Of Course We Can Pay for a Green New Deal, but We Can’t Escape Hard Choices

Yves here. This post on the Green New Deal highlights an issue that hasn’t come close to getting the attention it warrants: the operational and organizational demands. However, it’s odd that the author does not consider revenue sharing, a program launched by that great American socialist Richard Nixon. Nixon believed that the federal government was better at collecting taxes, but states and local governments could often spend money better, by virtue of being closer to needs in their communities and often having smaller and therefore less costly bureaucracies.

By Rob Macquarie, an economist working on the financial system and its links to sustainability, democracy and inequality. He tweets @RJMacquarie. Originally published at openDemocracy

Thanks to the formidable advocacy of Alexandria Ocasio-Cortez, the idea of a Green New Deal has attracted widespread attention on both sides of the Atlantic. Billed as a “new national, social, industrial, and economic mobilization on a scale not seen since World War II”, it is perhaps unsurprising that critics have focused on the price tag.

In response, many Green New Deal proponents cite the ideas of Modern Monetary Theory (‘MMT’). Although MMT has been quietly growing in prominence for many years, the school of thought’s association with the Green New Deal has propelled it into the limelight.

MMT holds that ‘money is a creature of the state’, and that a sovereign government with its own currency and central bank faces no financial constraints on spending. Other limits do exist – most notably inflation, but also political and administrative constraints – but money itself is no object.

MMT scholars contend that the Green New Deal is a perfect opportunity to mobilise underused resources through deficit spending, simultaneously transforming the economy and improving living standards. They pour scorn on those who argue that ‘we can’t afford’ a green transition. As Robert Hockett, a professor at Cornell University, has argued: “where were the ‘pay-fors’ for Bush’s $5 trillion wars and tax cuts, or for last year’s $2 trillion tax giveaway to billionaires?”

MMT also recognises the links between climate change and inequality, and suggests that a smarter approach to public spending can combat both. In particular, a ‘job guarantee’, whereby the public sector will employ anyone willing and able to work at a fixed wage, alleviating unemployment and insecure work, is associated with several prominent MMT thinkers.

In Britain, the Labour Party is developing its own plan for a green transition. Rebecca Long-Bailey, the Shadow Minister for Business, Energy, and Industrial Strategy, recently announcedan “unprecedented call for evidence” on how a surge in green investment could help local communities and economies. In recent months Labour has come under increasing pressure to embrace MMT thinking.

But while MMT offers an empowering narrative, its insights must be accompanied by some pragmatism. A successful green transition will require much more than increased government spending, and there is no escaping hard choices.

Towards a new political economy

In order to succeed, any Green New Deal must be rooted in good governance. But there is currently a gap, in political economy terms, between the idea that the state can centrally fund the green transition, and an emerging consensus that viable, sustainable societies of the future will be characterised by a broad distribution of power and resources. The task of commandeering the fiscal power of the nation-state while also responding to local needs gives rise to a number of practical challenges.

One of these relates to taxation. From an MMT perspective, tax ‘destroys’ money by taking it out of the economy. Changes to taxation levels are thus the preferred policy lever with which to manage demand and control inflation. However, taxation also serves many other purposes, which it would be naïve to think will always align neatly with controlling inflation. Richard Murphy, a member of the original British Green New Deal Group and one of the main UK-based proponents of MMT, describes several functions for tax, including penalising ‘bads’, redistributing income and wealth, and improving democratic representation.

In practice, policymakers may find it difficult to harmonise these different functions of taxation while also funding a just and sustainable transition. For example, a high and consistent carbon price will likely be needed to disincentivize polluting activity, even while the state undertakes a vast public works programme to build alternative energy systems. Taxation of dirty vehicles will be required to incentivise people to switch to electric. Consumption taxes will need to be carefully calibrated to reduce our over-use of resources without popping the consumer credit bubble our economy currently relies on.

Careful institutional design will be required to ensure that these trade-offs are managed, while inflation is controlled. This is just as important as MMT’s central observation that the state can always pay its debts, but thinking around these institutional questions is far less developed.

Secondly, there is the issue of how MMT might work with theories of democracy and ownership, an area of particular interest to the Labour leadership. Several different concepts of the role of the state have been discussed in the context of the sustainable transition. Writing in the New Statesman, the journalist Paul Mason has argued that “for a post-capitalist economy to take off, it has to work as spontaneously as the market does.” This requires the state to be an “enabler and rule-setter for a diverse ecosystem”. But for the transition itself – especially if driven by MMT-style fiscal policy – the state will need to take on a more commanding role, which Mason forebodingly terms ‘capitalist Stalinism’. These are radically different modes of governance, and striking a balance or transitioning between them will pose major challenges for our democratic system. Those advocating an activist role for central government must be candid about its limitations, and could seek lessons from distributed energy and participatory budgeting.

Thirdly, a Green New Deal is often presented as an exercise in coalition building, with the state sitting at the centre. The Ocasio-Cortez resolution calls for “transparent and inclusive consultation, collaboration, and partnership with frontline and vulnerable communities, labor unions, worker cooperatives, civil society groups, academia, and businesses.” Careful thought must be given as to how these seemingly diverse priorities and interests can be balanced. Building a coalition involves compromises, and the experience of other European countries is instructive. In France the gilets jaunes, are a recent exampleof what can happen when climate policy is badly designed, having first mobilised in order to protest new fuel duties. It is at least conceivable that a similar backlash could make it politically difficult for a government trying to implement a Green New Deal to raise taxes to control inflation.

Germany has had greater success with its renewable policies, for instance by allowing households to profit by selling excess energy back to the grid. Nevertheless, it has unfortunately struggled to uproot the last vestiges of coal power from its energy network. Today German coal jobs are relatively few, but their existence is inconsistent with achieving Paris-consistent decarbonisation. Crucially, however, they are well unionised – a fact that highlights how the interests of trade unions and the sustainable transition are not perfectly aligned.

It also remains unclear how exactly a federal job guarantee can be reconciled with empowering local communities. If central government guarantees a job for a newly unemployed coal plant worker, might that worker be forced to move to a region or locality where there is spare capacity in, say, retrofitting other people’s homes? Does the final say over how real resources are allocated (as opposed to financial resources) rest with Washington (or Whitehall), with local authorities, or with worker-owned local businesses? And how might the scheme as a whole respond to a reduced working week?

Finally, the rediscovery of the state’s spending power does not mean green campaigners can forget about private investment. Hyman Minsky, whom many MMT scholars cite as a key influence, went to great lengths to emphasise the importance of private finance. Writers like Robert Hockett uphold that legacy today, but this is often lost in tit for tat debates about public debt. Although many activists highlight the role that private finance plays in carbon capitalism, often the contribution it must make to turbo-charging a green transition is overlooked.

