(Earlier this week, I gave a virtual presentation at an event organized by the Roosevelt Institute and the Green New Deal Network. Virtual events are inferior to live ones in many, many ways. But one way they are better, is that they are necessarily on video, and can be shared. Anyway, here is 25 minutes on why the economic situation calls for even more spending than the (surprisingly ambitious) proposals from the Biden administration, and also on why full employment shouldn’t be seen as an alternative to social justice and equity goals but as the best way of advancing them.)
15 thoughts on “Video: The Macro Case for the Green New Deal”
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In the roaring 1920’s and in the glorious 1950’s the world was flooded with cheap oil. Today? https://www.nytimes.com/2021/02/11/business/shell-oil-production.html No oil, no recovery.
Not sure how much of an economic lift the US would get from a Green New Deal, because green-tech production is not a great fit for the US economy.
America’s economy was perfectly positioned for World War II with its supremacy in heavy industry and manufacturing at every level from oil and steel to aircraft and radar sets, and no foreign competition to speak of. And low unemployment was helped by the drafting of 12 million men out of the civilian labor force.
But most green tech these days is made in Asia. General Electric is a leading wind-turbine manufacturer, but most of its plants are overseas, and it’s expanding production in China, India, Indonesia, Vietnam, etc. As for solar panels, the US barely registers, with 3 percent of global manufacturing compared to China’s 71 percent. The US manufactures about 12 percent of global lithium-ion batteries, China about 73 percent and at a cheaper price. Left to its own devices it looks like clean generation technology will further concentrate in Asia.
A Green New Deal would boost the domestic construction sector a lot, but that’s not a sector that most people want to work in, especially women. Maybe more EV manufacturing, but it’s just as likely Asia will build our EVs. What, and where, are the founts of mass employment in the Green New Deal?
We could adopt protectionist policies to boost low-carbon equipment production in America, but that will raise the price and slow deployment.
Does it even make climate sense to spend on a Green New Deal in the US right now? The Chinese and Indian energy systems are much more emissions-intensive than America’s, and cheaper to decarbonize because of their low labor and construction costs. We could pay the Chinese and Indians to build low-carbon generating equipment—and install it in China and India. That might be the fastest and cheapest way for America to abate global emissions.
> Not sure how much of an economic lift the US would get from a Green New Deal, because green-tech production is not a great fit for the US economy.
Yes GND infra spending shouldn’t be thought about as a great creator jobs, but that’s doesn’t mean we shouldn’t do it.
https://rooseveltinstitute.org/wp-content/uploads/2020/07/RI_GND_policy-brief-carbon-CD.pdf proposes a “cap-and-dividend” scheme. Such dividends can produce demand much more broadly than “pointed” infra spending would.
I instead like to think of the infra spending as, most importantly, creating the things we simply ought to have social reasons. But secondarily, and more economically, I like to think off them as relieving the quasi-supply constraints created by punitive taxes.
For example, say a bunch of people want to travel, and have been given a bunch of cash, but fuel prices have also been cranked up. If those cancel out so the physical travel is the same as before — great, we accomplished no environmental goal and just created inflation in the transportation sector. But, if we build nice cool train, now the dividend-ensured demand has a nice supply to match with — people are happy traveling, our train investment is successful, yay!
From this point, yes don’t focus on infra jobs, “made in America” requirements, etc. etc.. Build the infrastructure without protectionism as efficiently as possible, and solve the demand problem completely separately.
> Does it even make climate sense to spend on a Green New Deal in the US right now?
Well, firstly, politically realities mean domestic investment is much preferred.
Secondly, we still have to decarbonize electricity here. In no scenario can we do enough decarbonization and carbon capture to allow US to continue polluting as is, even with the US paying everyone pollution reparations or whatever.
Thirdly, remember transportation, it still is the most polluting sector in the US. (See https://flowcharts.llnl.gov/content/assets/images/charts/Carbon/Carbon_2018_United-States.png and know that the goal-gas ratio for electricity has roughly flipped since then.) And whereas electricity is fungible and somewhat transportable (though not cross-continent for max labor arbitrage), transit, the best solution (not electric cars) for a number of reason must be built very locally.
So if we have to do local infra spending anyways, and that part also has good political benefits (constituents can see it and think it’s impressive), I see no reason to leave it out.
On the breakdown of what kinds of jobs could plausibly be created by a Green New Deal type program, the Political Economy Research Institute at UMass has deon quite a bit of work: https://www.peri.umass.edu/publication/item/1032-green-economy-transition-programs-for-u-s-states
I looked over the West Virginia one a lot, and the Pennsylvania one a tiny bit. Over all, yes, there is plenty of work that must be done in situ. I was a bit unsure how/why the manufacturing would occur in-state, but that is a relatively small component of the total jobs.
Maybe in a different political reality we would just empty out Appalachia and other less developed places, leaving behind just tourism for the great natural beauty and other low-intensity things. And I suppose the geographic economics often lead things in that direction vs e.g. a million+ person city with a good subway in every state.
