Deal or No Deal? — A Qualitative Analysis of the Green New Deal
Democratic Representative, Alexandria Ocasio-Cortez and Senator Ed Markey delivered to Congress her Green New Deal — a plan for overhauling the US economy, changing the role of the state, and restructuring the American society. However, is the bill actually even worth spending time on?
The new phase of the Democratic Party
It definitely seems so, as it has become the major topic of political debate over the past few days in the US. However, the reason why it is important to consider is frankly different from what it was intended for. As a non-binding resolution, its intent is to start a discussion over the measures needed to tackle climate change — and what the role of the federal government would be in doing so. Nevertheless, it is important to focus on the implications the bill has for the future of the American political discourse, and analyse whether its propositions are economically viable.
Since the 2016 presidential election the Democratic Party has been under transformation. After the centrist wing, led by Hillary Clinton, failed to win against Donald Trump — the progressives started to take over. Guided at first by the campaign promises of Bernie Sanders, and now a younger generation of socialist-democrats, the party continues to dirft leftwards.
The Green New Deal is a manifesto of this shift. It was created by the most prominent members of this wing, and is supported by a vast amount of the Party’s membership. The interventionist-environmentalist policies included in the resolution illustrate the new direction the Party is taking — and will probably represent in the 2020 presidential election.
The Green New Deal is a plan to revolutionise the US economy, and transform the US federal government into a much more of a welfare state. The plan encompasses a set of ideas and initiatives that the government should undertake in order to greatly limit the country’s carbon footprint and pollution. The plan also includes various other initiatives aimed at raising the quality of life in the US, mostly revolving around jobs and housing.
Even though the goals of the plan seem very noble in principle, and some of them can be agreed independent of the political position, the measures to solve the country’s problems are much more debatable. The majority of the plan is based on government spending and business regulation, showing a strong belief in the ideas of the multiplier effect. All of this highlights the biggest problem of the plan — funding.
Who is going to pay for it?
Various estimates place the cost of the programme at around 80-120 trillion dollars, of which the majority would come from the federal budget. The current expenditure of the government is below 4 trillion dollars, including all areas of public spending, even military and pensions. The plan assumes that some of the funding would be covered by private investment. However, the estimates predict a low possible return on investment, which would need to be very extensive, making such a source not very probable.
Even one of the cheapest ideas of the plan — the revitalisation or rebuilding of every US house, to meet standards set by the government to reduce pollution — is not going to be cheap. If you assume that revitalising one house would cost roughly $40,000, then multiply it by the number of households in the US, the overall cost is above 5 trillion dollars. The plan also advocates for building a high-speed railway system to an extent that air travel is redundant, and replacing all fossil fuel-based sources of energy with solar and wind power. Both of which are predicted to cost much more than that.
Currently, the US public debt is at its all-time high, having already surpassed the country’s GDP. The plan assumes not only increasing the budget deficit, but also increasing the money supply. The inflation caused by that could lead to other countries being no longer willing to lend money to the US, and would also make the US dollar much less valuable heavily impacting the US exports and simultaneously the entire industry.
Many countries around the world have their exchange rate pegged to the US dollar, thus, if the price of the dollar goes down significantly so will the prices of other currencies. The inflation would also cause US exports to be no longer competitive in international markets, as their prices skyrocket. Additionally, any loans or savings would no longer be worth anything, which means that anyone who invested in the Green New Deal, would actually lose on that investment. If we combine the huge inflation with heavy government regulation of businesses, the whole US economy might break, dragging down the global economy with it.
Apart from the changes to the economy the plan assumes vast changes to how the government-society relationship ought to function. The resolution includes secure employment, higher education, and free healthcare for all US citizens. It is evident how the plan aims to totalitarianise the US government — not only regulating who businesses employ and how they function, but also affecting the free choice of individuals in the society.
Despite some comments about the plan securing freedom of enterprise — the execution of the plan makes such promises impossible. Unionisation of labour, and regression of agriculture to a family-based system shows that the ideas of communal cooperation would be of higher focus than the efficiency of production. This contradicts the most basic notions of the resolution, environmental protection, as both measures lower the efficiency — increasing the carbon footprint.
What should we make of it?
Analysing the resolution, it becomes clear why it is non-binding, and why so many Democrats signed into it. The plan embodies everything that Alexandria Ocasio-Cortez represents on the American political scene — the power of ideas over means, non-bipartisanship, and neo-populism. The plan is not supposed to change much when it comes to legislation. It is meant to make people talk. It is meant to show the power of progressive ideas in the US, as they take politicians and many voters on the bandwagon.
The younger generation cannot be blamed for being astonished by the goals of the bill as it seems to answer many of the issues they are currently facing. Most of the Democrats who signed the resolution know that it cannot be realised. However, the fact that there even is such resolution makes voters believe that it is an option. Faced with answers to their biggest problems, they will not listen to people telling them it cannot be done, and understandably so.
Yet, the issues our generation faces cannot be fixed by the progressives through the Green New Deal, both because it is impossible to fulfil, and because it would create even more complications. However, the problems can be solved through a change of consumer behaviour, eliminating cronyism, and greater voluntary cooperation.
So, to answer the question ‘Deal or No Deal?’ — there was never a deal in the first place, as it was neither a real proposition, nor a one which would solve the problems.
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