Globally, the task of greening private finance lies with the Taskforce for Climate-Related Financial Disclosures. Central banks and financial regulators are currently mulling proposalsto ask firms to release information about the risks they face from climate change. More and better information should help markets allocate investment more efficiently. A Green New Deal platform would be more credible, and more likely to succeed, with a plan to map and leverage the power of private investment flows. In the UK, the Labour Party could state its intention to make disclosure of climate-related risk mandatory for all reasonably sized firms at a particular date in the near future.

However, central banks are rightly cautious over the financial risks posed by both sides of the climate investment dilemma. While carbon-intensive ‘stranded assets’ could result in large financial and economic shocks, rapidly increasing green investment produces risk in the form of unproven technologies and business models. An MMT-inspired plan to bring the Federal Reserve or Bank of England under direct government control will merely shift responsibility for this delicate balancing act.

Overall, current plans for a Green New Deal leave many questions unanswered, even when we acknowledge that financing is no barrier. Critics are queuing up to dismiss the Deal as a ‘utopian’ idea that doesn’t address real world trade-offs.

It’s up to us to prove them wrong.

Print Friendly, PDF & Email


  1. Alex V

    The phrase “hard choices” has become a red flag for me. It’s too often used to complicate easy choices for the furtherance of evil.

    The Lawfare blog has it in their tag line. They’re big fans of droning the hell out of people, but obfuscate that fact by handwringing over legal minutiae.

    This piece doesn’t even mention how much we need to cut emissions… How can economic discussions follow without that basic starting point.

    I don’t doubt the sincerity of the author in wanting to counter climate change, but he’s not just conceding the field in this game, he’s letting the other team decide the sport.

    1. Yves Smith Post author

      The choices here are not easy, which is one of the things about all the cheery Green New Deal talk that makes me leery. People are facing a lower standard of living going forward, period. The only question is whether to control and limit the amount of decline or try to pretend things won’t be so bad and assure catastrophic outcomes.

      1. GM

        People are facing a lower standard of living going forward, period

        Standards of living are the wrong thing to be thinking about though.

        At stake are the following:

        1. Survival of advanced technological civilization on this planet. As things currently stand, it will disappear with near 100% certainty not too long into the future (once this civilization has collapsed, there will be no recovery ever because the concentrated resources we used to build ours will have been dissipated, and it took the planet hundreds of millions and in some cases even billions of years for geological processes to concentrate them in the first place).

        2. Survival of the human species. This is unlikely on the scale of centuries to millennia, but without advanced civilization it kind of becomes inevitable on a longer time scale.

        3. Survival of life on the planet. This is not the Pre-Cambrian, and it’s not even the Permian, it’s the Holocene. The Sun has grown brighter and keeps getting brighter (which is why, even though we are in an ice age now, we are not completely frozen over even at 200ppm CO2, while we would have been in a Snowball Earth state deep in the geological past at that level of CO2 and back then CO2 was much higher). Nobody knows for sure what the threshold for runaway greenhouse effect is but some models suggest that it is as low as 1500ppm. Given how quickly we got to 400ppm from 280ppm and how emissions are exponentially rising and rising, 1500ppm is actually not that far off as it might seem, and we would get there surprisingly quickly if it wasn’t for the fact that Peak Oil will probably cause a collapse of it all well before that. Probably. But there is a small possibility we do not collapse fast enough and vast amounts of coal end up being burned over the coming couple centuries.

        In that context to talk about “standards of living” is just absurd.

        1. Susan the Other

          The standard of living question is exactly what we should be thinking about. But to clearly understand what that standard should be going forward is essential. I’ve been thinking just what you are thinking. I surfed around last week and found a lecture by Dan Britt (physicist and climatologist) from 2012. Bottom line according to him is that we have 2 choices: we can maintain a sufficient amount of CO2 warming the planet and put up with some ocean rise, or we can pull the emergency brake, stop using carbon-based energy and tip ourselves into a new and devastating glaciation. So I would certainly agree with everything this complex post has said and then some. We have hard choices to make and we need to be very careful we don’t make the wrong choices for all the right reasons. The most important thing to do is conserve energy, use it gradually, allowing the forces of warming and cooling to balance. We will have to live with sea level rise and more rain and snow. So I don’t see that “stranded assets” are a problem, except insofar as the conservation of these resources makes life too miserable for us – and that is where one very hard choice is: How should we determine what the new standard of living should be? This post was so complex with all of our choices put into one summary, I hate to make it more complex – but we all have to get real. Conservation is not “Stalinism” – it’s survival at this point. So we should use more appropriate terms, as you imply. Richard Murphy (linked in the post) is very good on all of this.

          1. Cal2


            Standards of living affect votes. Dead people don’t vote.
            Each succeeding generation has no idea what they are missing because they did not grow up with it.

            When I tell teenagers that the University of California system was once a guaranteed entry for students graduating with a B+ average and that it was essentially free, they are astounded.

            Clambakes on California beaches with Abalone being a trash fish it was so abundant, or lobster, poor people’s food on the east coast, are symbolic of this.

            Older people have a duty to constantly remind younger people of what they are missing and the importance of saving what’s left.

            1. Susan the other`

              Yes, I agree with you. We need a big democracy to make the best decisions. And those decisions will create stability. I can’t imagine anything else. And the voters need good information. They need to understand the word “fiscal” because to ignore it is asking for trouble now. They need to ask Why and Why Not? And they need to understand how MMT is solving some of our worst problems.

              1. GM

                Again, “fiscal” considerations are entirely the wrong direction to go here.

                Votes need to be scientifically literate, and to understand the long-term context in which their personal tiny insignificant existence is situated.

                That means that it is much more important for “voters” to understand what happened during the second half of the Paleozoic, or during the Siderian and the Rhyacian than to have a firm “understanding” the pseudoscience that is modern economics (understanding of it is useful, so that they know it is is pseudoscience, but believing in it is an unmitigated disaster).

            2. The Rev Kev

              Hey Cal2 – would it surprise you to know that Californians kids were uniformly fit through a school program that they once had in place? Kenneth H. Cooper (of Aerobics fame) said that back in the 60s that recruits from California were considered fit, sight unseen. But then California dropped that program and they quickly became indistinguishable from recruits from all the other States.

          2. A W

            The Atlantic Gulf Stream sends water to the North Atlantic where it releases heat to the atmosphere and warms Western Europe, It is already exhibiting a slow down due to increased co2. The slowdown of the Gulf Stream was the cause of the Little Ice Age.

      2. Alex V

        I guess a lot of this is a semantic debate as well. To me it’s an easy choice to do something about changing living standards. The powers that be still have control over the narrative because we are still debating a “hard” choice whether to do something or not, and they still control the question by threatening a worse quality of life through a consumerist lens.

