

Ocasio-Cortez’s proposal declares that the mobilization to fight climate change is “a historic opportunity to virtually eliminate poverty in the United States.” It stipulates that the plan will “mitigate deeply entrenched racial, regional and gender-based inequalities in income and wealth” and “include additional measures such as basic income programs, universal health care programs.”

Eliminating poverty, mitigating economic disparities and creating ambitious new social safety net programs are all worthy aspirations. But they go far beyond the goal of stopping climate change. Yes, paying poor and working-class Americans to build green infrastructure, retrofit old buildings and create a new national smart grid will advance both goals at once. But money spent on universal basic income — which some estimates predict will cost several trillion dollars a year — would not fight climate change. The same is true of universal health care.

That doesn’t mean universal health care or universal basic income are bad programs. But they mean that a Green New Deal will be asking rich and upper-middle-class Americans to simultaneously pay for two enormous changes in the U.S. economic system, rather than one. Ultimately, that might mean that neither one ends up getting funded.

A bigger worry is that a Green New Deal might not take a very effective approach toward fighting climate change. The U.S. now contributes only about 15 percent of global carbon emissions:

A Green New Deal Isn’t Ready for Prime Time

During the coming decades, the U.S.’s share will be even smaller, since other countries’ emissions — especially China’s — are growing at a much faster rate. In other words, even if a Green New Deal pushed U.S. emissions to zero, it would cut total future global carbon emissions by only a few percentage points — not nearly enough to prevent climate change from reaching severe levels.

Proponents of reducing carbon output argue that if the U.S. slashes its emissions, other countries will follow because of American moral leadership. A more likely scenario, however, is that U.S. refusal to consume oil and other fossil fuels will reduce their price on world markets, allowing China to burn much of what the U.S. did not. Ultimately, most of the carbon will still get into the atmosphere.

Thus, the most important thing the U.S. can do to fight climate change is to advance the state of green energy technologies — batteries, other energy-storage technologies, smart grids and carbon removal. Cheaper green energy will make China and other countries much more likely to want to join a global effort to battle climate change, rather than free-riding on U.S. efforts.

The climate-related parts of a Green New Deal, as laid out by Ocasio-Cortez, will probably further that goal. Spending more money on creating a smart grid will advance the state of the technology. So will subsidies and increased research spending on green energy.

But the economic justice portions of a Green New Deal won't advance this goal — in fact, they might work against it. If the high taxes needed to pay for universal basic income and other purely redistributive programs end up discouraging business investment, or if shifting large numbers of people to government jobs reduces productivity, that could curb investment in the new technologies that the climate needs most. And it could reduce demand for things like electric cars, which would work against the goal of pushing that technology forward.

Thus, the bundling of climate action with economic justice might end up as a liability for a Green New Deal. Though both are worthy goals, there are definitely some trade-offs between the two. The best solution is to separate out purely redistributionist ideas like basic income, health care, and job guarantees from the rest of the plan, and advance those ideas separately. A Green New Deal should focus exclusively on cleaning up the environment, and on paying low-income Americans to do that work.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Noah Smith is a Bloomberg Opinion columnist. He was an assistant professor of finance at Stony Brook University, and he blogs at Noahpinion.

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