The Farcical “Green New Deal”

 

The dominant source of energy for the foreseeable future for both the United States and the world will be fossil fuels, chiefly in the form of oil, natural gas, and coal. Throughout the world, many groups will push hard for massive subsidies to wind and solar energy. Yet, that attempt, no matter how bold, will fail to shift the overall balance of energy production toward green sources. The fatal drawback of wind and solar is their lack of storability. Solar works when the sun shines. Wind works when breezes blow. Both often provide energy when it is not needed and fail to provide it when required. Any legal diktat that puts these renewable sources first will only produce a prolonged economic dislocation. Pie-in-the-sky proposals like Rep. Alexandria Ocasio-Cortez’s Green New Deal, which stipulates 100 percent of energy needs be supplied by “clean, renewable, and zero emissions” sources, should be dead on arrival.

The major challenge of sound energy policy today is to find ways to make the production of fossil fuels both cheaper and safer. Fortunately, private-sector innovation has paid off handsomely such that the total social cost of fossil fuels has trended sharply downward and shows every indication of continuing to do so. The point is especially true with fracking, which has been driven by large cumulative improvements at every stage of the production process. Since 1950, carbon dioxide emissions have increased over fivefold, but, as policy analyst Marlo Lewis has demonstrated, it is difficult to link these emissions to any negative global consequences. After all, over the same period of time, there have been massive increases in life expectancy, crop yields, and wealth. In my view, the current scientific record offers no support for the claim that increases in CO2 emissions pose an immediate, let alone existential, threat. Indeed, global temperatures have declined 0.56 degrees Celsius between 2016 and 2018 for the largest two-year drop in the past century—a trend that has gone largely unremarked upon in the press.

Nor is the Green New Deal justified by any breakdown in the economic system. Notwithstanding Trump’s major blunders on foreign trade, the domestic economy has picked up from the slow-growth Obama years. Gross domestic product is up, along with employment levels and wages. The progressive trope was that only strong government regulation in the form of minimum wages, tough overtime rules, and strong support for labor unions could improve job opportunities and wages for individuals stuck at the bottom of the income ladder thanks to race, age, gender, disability, or criminal record. That wrong-headed prescription ignores that these supposedly protective measures function as barriers to entry for people locked outside the market.

It is also instructive to compare how the two New Deals—Roosevelt’s and Ocasio-Cortez’s—responded to their perceived problems. The Roosevelt confection was a mixed bag that did not represent any coherent philosophy. Many of its initiatives were triggered by immediate dangers that required firm action, including Roosevelt’s decision in March 1933 to declare a bank holiday shortly after taking office to slow down a potentially ruinous run on the banks. His introduction of the Federal Deposit Insurance Corporation that same year was surely a defensible approach to that same end, even if not beyond criticism. And the formation of the Securities and Exchange Commission in 1934 was a sensible, if controversial, action to prop up public confidence in the securities markets. On a different front, the use of government advisors to teach sound agricultural techniques to dust-bowl farmers through the Soil Conservation Service was a stroke of genius, as was the operation of the Civilian Conservation Corps for unemployed and unmarried men, which led to massive improvements in domestic infrastructure, including the construction of roads, dams, and the planting of some three billion trees.

On the debit side, FDR’s New Deal carried with it a very high price tag. Roosevelt is often credited for staving off socialism by his intervention in the labor, agriculture, and transportation markets. And Roosevelt should receive full marks for resisting government ownership of these operations. But two major blunders had lasting effects. First, Roosevelt did nothing to moderate the high progressive tax rates of the Hoover administration. Drying up private investment capital forced the government to prime the pump in order to facilitate capital improvements. But all too often, this approach gave priority to inefficient forms of public investment, driving out the more informed choices of private investors.

Worse still was Roosevelt’s infatuation with cartels, which allowed industry members to call on the government to curb output and raise prices. These cartels were formed for agriculture, ground transportation, airlines, labor, and many other activities. Their creation gave Roosevelt political running room to rail against various monopolists, real and imagined, for he well understood that cartels offered at least short-term assistance to large numbers of farmers and workers that helped forge his political coalition. But that master political stroke had strong negative economic consequences. It led to the burning of excessive agricultural produce to keep food prices artificially high, and to constant strikes and union actions which advanced the monopoly position conferred on them by the National Labor Relations Act. These legislative blunders, moreover, had considerable durability: the madcap systems, agricultural quotas, and collective bargaining system remain in place today, long after the short-term measures of the New Deal expired.