        1. Anarcissie

          I think consideration of the hard choices is politically necessary. Not long ago I gave the example here of Trump’s complaint that the Green New Deal will make you ‘give up your pickup truck’, or something like that. Since the good ol’ boy does not want to give up his pickup truck, and cannot afford a spiffy new electric pickup truck anyway, he’s going to fight you at the polls and elsewhere, and this is still nominally a democracy, as witness our present head-good-ol’-boy-in-charge. How he will do that is his hard choice. Your hard choices will be how to construct and impose that ‘capitalist Stalinism’ (a redundancy) without winding up with, well, permanent capitalist Stalinism and the ensuing degeneration, which we have observed in another country not all that different from our own in the not-so-distant past.

          1. anon y'mouse

            the good ol’ boy lives in a place where he can’t give up his pickup truck.

            not only would he not be able to get to work, thus earn the truck-and-self operating costs of living, but he would not be able to get chores done around the homestead.

            what you are saying is that the good ol’boy needs to give up his job, his homestead, and then….? replace these with what?

            1. notabanker

              I have relatives in Texas and I’ve spent weeks at a time with them. I’ve thought about the effects of a simple thing like a big tax on diesel fuel.

              Picture the GJ, wearing camo, in modded up assault vehicles they have built themselves, with heavy caliber guns mounted, high tech radio communications. Every man armed with military assault rifles and 9mm sidearms. There’s no good outcome here.

      3. Lee

        What do we mean when we talk about reduced “standards of living”. Less food, shelter, and medical care, or fewer toys? Surely we can prioritize so as not to inflict material misery and life-shortening privation upon the citizenry.

        This also caught my eye:

        Taxation of dirty vehicles will be required to incentivise people to switch to electric. Consumption taxes will need to be carefully calibrated to reduce our over-use of resources without popping the consumer credit bubble our economy currently relies on.

        A lot of poor people drive older “dirty vehicles” but lack the financial resources to replace them. i’m not poor, but replacing my 20 year old jalopy would blow a big hole in my retiree budget. And, although not French, I do own a yellow vest.

          1. polecat

            The rest will be hurling rocks and such at those ‘Teslas’ or whatever else is within the elite perview, because the hypocrisy will out there for all the lessers to see.
            Just spitballing here :
            We need to get away from personal transportation for the most part, and develop, and soon, public transit … biggest band for the benjamins as it were .. forget adding moarrrr soon-to-be-choked expressway lanes !
            Revise municipal building codes to encourage better, and perhaps novel construction techniques and design with conservation inplicit in its development, such as passive solar, improved heat exchage technologies .. without sacrificing resonable comfort.
            Allowances should be made for areas to be set aside within cities/urban areas specifically for growing/raising foodstuffs, etc. .. within appropriate and agreed-upon health standards.
            Develop and encourage different ways to treat municipal streams, again with conservation of precious resources in mind, such as sewer waste.

            We need to get away from what is still essentially a Victorian mind-set when it comes to living on this pale blue dot, and tread lightly.

            And put aside the fantasy of geo-engineering as is currently being discussed in policy circles .. THAT all by itself is courting real unintended disaster !

            1. Chris

              I think you might be able to shift the idea of what personal transportation should be, but I really don’t think we’ll get rid of it in the US.

              We’ve had functional plans for diesel powered vehicles that easily get 100 mpg. But, they’ll only carry 2 people, they won’t carry a lot of stuff, and won’t go over 70 mph. That’s just not a car to most people now. But in the future, it might be.

              Another problem is the more efficient and “better” cars aren’t safe on the road with larger, heavier, passenger vehicles on the road. Mass kicks a$$ in a crash. But the heavier a vehicle is, the less efficient it is. If everyone is shifted to lighter weight vehicles, lighter weight more efficient personal vehicles that will also reduce traffic congestion are possible. In the current mix of vehicles they’re problematic.

        1. Alex Cox

          Let me put in a good word for “dirty” vehicles since I live in a rural area and drive one.

          Fuel consumption (and the type of fuel used) are not the only consideration. The life cycle of the vehicle must also be considered. How much power was consumed in the manufacture? How was that power generated? How long will the vehicle last? How will the vehicle be disposed of when it reaches the end of its life?

          If manufacture, power generation, and disposal (particularly of batteries) are factored in, the “greenest” alternative may be to keep your beater on the road as long as possible.

          My un-green truck (which I bought used) has 130,000 miles on it and can easily reach double that. Treat a gas-burning car well and it will last a long time. How many miles can a Tesla travel before it gives up the ghost? We don’t know yet. How much long-term environmental damage was done by coal or LNG or nuclear energy used to build a brand-new electrical vehicle?

          Public transport, not private electric cars, is the real solution to this issue – if we had a rural bus service I would gladly ride that to town rather than take the truck.

          1. Lee

            I agree. Carbon footprints need to be comparatively measured from cradle to grave as it were: from resource acquisition to manufacturing to use to waste stream. It could well be the case that an older carbon emitting vehicle, over its limited remaining lifespan, could have a smaller carbon footprint than would a new non carbon emitting vehicle over the same period of time. There must be data on this, one would think.

            1. Shonde

              We have to start demanding data on your question of what has the larger carbon footprint. Does Yves use of her old dumb phone have a larger carbon footprint than if she had thrown that out years ago and purchased many phones in the interim? Obviously I know the answer but often I feel the issue of what a GND should be comprised of is being driven by that old concept of progress that got us into trouble in the first place.

      4. Summer

        “Choices” implies having an actual “choice.”

        When people hear the word “choice” in these contexts it causes panic because it confronts them with the fact that much their lives aren’t being led by their actual “choices” and this is one more thing that won’t really be a “choice.”

        Example: It’s not a “choice” to stop driving when it’s been made too expensive to drive. You stop driving because you can’t afford to.

        So the Green New Deal is mandates. Say it. But be prepared to really face the questions about who is actually making the choices and why.

      5. which is worse - bankers or terrorists


        Could you expand on the following statement?

        “People are facing a lower standard of living going forward, period”.

        I’ve been working a lot in the developing world in real estate the past decade and half now and it looks like standards of living are rapidly improving. I’m currently working with a federal-level government in the Middle East to incorporate net metering in their electricity network and the benefits to that country and environmentally and the economic effects are enormous if we can pull it off.

        I just sometimes wonder if this blog at times reflects too much the current gloom and doom mentality of the Western world.

      6. John k

        Yes, but…
        Climate change implies a sharply lower standard. While maybe too late, if not, then reducing affect improves standards vs the alternative.
        Increasing income mal distribution has been lowering standards for some for a generation.
        True full employment along with major changes in tax rates would boost standards for many while reducing standards, or at least accumulation, at the top.
        Granted, consumption will reduce… but if much of this is energy intensive cruising, flying, military, and shipping stuff around the world multiple times it won’t be so hard to take. No grapes in winter… sad, but not terrible.
        Punitive coal and jet fuel tax, higher gas, changes use. Then boost green subsidies.