@JE:
–“Yes GND infra spending shouldn’t be thought about as a great creator jobs, but that’s doesn’t mean we shouldn’t do it.”
Agreed, but the whole political logic of the Green New Deal discourse is that you need the New Deal to sell the Green. Apocalyptic scare-mongering hasn’t been enough to move the needle on decarbonization. That’s why the Left switched to the carrot of GND framing—it’s a jobs program, not an environmental hair-shirt. If you allow that there may not be very many American jobs in it after all, support could evaporate.
–“But, if we build nice cool train, now the dividend-ensured demand has a nice supply to match with — people are happy traveling, our train investment is successful, yay!”
No, Boo! Trains are cool to train afficionados, but Americans are simply not going to abandon planes and cars for trains and mass transit. Any attempt to get them to do that will be perceived as a particularly galling form of austerity, and will doom the GND politically.
Looking at Pollin’s vague forecasts, it seems like a sizeable fraction of jobs are supposed to come from “transportation” and “rail.” To the extent that those jobs rely on mass transit schemes or high-speed rail boondoggles, they are not going to materialize.
That’s a pervasive problem with the GND—the infrastructure isn’t always well thought out.
@Will Boisvert
Happy to talk the politics here.
> …Apocalyptic scare-mongering hasn’t been enough to move the needle on decarbonization….
I agree with that, and agree scare-mongering is bad politics here. I also agree that there’s certainly an aggregate demand problem and attaching fixing the aggregate demand problem to fixing the environment problems. But I worry the American left really believes jobs are the *only* way to solve the aggregate demand problem — that the latter pair is coupled as a matter of policy not politics—and this mistake limits their imagination (and also indicates some bad nostalgic tendencies).
> No, Boo! Trains are cool to train afficionados, but Americans are simply not going to abandon planes and cars for trains and mass transit. Any attempt to get them to do that will be perceived as a particularly galling form of austerity, and will doom the GND politically.
I am certainly one of those minority train aficionados, and I agree “the people” are not like me in this regard (though I also think they are more suspicious of change than loving of non-pickup driving). But I’d hope the messaging can be Carbon Tax -> Carbon Dividend, trains can be sold as shiny monuments to national greatness or whateverthefuck, and the connection between riding the train and pocketing more of the Carbon Dividend is an Easter egg that should *not* be advertised.
Americans don’t love giving up driving, but they should love cash.
These are valid questions. For specifics of what kinds of jobs a GND might create, you could look here: https://www.peri.umass.edu/publication/item/1415-state-level-employment-impacts-of-proposed-national-thrive-agenda
I didn’t realize how much large the THRIVE plan was than Biden’s proposal. That’s great, at that scale you can hardly go wrong!
@ JW,
I have misgivings about the THRIVE jobs forecasts for RE by Pollin et al that you linked to. The methodological frame seems to be that if you pour X trillions of dollars in one end of the pipeline you will get Y millions of jobs coming out the other end. But energy infrastructure is more complicated: it’s prone to bottlenecks that limit how fast it can absorb investment and expand employment, especially on the huge scale that THRIVE models.
THRIVE is forecasting investment of about $400 billion per year for building solar and wind in the US pretty much right away, which is more than the whole world spends annually now on all RE investment. There’s no way to staff that rapid an expansion—we would immediately run into severe shortages of skilled trades. A 2019 NREL survey reported that 94 percent of wind industry companies had “some difficulty or great difficulty” filling trades positions. That’s for a construction rate of about 12 gigawatts per year; THRIVE seems to envision building roughly 100 GW per year or more of wind in the US. Worse, they want to simultaneously ramp up other non-energy infrastructure spending, which would further stretch the labor supply. While we are waiting to patch the shortages of trades workers, the admin and support jobs can’t be filled.
It’s going to take a long time to train up the requisite electricians, welders, crane operators etc from a workforce that’s currently geared towards baristas and marketing associates. Like I say, not a great fit for the American economy.
Once we start ramping up RE construction we will soon run into more bottlenecks. Building transmission lines, for example, often takes over a decade with all the land easements and environmental regulations to negotiate.
Before they even get off the ground, many RE projects will face multi-year permitting processes and further lawsuits from environmentalists and NIMBYs who oppose the visual blight, noise, and hazards to raptors, bats, desert tortoises and other threatened species and habitats. Among the biggest opponents of the Green New Deal will be Greens.
The Chinese haven’t been able to do anything like the pace of RE construction that THRIVE envisions in the US, even though they have four times the workers we do and no environmental regs or NIMBY lawsuits or local permitting issues or OSHA standards to slow them down.
So I’m skeptical that we will get anything like the jobs boost from RE that Pollin thinks we will, certainly not for years to come.
I have some similar misgivings; I personally think bottlenecks are a wonderful problem to have, but the current hand-wringing about chip shortages, along with Biden evidentally caving a bit on unemployment so the wage slaves slouch back to work, make me worried about the politics. There are too much bad ideology out there and any massive stimulus has to survive the initial cycle of bullshit.