Whatever the economic problems the New Deal caused, they are child’s play in comparison with the Green New Deal, which will likely lead to massive government mandates by way of direct expenditures of dollars that cannot be raised by taxes or borrowing, but only through inflation. The initial blunder is to assume any such initiative, likely to wreck the economy, will have more than a negligible effect on CO2 levels. Two salient facts dictate the picture: right now China produces more CO2 emissions than the US and the EU combined, and emissions levels in the United States, which account for under 15 percent of total world emissions, have dropped by about 800 million annual tons since 2005.

Worse still, the Green New Deal seeks to implement a set of juvenile domestic proposals. One of the most welcome developments in the US has been the decline of union power over recent decades. In an odd reversal, the Green New Deal wants to give unions the whip hand in all labor negotiations. But strong unions lead in practice to artificial work rules that make it impossible to introduce sensible procedures for the most mundane of tasks, like changing light bulbs in union-managed public housing. Any proposal to implement the massive retrofitting of housing and transportation stock through union labor will consume so many resources that little private capital will be left for the high level of new investment required to sustain economic growth.

Nor will the situation improve when further distortions are imposed on the economy in the name of gender equity. One of the more puzzling aspects of the Green New Deal is its insistence that all occupational differences between men and women are somehow suspect. The one point that is perfectly clear on this front is that the defenders of that principle do not mean that all individuals should have the right to compete for whatever jobs they want in an open market. Rather, the objective of this movement is equality of outcome in the form of proportionate representation in key occupations, pay equalization across different job categories, equal representation of women on corporate boards, and an ever higher percentage of female CEOs. The underlying premise of this movement is that normal market forces necessarily undervalue the services of women. The likely outcome of this full-scale regulatory initiative is to introduce further distortions in labor markets, without addressing any climate change issue.

Finally, the defenders of the Green New Deal are also champions of the indigenous rights movement, including proposals to give various groups the right to veto development along the lines of the 2007 UN Declaration of the Rights of Indigenous People, which held that all nations must acquire from indigenous people “their free, prior and informed consent before adopting and implementing legislative or administrative measures that may affect them.” Read broadly, that position could give various Indian tribes veto power of the construction of new pipelines and facilities across the country, and do so at a time when the various legal obstacles to pipeline construction are now beginning to cause a serious tightening of energy supplies in the New York metropolitan area and elsewhere. The Green New Deal could fall victim to its own excessive ambition.

It is quite shocking that many Democrats have lined up in defense of this extreme proposal without the slightest knowledge or awareness of its deeply counterproductive features. They seem to have adopted the dangerous mindset that the outcomes produced by traditional markets and deliberative processes are necessarily corrupt. The progressive movement, and the nation as a whole, will be in far better shape if the harshest critics of the status quo took it upon themselves to understand the many tradeoffs and compromises that are needed to operate any complex system—before implementing an infantile proposal that will wreck the whole thing.

© 2019 by the Board of Trustees of Leland Stanford Junior University

Published in Economics, Environment, Law
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There are 15 comments.

  1. Coolidge

    Nailed it! The “Moral Case for Fossil Fuels” is a must read for everyone.

    • #1
    • February 19, 2019 at 4:18 pm
    • 1 like
  2. Member

    Richard Epstein: Since 1950, carbon dioxide emissions have increased over fivefold, but, as policy analyst Marlo Lewis has demonstrated, it is difficult to link these emissions to any negative global consequences. After all, over the same period of time, there have been massive increases in life expectancy, crop yields, and wealth. In my view, the current scientific record offers no support for the claim that increases in CO2 emissions pose an immediate, let alone existential, threat. Indeed, global temperatures have declined 0.56 degrees Celsius between 2016 and 2018 for the largest two-year drop in the past century—a trend that has gone largely unremarked upon in the press.

    Don’t confuse the poor dears with facts; it might “trigger” them to retreat to their safe spaces and comfort unicorns. The “greens” can only see red these days, because: Trump.

    “Global Warming/Climate Change/Climate Disruption”: The biggest, and most expensive, mass delusion in history.

    • #2
    • February 19, 2019 at 4:19 pm
    • 3 likes
  3. Member

    Richard Epstein: Any legal diktat that puts these renewable sources first will only produce a prolonged economic dislocation. Pie-in-the-sky proposals like Rep. Alexandria Ocasio-Cortez’s Green New Deal, which stipulates 100 percent of energy needs be supplied by “clean, renewable, and zero emissions” sources, should be dead on arrival.