      7. Joe Well

        People are facing a lower standard of living going forward

        What people? I live in a major blue metro and can’t afford to both have a car and live anywhere central; I can’t get an apartment much bigger than a suburban “Great Room.” This is the plight of anyone who was unable to get on the housing ladder the last time it was remotely affordable to do so (mid-1990s or better yet, 1970s). Most Americans just aren’t that well off, and the younger you are, the more likely that is to be true. Housing + healthcare + education have destroyed our personal finances. What we want is to be able to live in a simple apartment like a recent college grad in 1975 would take for granted, with functioning trains and buses like most other countries have, plus the internet’s electronic portal to culture and entertainment.

        Yes, I’ve traveled internationally extensively, but that’s mostly because it’s cheaper to go to the Caribbean, Mexico or Europe than any of the vacation areas nearby. With traffic in the summer, travels times to fly to the Caribbean aren’t that different from going to the beach, something fewer cars on the road would help with.

        I see the GND as a chance at a better standard of living. No, I won’t have the standard of living that the people on TV do, but very few Americans within 20 years of my age do.

        1. Yves Smith Post author

          I don’t think you understand, or you don’t want to understand. If we are serious about tackling climate change (absent some magical carbon reduction solution), it means radical changes in lifestyles at all levels. And not pretty ones. No more extended supply chains. No more Amazon deliveries. Vast reduction in air travel.

          Have you noticed how food prices have been going up almost across the board? Expect a lot more of that, for starters. The oceans are already overfished, and ocean acidification (another effect of higher C02 levels) is going to lead to a great reduction in shellfish of all kinds, which will put even more pressure on fish and other ocean life. I can go through causal chains like this on tons of topics, and they all come back to greater costs and greater scarcity.

          We are already on a path to having agriculture become less productive due to changes in growing seasons, more storms, and potable water becoming scarce (this happens starting in 2050 if not sooner). Advanced societies have so little slack in them thanks to just in time processes being widely adopted, plus the dependency on chips and hardware that isn’t designed to last means that when critical systems start performing erratically under stress, the knock on effects are great. We are talking about starvation as an outcome for lots of people as climate change induced flooding leads to mass migrations. The Pentagon started planning for that before 2005!

          You can say you don’t like it but you don’t have a choice.

          1. Robert Theleen

            Take a valium, Yves, I have lived in China for the past 30 years. China made a deal with the devil and chose electricity from coal to stave off starvation and build the largest middle class in history. They now can afford to deal with the problems you have cited. For me, the question is the role of government vs the marketplace. Should government create policies for climate change based upon first generation technology, such as EVs, solar and windmills? Or, should they fund research at America’s great universities which, in my view, has produced the best combination of public policy, academia, the market and the ballot box to produce the best outcomes. China is now making huge mistakes in creating industrial policies based on past success and fueled by hubris. Japan made similar mistakes in the 70s. Europe has creates its own mediocrity by celebrating a failed currency and zero fiscal cohesion.

            1. Yves Smith Post author

              For someone who has lived in China for 30 years, you seem remarkably unobservant or are flagrantly making stuff up.

              My big point was about the impact of climate change on food supplies and cost as a first order issue, which you straw manned and went on about China. China has a food security problem which is only getting worse due to more Chinese wanting to eat a higher protein (Western) diet, along with reluctance of Chinese to eat Chinese produced food due to pollution. China isn’t self sufficient, has no path for becoming self sufficient in food, and food supplies are coming under pressure globally as populations continue to grow and some high producing areas are expected to become less productive as a result of climate change.

              You also ignored my point on how sea level rises will produce destabilizing mass migrations. And which major cities will be worst hit? Shanghai and Hong Kong:


              You have no business copping a ‘tude as a way of trying to hide your abject failure to address the issues I raised.

              Better trolls, please.

          2. Joe Well

            If by “standard of living” you mean consumption of resources, I agree, that will decline, even among the poorest Americans.

            But let me be absolutely clear: I would happily forswear daily showers, fresh vegetables, Amazon, and air travel if everyone could be guaranteed a studio apartment in a walkable, diverse neighborhood and equal access to whatever healthcare and education might exist…because that would wipe out the economic anxiety that pervades every thought of the immediate and distant future not just for me but many friends and family, including a recent suicide attempt by a friend that was partly triggered by having to immediately drop a psychiatric prescription because of a change in insurance necessitated by a lost job combined with their eighth annual rent hike. My life has been a series of economic disappointments whereby everything gets expensive faster than my income can grow; I have no illusions for the future. Bring on the rationed vat-grown algae and lentils! And ration housing…please!

            And I am in the “middle class!” 1:8 Americans are food insecure; only 10% of Americans eat the USDA “recommended” amount of fish. As you already know, suicide rates are at an all-time high.

            With all respect, it’s the few people who have housing security and retirement savings who don’t get it. For the rest of us, the socioeconomic hell has already arrived, attitudes toward the future tend to be fatalistic, and the SUVs, JetBlue flights and trinkets from Amazon are small consolation. As things stand, we may be eating cat food in 2050 and living under bridges even if global warming is completely averted and every one-percenter has a fusion-powered Tesla.

  2. GM

    The usual reminders:

    1. One does not solve physical problems by doing politics, those problems can only be solved by doing what is physically necessarily to solve them and no compromises can be made with that because nature does not negotiate. Sustainability is a physical problem.

    2. MMT is just as divorced from reality as all other mainstream (and barely mainstream) economic theories, because, just as they do, it commits the mortal sin of assuming an inverse relationship between the economy and the natural world (economists tend to see the natural world as a subset of the economy rather than accepting the objective reality that the economy is a tiny subset of the physical world around us, entirely governed by the laws of physics just as everything else in this world).

    3. Anyone who is not insisting on reducing global population by an order of magnitude by the end of the century and on an immediate transition to a steady-state (and much smaller per capita) economy as the two absolutely necessary conditions for dealing with the sustainability crisis (i.e. only after those two have been implemented does it even make sense to talk about further details) is a bullshitter, due to some combination of appalling ignorance and/or deliberate lying and obfuscation. I see nothing of the sort in the GND.

    1. Alex V

      An order of magnitude reduction in population implies the removal of 6 billion people. Interested in how you realistically plan to achieve this.

      Civilization currently consumes an estimated 1.7 times the planet’s carrying capacity. Guess you’re just ambitious in your goals for a brighter tomorrow?

      1. GM

        Interested in how you realistically plan to achieve this.

        Most people go childless, and only about 5 million births are allowed worldwide every year. By 2100 pretty much everyone alive today will have died, leaving a population of ~500 million. Nobody needs to be “exterminated”.