But this is why I am so pleased with Carbon Dividend plans. Pay it up front, not *after* the taxes come in of course, and I just don’t know how an opposition will be able to demonize unconditional tax payments.
Meanwhile I still *do* think should be lots of infra work done, but if that needs to fade in more slowly for “efficiency respectability politics” reasons, this can be done without sapping the immediate stimulus benefits to the people and repeating the mistake of the ACA’s delay.
@JW
There’s other stuff in the THRIVE jobs forecasts that seems dubious.
–It’s hard to tell how much mass transit and passenger rail they envision building—it sounds substantial—but little of that will be funded outside the NE Corridor because no one would use it.
–Then there are the jobs in agriculture and land restoration. This category includes $41 billion per year to create 578,100 direct jobs in “regenerative agriculture.” That scares me because regenerative agriculture is a very controversial doctrine that’s had many of its claims debunked in the agronomical literature. Its sounder notions, like no-till, low-till and cover cropping, are already widely practiced by industrial farmers, who are very aware of the importance of soil quality, water cycling, etc. For the most part, regenerative ag is at the stage of sketchy TED Talks, not best practice. I pray that those jobs will not materialize.
THRIVE also spends $91 billion per year on “resources for marginalized farmers” to create 1,073,800 jobs and double the number of young, immigrant and BIPOC farmers. I don’t think it will help our food supply or marginalized farmers to subsidize an influx of inexperienced people into an ag sector that’s very high-tech and capital-intensive.
These two items account for 3 million jobs after THRIVE applies their multiplier, but they are both bad ideas that shouldn’t be done.
I’m worried that a lot of the proposals in the various New Deal and infrastructure packages are just incoherent eco-fads that won’t—and shouldn’t—pan out.
> That scares me because regenerative agriculture is a very controversial doctrine that’s had many of its claims debunked in the agronomical literature.
Yes it is slightly worrisome. Maybe that our current agriculture policy is already such a mess of heavy electoral-college-boosted regularity capture scares me more.
I would prefer to first up some Pigovian taxes to “define the objective”. But with those, I don’t doubt that there are things that would benefit from state management and not just incentivazation tricks.
As for the “care infrastructure,” I’m likewise skeptical of the jobs potential. There are serious problems of expense and equitable access in the care economy, but I’m not sure that staffing up is the cure.
The US health-care sector, for example, is not really understaffed compared to, say, the European social democracies. The US has 2.6 doctors per 1,000 population, substantially below Sweden’s 4.0 but not too far from Britain’s 2.8 and Norway’s 2.9. When it comes to nurses and midwives, though, the US is near the top, with 14.5 per 1,000 pop (in 2017) compared to UK’s 8.2, Sweden’s 11.8, France’s 11.5, and Germany’s 13.2.
In fact, given the bloat of administrative and marketing workers in US health care, the sector as a whole should shed jobs rather than add them. (That’s a central goal of Medicare For All.) Advances in telemedicine and AI may also hold down employment. Yes, it’s a growth industry, but it’s not clear why that growth can’t be financed out of existing revenue streams without a new spending program to add on more redundant workers.
@JW
Finally, let me push back on your idea of boosting women’s labor-force participation rate in the US. Is it really crucial to raise it to Scandinavian levels as you suggest?
Maybe not. Women who aren’t in the workforce aren’t twiddling their thumbs. They’re taking care of kids and grandparents and doing other unpaid care-ish labor. Boosting their workforce participation rate will often mean rousting them out of unpaid caring and into the formal care economy.
That’s not necessarily a gain in the quantity or quality of caring, and it’s not necessarily what many women want. Scandinavia is pretty secular and feminist and communist, but the US has tens of millions of conservative women—fundamentalist Christians, Mormons, ultra-orthodox Jews, conservative Muslims and Catholics—who have a religious commitment to staying home with the kids.
For example, the US has 2.5 million home-school kids, many-fold more per capita than any other rich country (and counting because of the school shutdowns). That probably works out to a million or more home-schooling moms. If those kids went to school we could hire 167,000 more teachers to educate them at 15 kids per teacher. And the idled home-school moms could then get paid care jobs as those teachers, or as docs or physical therapists or day-care attendants.
By your lights that would count as a big win from the standpoint of GDP growth and full employment and equal labor-force participation and care infrastructure. But home-school moms would hate it passionately. They don’t want to give up their unpaid jobs teaching their own kids and tending their own grandparents to get paid jobs teaching other peoples’ kids and tending other peoples’ grandparents.
And the Left’s proposal to make per-child family payments permanent will support them in that. A family with three kids would make almost $11 k per year from those payments. That’s enough to enable many women to quit their McJobs and become housewives and homeschoolers (which is further supported by home-school tax rebates in some states).
Progressive policy should help women who want to get into the work force do that. But it could also help women who want to get out of the work force do that, too. The latter group might offset the former and reduce the labor-force participation rate. Policy that tries to maximize women’s labor-force participation might not be the best fit with what people want.
So, thinking about these new New Deals, I feel like the prospect of an ultra-bonanza of growth and jobs may be illusory—and perhaps not even the right goal to pursue.