    Yet every Democrat 2020 presidential candidate has come out in favor of the Green New Deal, so it is not DOA.

    • #3
    • February 19, 2019 at 4:58 pm
    • 2 likes
  4. Member

    Very few journalist have enough knowledge to discuss energy issues intelligently, or have any interest in gaining such knowledge. Most of them don’t even understand the distinction between a kilowatt and a kilowatt-hour, which is really important when discussing batteries and other forms of energy storage. Measuring a battery’s energy storage capacity in kilowatts is like measuring the capacity of your car’s gas tank in horsepower.

    Businesses and households that claim to be “100% wind and solar” are actually selling power to the grid when they are generating more than they need, and buying it back when the sun isn’t shining or the wind isn’t blowing. Increase in this sort of thing beyond a certain level will impose additional costs on other grid users, and eventually make the whole thing unstable.

     

    • #4
    • February 19, 2019 at 5:23 pm
    • 2 likes
  5. Contributor

    David Foster (View Comment):
    Yet every Democrat 2020 presidential candidate has come out in favor of the Green New Deal, so it is not DOA.

    Not Amy Klobuchar.

    Later Monday, Klobuchar was guest of honor on a CNN town hall in Manchester. She struck a moderate tone, declining to endorse proposals popular with progressive Democrats like Medicare for all and the “Green New Deal” that she called aspirational but not immediately achievable. She also said she didn’t support making college free.

    “If I was a magic genie and we could afford that, we would,” Klobuchar said. “But I’ve got to tell the truth. We’ve got a mounting debt that keeps getting worse and worse.”

    It’s not a full denunciation, but it sets her apart. The local progressives are pouring boiling oil on her, too. They don’t want anyone who’s trying to appeal to the center.

    • #5
    • February 19, 2019 at 8:44 pm
    • 5 likes
  6. Coolidge

    James Lileks (View Comment):

    David Foster (View Comment):
    Yet every Democrat 2020 presidential candidate has come out in favor of the Green New Deal, so it is not DOA.

    Not Amy Klobuchar.

    I remember her. She was the one complaining about Global Warming through chattering teeth in a blizzard. Funny stuff.

    • #6
    • February 19, 2019 at 9:06 pm
    • 3 likes
  7. Contributor

    DonG (View Comment):
    I remember her. She was the one complaining about Global Warming through chattering teeth in a blizzard. Funny stuff.

    Climate change, DonG. Climate Change. All weather is a source of fear.

    • #7
    • February 19, 2019 at 10:02 pm
    • 5 likes
  8. Member

    Weird: I agree with everything Prof Epstein said and I especially like the way he bluntly categorizes the GND as “farcical”… and yet,

    I’m Greener than Gore!

    • #8
    • February 19, 2019 at 10:13 pm
    • 1 like
  9. Lincoln

    The Texas Tribune and the Center for Public Integrity (how can you not trust people with a name like that?) did a recent series of stories which they have turned into a documentary called “Blowout”, which debuts Wednesday in Odessa, before likely finding a more receptive audience Thursday night in Austin. Here’s s sample of the series — when you’re describing the area of West Texas where fracking has has caused a sea change in the energy independence position of the U.S. as the “World’s Extraction Colony” in your headline, you are kind of telegraphing the position the documentary is going to take. At least they will have the head of the Permian Basin Petroleum Association on hand for a post-screening roundtable in Odessa.

    It’s worth noting that the same environmental groups screaming about fracking in 2019 loved the idea 15 years ago of clean-burning natural gas reducing the levels of carbon dioxide in the atmosphere … until fracking made the production of natural gas in the quantities to replace coal and other dirtier-burning fuels viable. Natural gas was only beloved as a hypothetical — as an actual solution it became as evil as coal (or nuclear), and I suspect the same thing would happen down the line with wind and solar. If the battery storage technology was ever developed to make those alternative energy sources viable, odds are the mining and the heavy metal disposal needed to develop and then discard the storage batters would suddenly become as evil as coal, nuclear and natural gas, since the only energy sources in the enviros’ minds that are good are the ones that are unobtainable.

    • #9
    • February 19, 2019 at 11:06 pm
    • 1 like
  10. Member

    Jon1979 (View Comment):
    the only energy sources in the enviros’ minds that are good are the ones that are unobtainable.