        Obviously, non-compliance has to be punished with forced abortions, sterilizations, and infanticide, which is unpleasant, but it is an utterly insignificant price to pay given what is at stake.

        There was a time when a simple worldwide one-child policy would have done the trick, but our collective stupidity allowed that moment to pass, and now it’s too late.

        Unfortunately, we have not become any smarter since then (if anything, it’s the opposite), so population reduction (which will happen one way or another, the question is do we do it the easy way or the hard way) will occur through war, famine and disease, i.e. precisely what we are trying to avoid.

    2. charles 2

      only after those two have been implemented does it even make sense to talk about further details

      You realise that “implementation” requires killing, or sterilising in the next 10 years, people by the billions right ? You may understand physical constraints, but you still have to realise that there are some social constraints that are just as hard.

      This being said, your prediction may become true, but in that case, it won’t be “implemented”. It would just be the unplanned catastrophic outcome of war of all against all, Rwanda style.

    3. Darthbobber

      If there’s more than one way to physically deal with something, politics still shows up.

      Take the order of magnitude population reduction, just for the sake of an extreme example. Lacking sufficient volunteers for extermination, which of several possible groups of several billion people are going to go away becomes a political decision.

      Unless a single individual has the needed means to implement a physical solution, once you involve more than one person there’s inevitably politics to be done.

    4. Troutwaxer

      “One does not solve physical problems by doing politics…”

      Don’t say “physical problems.” Say “physics problems.” We either solve the “physics problem” of too much carbon in the atmosphere, or we all die. That’s the problem.

      1. Susan the Other

        Once again, How much carbon is too much? And can consumption be brought down without draconian population pogroms? It is a physics problem. And a cosmological one as well. The forces against us are so enormous we are almost talking nonsense. It is civilization itself, populations of people, that are causing the push of global warming. The Danes have been saying that when the sun’s magnetic field subsides we get a cooling because cosmic rays enter our atmosphere and form clouds. Shading us from the sun. So there’s another thing to think about. And all that cloud cover at night warms the planet enough that ice is not forming in the arctic. Yet another. And so on. I submit a pinch of “Stalinism” – we should use that word tongue-in-cheek – is better than a pogrom. And it is quiet possible that we will need 8 billion living, breathing people to help keep the planet warm. We might consider research into forms of human hibernation.

    1. Yves Smith Post author

      No, because readers would think it gives a complete archive of our MMT stories, when we’ve been posting on MMT since 2010. We don’t have the time or resources to go tag all the articles in our archives. WordPress does not allow you to mass tag on a set of search results. We’d have to go into each and every article’s “Edit Post” page to do that.

  3. PlutoniumKun

    The article is exactly right to say that there are many very difficult practical and political issues involved in a Green New Deal – and perhaps one of the biggest is intrenched interests – by which I don’t just mean the rich. Here in Ireland two interest groups – small dairy farmers, and workers in peat extraction have proven to be very relentless and successful opponents of attempts to get to grips with the main sources of CO2 emissions. Both sectors soak up vast sums of subsidy that would be much better spent on green energy, but have proven politically almost impossible to shift.

    While I understand entirely the macro arguments in favour of the Jobs Guarantee, for example, I always very concerned when I read MMT economists on the topic about just how little they know about the mechanics of providing direct jobs ‘on the ground’ in a meaningful way. Many years ago one of my job descriptions involved funding precisely that type of scheme – trying to get unemployed involved in direct community and environmental work. There are numerous reasons why it proved far more difficult to do that it appeared on first sight, and why it also proved very disruptive for existing workers in the field.

    But on the broader point, I get very frustrated by the obfuscation we see about the costings of the GND. For one thing, there is an assumption that greening the electricity supply will cost trillions. The direct investment will indeed come to many trillions, but it seems to be ignored that this will cost equal trillions if we stick with direct fossil fuel generation! Over the natural investment cycle of about 25 years or so there is no clear evidence to suggest that a ‘green’ investment will cost more than coal, oil and gas. On the contrary, it might actually be cheaper. Oil, gas and yes, nuclear, have been the recipients of vast overt and hidden subsidies over decades and yet are now barely competitive with wind and solar. The question of cost is the additional net cost of accelerating the natural changeover, over and above existing levels of investment and subsidy. Its not clear that this is a particularly large sum at all (much depends on the required speed of transition – i.e. how much viable existing plant will need to be retired and replaced early).

    1. The Rev Kev

      It would be interesting to see all of the ‘vast overt and hidden subsidies’ in the fields of energy being totally removed. And I mean for coal, oil, gas, nuclear, solar, wind – all of them. Then we can find out which can stand on their own. I can tell you right now that nuclear would be first out the door. It may be that in a world of declining growth, these subsidies will go anyway but at the moment they are only masking what the true economic situation is and setting off all kinds of false signals.

  4. Henry Moon Pie

    Thanks, Yves, for this excellent article, including your point about revenue sharing. Macquarie does a good job of sketching for us just exactly how difficult the task ahead is. To meet carbon targets in time with the necessary institutions still intact and cooperating is threading a very small-eyed needle. But we have to try using whatever political vehicle is available.

    At the same time, we had better be busy working locally with family, friends and neighbors to build resilience. The very process of creating ad hoc groups and associations will be critical because such local groups will be necessary whether a GND push succeeds or fails. They will be especially important if institutions fail at dealing with climate change and consequently collapse.

    1. William Beyer

      I think the “revenue” sharing idea is on the right track, but let’s call it what it is – money-sharing, recalling that taxes do not provide revenue for governments who can make their own money. About ten years ago, I proposed a policy approach to my own professional organization that would have the Congress appropriate $1,000 per capita each year, about $330 billion, for direct payments to each state. There could be absolutely zero strings attached, and the entire bill would indeed fit on a postcard. My own state of MN would get about $5.5 billion per year, and I guarantee you that they would spend it wisely.

      States like Kentucky could do what they wished and would probably fund seven more Noah’s Arc replicas and nuke all abortion providers with their money, which would lead to all residents of that state either relocating or dying off. A good result.

      If we can “afford” a trillion dollars a year for our military adventures, certainly we can provide a third of that to the states to help fund these laboratories of democracy.

      1. GF

        Come on, not all KY residents need to die off – just a select few with the first name of Mitch.

        I’m all for money sharing too.

        My state would receive over $7 billion while our current state budget is just over $10 billion with a small income and property tax but a high sales tax (that includes local, county and city sales taxes). Money sharing would have a huge impact.

  5. Sanxi

    To all of you, each of you has has very good points, I’d add in a very humble manner that the nature of reality is that it acts independently of what we think about it and therein lies the danger. Reality is acting. This site may have the most diverse intellects of any site on the web thus it must be acknowledged that the earth is out of balance, and is correcting to homeostatis.