    A great example of that is hydroelectric power…it is renewable, it is really solar power with an integral storage capability. Whereas old-fashioned Leftists…of both the Communist and the New Deal varieties…gloried in hydroelectric dams, our present generation of the Left wants to tear them all down.

     

     

    • #10
    • February 20, 2019 at 5:33 am
    • 5 likes
  11. Coolidge

    Now if only we can condense this post into 140 characters to be tweeted out by a hip millennial (non-white, non-male) 

    • #11
    • February 20, 2019 at 3:38 pm
    • 3 likes
  12. Coolidge

    Vance Richards (View Comment):

    Richard Epstein: Any legal diktat that puts these renewable sources first will only produce a prolonged economic dislocation. Pie-in-the-sky proposals like Rep. Alexandria Ocasio-Cortez’s Green New Deal, which stipulates 100 percent of energy needs be supplied by “clean, renewable, and zero emissions” sources, should be dead on arrival.

    Yet every Democrat 2020 presidential candidate has come out in favor of the Green New Deal, so it is not DOA.

    Well that is scary, although not very surprising.

    • #12
    • February 23, 2019 at 3:03 pm
    • Like
  13. Coolidge

    Also since more and more people are living in areas like the nation’s Southwest, or in Californian communities, so now going solar is actually an economics solution.

    Right now, here in California, the largest purveyor of traditional electricity and other power needs, PG $ E, is threatening to cut off its power every single time the temps go too high. (Which I assume means more than 97 or 98 degrees, which means we are at risk for power black outs for much of July, August and/or September.) So this means it is more important than ever to go off the grid.

    PG $ E is also exorbitantly expensive. We barely use the utilities, but even so, we manage to have a $ 75 a month bill, in April and October, when we don’t need either heat or AC. Our bills when we do need AC or heat are two to three times higher. (Air conditioning in our area is actually considered a life saver, as the temps are quite extreme in terms of heat.)

    PG & E also initiated a “power usage acceptability time range” so if you use the appliances you own during a time when you shouldn’t then you’ re charged even more. And they switch the times around a lot, so my efforts over the last 18 months to not use the washing machine til 7Pm were all in vain, as PG & E made it 9Pm without my noticing.

    One man who switched not only his home residence but the apartment complex he owned over to solar noted this in a letter to the Sacramento Bee some time ago: “The 14 unit apartment complex I own now costs me $ 26 dollars a month -for my agreement with my tenants to pay all their utility costs. Not $ 26 per unit – $ 26 total.” Those remarks were made some five years ago, so if someone did this now, the savings would be even greater.

    So bad mouthing solar when it is proven in many heavily populated areas of the nation to be an effective and cheap way to deal with needing energy seems rather Dino.

    • #13
    • February 23, 2019 at 3:31 pm
    • Like
  14. Coolidge

    CarolJoy, Above Top Secret (View Comment):
    So bad mouthing solar when it is proven in many heavily populated areas of the nation to be an effective and cheap way to deal with needing energy seems rather Dino.

    You are confusing cause and effect. Your grid is unreliable and overly expensive because your grid has too much solar. If the solar was so good for your heat waves, it would make sense (and cents) to have it without a grid connection. It only appears to be cheap because it is subsidized (no batteries required).

    • #14
    • February 23, 2019 at 5:48 pm
    • Like
  15. Coolidge

    Phil Turmel (View Comment):

    CarolJoy, Above Top Secret (View Comment):
    So bad mouthing solar when it is proven in many heavily populated areas of the nation to be an effective and cheap way to deal with needing energy seems rather Dino.

    You are confusing cause and effect. Your grid is unreliable and overly expensive because your grid has too much solar. If the solar was so good for your heat waves, it would make sense (and cents) to have it without a grid connection. It only appears to be cheap because it is subsidized (no batteries required).

    Uh sorry but I don’t follow your thinking on this.

    Here in Lake County, Calif, the sun is beaming down on us from the sky most days in the summer, which runs at our elevation of 3,700 ft from April 30th to September 15th. Maybe one percent of the days are cloudy.

    When do people in Lake County need to use their solar power? During the day, for the AC, when temps reach 95 to 100 degrees.

    BTW, almost all the big energy conglomerates, Atlantic Richfield, Chevron, BP, et al are into solar. It is a major solution. What do they know that you don’t?

     

    • #15
    • February 25, 2019 at 11:53 am
    • Like