    While there are many characteristics of this process of note, three of are particular importance: 1. it is going to take a [family blog] long time for this to resolve, thousands of years – not good for humans, 2. So little of the planet will be fit for humans activity which includes living on it, thus discussing human Extinction is necessary, 3. To have any possible hope of a future we have only ten years to deal with this problem. This means many things. One thing it means is that carbon energy can only be used to bootstrap us into the future for ten years, else we overshoot and go beyond 3° C which is in and of itself is a catastrophic. I don’t know what words to put around that to both put dread into you and the desire for the need to act, because if you don’t, you will die. Simple enough.

    The guy who does have the words is: The Uninhabitable Earth: Life After Warming, David Wallace-Wells. Beware he is unrelenting, but necessary. Republicans yesterday said the premise of the Green Deal was Extinction. They were right but not in the way they meant. Cold comfort.

  6. Haydar Khan

    Things that bother me about the GND:

    1) Humanity needs unprecedented global coordination and cooperation in order to combat ecological collapse . This involves far more than the United States. How to get there from here when our evolutionary success story is driven by prioritizing the short term over the long term?

    2) At the U.S. national level,if the full ambitions of the GND were implemented, would there not be tremendous inflationary pressure and shortages? Sounds like rationing would be crucial How will Americans deal with this?

  7. Shonde

    The first mobilization needed to implement the GND or other climate measures, other than personal changes in lifestyle, must be the complete prioritization of throwing out of office any climate denialists at all levels of government. If we don’t accomplish that one objective, it is worthless discussing how to overcome our coming extinction.

  8. Steve Ruis

    Just as with the discussion of universal health care in the US, all of the detractors just talk about the costs (How will we pay for it?) and do not even mention the benefits. What are the opportunity costs of the GND? What are the benefits? What are the costs? Why cannot we have a complete discussion?

    I am reminded that at one point the town of Brisbane, Australia hired a “Town Scientist” to explain scientific topics to the town council and to the people of the town. In California we had a politically neutral office that explained the pros and cons of ballot issues. I think we need a politically neutral source of information to dissect such proposals and provide broad based descriptions of the impacts of such legislation.

  9. Steven Greenberg

    We can’t be expected to know in advance how we will solve every problem. We have to think very hard about the issues, but we cannot get stuck with analysis paralysis. At some point we have to get going and trying things. As we go, we will see what works and what doesn’t. There will be a constant process of adjusting to reality. Knowing all that, we have to plan to keep measuring the results, and making changes as required.

    We won’t find out what works and what doesn’t if we never actually try something.

    1. Anarcissie

      Actually, there are people doing this now. The problem being discussed here is mostly not how to survive and prosper as an individual or small group, but how to get everybody to survive and prosper, when a large portion of the population does not wish to do the things necessary to survive and prosper within the constraints of physics, etc. Hence government is brought in. But the problem with this is that what governors know how to do is govern, and so it takes them a long, long time to get around to doing anything practical about anything — first they have to accumulate and arrange the tools of governance, that is, cops, armies, spies, bureaucrats, judges, jailers, jails, hangmen, propagandists, academics, money handlers, priests, officials, etc. etc. etc. — people and institutions who could not grow a potato or put up a pup tent. ‘Capitalist Stalinism’ was an apt quip for this first stage of alleged salvation.

      1. Pookah Harvey

        “Stalinist Capitalism” is simply State Capitalism. That is the economy is controlled by a state bureaucracy with an agenda in mind—a 5 year plan for example. We currently live in a monopolistic Private Capitalism. An economy controlled by private corporate bureaucracy, also with an agenda in mind–maximize profit, largely by ignoring the externalities such as CO2 production. The main problem is to change the agenda for the bureaucracy.
        To change behavior you can use carrots and sticks. Almost all the discussion above is for sticks for the consumer. I believe it would be better to use carrots for consumers–large subsidies for energy efficiency thereby limiting opposition from the people for a GND. And sticks for the corporate bureaucrats–heavy taxes on capitol gains and dividends on CO2 polluting corporations.
        I’m not saying this would be easy but may not be the totally disrupting process that this article seems to portray.

      2. Jeremy Grimm

        Government response to a disaster or an attack does not “take a long, long time” and the government already has considerable tools of governance. I don’t see the conflict between taking action at a government level and individuals taking action at an individual or small group level. What conflicts do you anticipate?

        1. Anarcissie

          There is a book titled Zeitoun you might want to read. ‘Zeitoun’ is the name of a person: a New Orleans contractor of Syrian birth who through hard work, intelligence, consideration and honesty, built up a considerable business in New Orleans. When Katrina arrived and New Orleans was under several feet of water, sewage, and dead bodies, he went about in a canoe rescuing quite a few people, while the police, National Guard, bureaucrats, politicians, and FEMA did nothing or actually attacked the people left in the city. As a result of his activities and, probably, looking Middle-Eastern, he was arrested, treated brutally, and thrown into a Guantánamo-style prison — they’ve got them in the US — without any way of communicating with his family, much less an attorney, for months. It’s not just one more shameful tale of the Bush era and the degenerate America which elected him twice; it’s also an almost iconic representation of authority and administration. The book, by Dave Eggars, is simply and straightforwardly told. You can probably read it in a day or two, although once they cage the hero and start working on him it might be difficult to get through. Guilty liberals seem to have made it a prize-winner and a best-seller, but the beat goes on, and the knuckle-draggers are still in charge. I believe the book because I have observed the same sort of behavior at other times and in other places. The first thing the authorities do is organize and take care of themselves, and this means getting their places in the tree and moving value upward. When they see something and they don’t know what it is, they try to suppress it or imprison it. Eventually they get around to dealing with whatever it is they’re supposed to be dealing with, but it takes a long time because first things must be dealt with first.

          So I do see some conflicts, but if the local small groups and individuals keep mostly out of sight, they’ll probably be safe from the present configuration of government, anyway. Of course that doesn’t solve the other problem.

          1. Jeremy Grimm

            The story of Zeitoun and the way FEMA ‘helped’ New Orleans, and the way Puerta Rico has been helped do provide a sobering view of our government. I was thinking of how the US responded to being attacked at Pearl Harbor and the actions of government to respond to the Great Depression. Government did act relatively quickly to stop the near collapse of our financial system and economy — although the sum of government action best fits your view “The first thing the authorities do is organize and take care of themselves…”

            But if we are dreaming of a GND … the government can respond quickly and has, the government already has considerable tools of governance, and most of the actions individuals might take do not seem inherently in conflict with government actions creating a GND.

    2. Jeremy Grimm

      Try what? If you are commenting on the Green New Deal the range of possible things to try is very large. Some things can only be ‘tried’ on a large scale, like some of the changes to the electric grid. Experiments that work in-the-small run into new problems when they are scaled up. Analysis paralysis is a very real problem — as in let’s form a committee to study the issue — but just ‘trying’ something –anything — is also problematic.

  10. Watt4Bob

    I believe the biggest obstacle in the way of the GND was deliberately built to stop just such an effort, and that is the DHS.

    The creation of the DHS was the biggest reorganization of the federal government since the New Deal, and among its other evils, it was intended to stop and roll back the New Deal programs and prevent future expansion of expenditures on safety net, and ‘entitlements‘.

    9/11 was used as an excuse to stick a knife in the heart of our nations commitment to providing tangible material benefits to the people, and the reorganization under the DHS was the method to insure we could not go back.

    The GND represents the obvious path necessary to reclaim our government from the clutches of the 1%, and make our’s a people-centric nation, and as such will be resisted with all the powers of our ruling class, and the reorganization of government under the DHS is evidence of their extensive preparations for just such a battle.

    Remember what happened to the Occupy movement.

    1. TimR

      It seems sort of like a big jobs program to me… Employ thousands of people in “security theater” jobs, plus all the massive administrative overhead, supplies, buildings, etc etc. How does it roll back New Deal policies?

    2. Oh

      If we can abolish DHS and divert that budget to GND, it will help a little bit. But folks who ask “how do we pay for it” are looking to stop GND. Als, this is not going to happen because we’ve been scared out of our wits about “terrorism” and there’s too many bureaucrats that depend on DHS waste funding

    3. Eclair

      Good point, Watt4Bob. And, whenever someone asks how we can possible implement Medicare4All (or any other program that provides benefits for the common good) in a such a short time, point out that the entire apparatus of DHS was up and running 14 months after 9/11.

  11. Louis Fyne

    Reducing America’s consumption/resource footprint, reducing income inequality, de facto open borders (ie chain migration, jus solis citizenship)

    America can have two of the three—-barring Star Trek levels of tech breakthroughs now.

    just being realistic and the left-of-center wants all three. Sorry to be a non-techno-optimist.

    1. mle detroit

      I think there are a great many assumptions packed into “America can pick two of the three.” Please explain your thinking. And you’re right, this left-of-centerite wants all three.

      1. Troutwaxer

        I think the issue is this. Look at a Black (or Gay, or female, or Muslim) person. Look at a graph of world temperatures over time.

        If you think the Black/Gay/female/Muslim person is the real problem, you don’t have anything resembling a clear understanding of the issues. A Green New Deal should probably do everything it can to take all the other issues off the table so we can concentrate on the carbon content of our atmosphere.

        1. Louis Fyne

          Race has nothing to do with this.

          this comment is exactly why the world can’t have a sensible, calm, clinical discussion about mitigating climate change and every aspect of policy that touches it. Someone, somewhere gets offended and pulls out the ad hominem identity politics card.

          Which is why I believe that there can be no deviation from the present course…..the climate problem will “solve itself” via economic hardship, human suffering in the developing world, a comfortable developing world elite profiting from that suffering, desperate labor pool and a walled up developed world whistling past the graveyard.

          1. Troutwaxer

            The problem here is that racial/class/gender issues* and climate issues are linked, in that while we are arguing racial/class/gender issues (and so much of our politics is all about racial/class/gender issues) we are not solving climate change. It’s not a matter of “the left bringing up all these social issues” so much as a matter of figuring out a way for everyone to shift their focus to fixing the climate while knowing that their personal safety as a Black/Poor/Gay person is guaranteed.

            It’s not just a matter of “what we do to fix the climate.” It’s also a matter of “what we won’t do (to other people) while we’re fixing the climate.”

            For example, if we’re moving people out of Seal Beach (a local community close to sea level) the people in East LA need to know that some group of White politicians aren’t going to use immanent domain to seize a couple square miles of their land so the White folks in Seal beach have a place to stay.

            It’s a really hard idea to grasp, but what we don’t do while fixing climate change is as important as what we do.

  12. Summer

    The history of humans is environmental degradation on a large scale wherever high numbers of humans form cities/states.
    Can there ever be anything “green” about cities of millions of people?

  13. Summer

    I can phrase it another way too, the entire Green New Deal is an attempt to preserve cities. All the “choices” are what has to be done to maintain cities in the face of environmemtal destruction.

  14. Troutwaxer

    “Critics are queuing up to dismiss the Deal as a ‘utopian’ idea that doesn’t address real world trade-offs.”

    It doesn’t matter. The bill for the last 150 years is due, and physics court doesn’t care about “‘utopian’ ideas that doesn’t address real world trade-offs…” We either fix the problem as close to immediately as possible or the seas/temperatures rise, and I can guarantee you without running a single number that the cost will be higher than the Green New Deal.

    1. False Solace

      It’s like people halfway down an elevator shaft arguing about the existence of gravity as they blow past each floor. You can argue all you want but if you don’t do something to actually stop your fall, you’re going to hit the ground.

      CO2 doesn’t care about your standard of living or your civilization. We’re about to learn firsthand why there are no signs of intelligent life anywhere in the universe.

  15. Haydar Khan

    Interesting discussion about the flaws of the GND:

    “Fitz and Cox feel that this so-called “green growth” would be unlikely to stop global warming, and would only worsen numerous other global environmental crises. Though they support a rapid changeover to renewable energy coupled with economically egalitarian reforms, they believe this needs to come along with a major reduction in industrial production. Some of the potential changes they talk about include a shorter work week, and new regulations aimed at guaranteeing higher quality products and eliminating planned obsolescence, the process of manufacturing consumer items with the intention that they will quickly break and need to be replaced.”


    1. Shonde

      I highly recommend the articles contained in the link provided by Haydar Khan. I beg everyone to read them. Please?

  16. Susan the other`

    The GND is the most rational thing US politics has ever done. It opens the conversation to the realities we face and to all sorts of bids for remediation. For sustainability. Capitalist and otherwise. Most rational, and therefore by definition, also the most radical. It’s just what we need. The GND is asking for science to lead the way. That’s a good thing. Because we’ve got a balancing act to perform and we are no longer living in a circus. I can’t imagine turning our back on something as thoughtful and progressive as the GND.

  17. Eclair

    Facts don’t matter. The story does.

    That’s why religion and other ideologies (and I’m including mainstream economic theories in this category) have remained so popular over time. They have a compelling story that gets us through the hard times. Even reaching into the After Life, when there is no hope of relief in this life.

    Trickle-down theory and its corollary, the rising tide lifts all boats: give the rich tax breaks and more money and they will create the jobs that benefit you and me. God rewards those who are virtuous and work hard with wealth; ergo, if we have no money we are, by definition, unworthy. But, being born equal, we have the same opportunity to become billionaires. Just need that one lucky break.

    The earth and all it’s bounty has been given by god/nature/chance to us humans for us to exploit and become wealthy. Turn trees into dollars, decayed dinosaurs into rubles, minerals into munitions that feed the MIC.

    Ronald Reagan was an actor, an empty vessel who had cozily persuaded the US public that GE was a warm and fuzzy company where “progress is our most important product!” Not profits, not bomber engines, not nuclear weapons. Just refrigerators and washing machines. Given a script, he went on to spin a tale to us of how the growing power of labor unions was bringing the country to the edge of economic disaster and how smaller government, less regulation and, above all, privatization would make us all fat and prosperous. What a story. We fell for it.

    Yes, we need facts. We need science. But most of us, to find the courage to get up every morning, need a story. And courage is what we will need in the months and years ahead. To counter the despair that we will see piling up around us.

    So, what is our story going to be? And who are the people who are going to be the our most effective story tellers? Our dream-weavers.

  18. Jeremy Grimm

    I agree with the conclusion of this post: “Overall, current plans for a Green New Deal leave many questions unanswered, even when we acknowledge that financing is no barrier.” The Green New Deal [GND] is 14-pages of broad resolutions with even broader implications. I am not convinced the potential and perhaps inherent conflicts between the needs of the nation-state and local needs will be the problem this post argues. The needs of the nation-state in a time of crisis like a time of war are paramount.

    I think the post’s concerns for nation-state opposed to local needs, coalition building, a jobs guarantee, and theories of democracy and ownership masks a different concern. The link in this post to the Forbes article “Remember Finance is a Public-Private Franchise, Not a Big Broker in the Sky” does not suggest a New Deal or War economy. Focus on just the implications of GND’s goals for the Electric Grid — I believe the ownership of the Grid and its public-private ‘legacy’ investments will have to be regulated to the point of de facto nationalization to build that GND Grid.

  19. Jeremy Grimm

    There is so much in the Green New Deal [GND] — everything except World Peace — so I’ll fix upon one little problem, the “clean, renewable, and zero-emission energy sources” that will feed the “smart” GND Grid. This verges outside the content of this post but lies within the bounds of its title. I believe solar power has been greatly oversold and whether it can meet our future energy needs or not solar power does not offer a long-term solution — (yet?).

    “Solar power—largest study to date discovers 25 percent power loss across UK” https://phys.org/news/2018-11-solar-powerlargest-date-percent-power.html

    “Pedro Prieto: many solar panels won’t last 25-30 years, EROI may be negative”

    1. GM

      I believe solar power has been greatly oversold

      That is correct — it neither scales up well nor is it really renewable. Same for wind.

      Right now the only way to build those is by using fossil fuels and other nonrenewable inputs. If true “sustainability” is to be achieved using solar and wind, they will have to be able to not only provide an energy surplus but to also power the rebuilding of their own infrastructure.

      Which is not in the cards, because of how diffuse of sources of energy they are.

      There is also the issue of energy storage, which will never be solved, because it cannot be solved, for objective physical reasons (it is damning indictment of the scientific establishment that nobody has come publicly and said “Look, we understand the laws of nature sufficiently well to know that large-scale energy storage without major losses is not achievable”; instead it is presented as a problem that could be solved with R&D investment).

      You can use renewables to power a much smaller civilization that the one we have at a much lower per capita consumption levels. But the current one, let a lone its future projected growth? Forget it.

  20. notabanktoadie

    From an MMT perspective, tax ‘destroys’ money by taking it out of the economy. Rob Macquarie

    Except the economy does not run off fiat, except for paper bills and coins; it runs off private* bank deposits. True, Federal taxation destroys private bank deposits but the banks can replace those with new deposits (“Bank loans create bank deposits”).

    Moreover, since Federal taxation also destroys bank reserves, it improves the Supplemental Leverage Ratio of banks, the most restrictive bank capitalization requirement, thus allowing them to create even more deposits than were taxed away!

    Changes to taxation levels are thus the preferred policy lever with which to manage demand and control inflation. Rob Macquarie

    Except, as noted above, they do not manage the demand created by banks (“Bank loans create bank deposits”) but potentially increase it via improvement in their Supplemental Leverage Ratios.

    So the taxation burden imposed on the non-rich to curb their consumption may be in vain unless the ability of the banks to create deposits is also curbed.

    *Of course, due to heavy government privilege, banks are not truly private any more than their depositors are truly voluntary.

    1. Tony Wright

      How about I throw a real stinkbomb into this discussion of how the hell (bad pun alert) we are going to stop screwing up our life support system via overpopulation and our profligate use of fossil fuels. Religion.
      Most religions either overtly or by inference indoctrinate their believers into believing that as “God’s Chosen Ones” they are more righteous and therefore have a greater right to populate( and overpopulate) the planet. This is cultural chauvinism of the worst kind. This has to be called out. Religious leaders across the board need to learn a bit about ecology and evolution and start telling their followers to stop having more than two children.
      And Governments have to stop giving tax breaks and welfare for women to have more than two children.
      It is morally unacceptable for humans (supposedly the only sentient beings on the planet) to cause the extinction of vast swathes of other species by our ever increasing jackbooted footprint on the planet. Yet that is what we have done (over 40% since 1970 and climbing fast)
      It is also f…… Stupid. Havn’t people heard of food pyramids? We are at the top of all of them, and doing our best to eat out, pollute and destroy all of them in our shortsighted, profit driven greed for MORE of everything that advertising dangles in front of our greedy faces.
      And we can reduce CO2 emissions markedly and quickly by switching to renewable energy for power generation, it is happening, but not quickly enough. The more difficult area of transport needs a combination of electrification and increased emphasis on public transport.
      As for MMT, governments print money at will now just to prop up Wall St, give tax cuts to the top 1%, and fund militarism, so whilst not pretending to have studied economics, what is the difference? By all accounts worldwide debt is already unpayable.
      At least with the New Green Deal the money would be spent on hiring people to do useful jobs to help remedy the damage we have done to our life support system.

    2. False Solace

      It is difficult to imagine that banks would be permitted to lend willy nilly in a GND / high inflation / high taxation scenario. The Fed can easily limit bank lending through reserve requirements and interest rates. Banks only create loans when a credit-worthy applicant walks through the door and asks for one — banking regulations determine who is credit-worthy and who is not.

  21. Jon Cloke

    FYI, where the Justice Democrats talk about “transparent and inclusive consultation, collaboration, and partnership with frontline and vulnerable communities, labor unions, worker cooperatives, civil society groups, academia, and businesses” this has already been trialled in Brazil in the cities where the PT instigated systems of participatory budgeting including all groups and interests…

    There’s quite a bit of literature on this – see for instance ‘Participatory Democracy in Porto Alegre and Belo Horizonte’ – https://participedia.net/sites/default/files/case-files/241_265_bibl_Terence_Wood.pdf on the World Social Forum site

    Whereas Brazilian local governance is a long way from being ideal, the methods and systems being trialled there are exactly what are needed and what US progressives have begun to talk about…

Comments are closed.