I persist in believing that if there is to be economic recovery in the UK post Brexit then something like the Green New Deal will be an essential part of the process.
The essence of the Green New Deal is a Keynesian stimulus. It recognises an essential truth, which is that the way to solve any government funding issue is to create well paid full employment. When you have that any government can fund itself without difficulty. Until you have that most inflation risk (excepting that from devaluation) is small.
The Green New Deal explicitly recognises that in an open economy the risk of the multiplier being dissipated by imports is high. That is why it focuses on local investment, in housing, local infrastructure, insulation, local green generation capacity and providing finance to the SME sector. Local investment spending has the highest possible growth impact on the UK impact.
In the process it creates jobs (and housing) in every constituency: this is blatantly about meeting the needs of people in the county, for work, income, housing, energy, transport and the capital for local enterprise.
By focussing on investment the Green New Deal makes clear that we need to balance the demands of future claims on the economy against those arising right now. We have turned a blind eye to climate change, our children's future and the current generations' legacies. This needs to change. The fundamental pension contract, that each generation has a duty to leave sufficient real capital so that the next can afford to keep those who made that capital out of the income thenext generation can earn by putting that capital to use, has to be reintroduced to the UK economy. The Green New Deal does that.
And we gave to be green, and can be. Wind, sun and the little exploited tide has to be the basis for our future energy.
But the Green New Deal is more than that. This is where the idea for a Central Invstment Bank, now used by Jeremy Corbyn, came from.
This too is from where the focus on addressing the tax gap for its social as well as its economic benefits arrived in Labour thinking.
And this is where Green (or People's QE) was first to be found as a funding mechanism.
This then is a strategy that links together fiscal, monetary, social, economic, taxation, industrial and climate policy, with a good dose of localism thrown in. Few ideas can claim that. The Green New Eeal can.
And it is an ideal policy to manage Brexit. Devaluation will have happened by 2019. The rebalancing of the UK will then be needed. Government will have to create work or there will be none to be had. QE will be easier post Brexit. A focus on the UK is what Brexit demanded.
I remain unconvinced by Brexit. But I will think about what it means and how it can be dealt with. It's time others did the same. The Green New Deal remains a significant offering in this arena.
Actually, come to that, what else is there? Has anyone else got anything that looks like a plan?
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Yes but what about rebound effect on omissions? Green Deal could only work with absolute and reducing caps on resource input. See my https://uncommontater.net/2016/01/11/corbynomics-lets-be-sceptical-about-the-growth-rhetoric/
The transition could not be subject to that constraint
Responding to your comment on an emissions cap & Richards comment on it being a constraint – the “Green New deal” (which I support) should be a “cake & eat it” opportunity not an “either or”. Zero emission homes can be built (or existing homes rennovated) such that they are warm & zero emission. Transport: mostly stuck in the “one man one car” era (& relatively poor public transport) – & could transition to a mix of zero emission public & private (a guy I know in the European Commission got rid of his car – he uses pooled electric/hybrid vehicles – & raves about how good it is). Moving society towards a circular economu would likewise offer a chance of better quality employment whilst enhancing UK manufacturing (space does not permit a long explanation). Making this to last (not use & throw away) opens up space for SMEs etc etc.
Agreed
Then it would be a Green Deal in name only. Less than 5 years’ global carbon budget left for a 50% chance of averting 1.5 degree rise.
Unless we invest for change change cannot happen
A huge investment in green infrastructure and energy has to be seen as a good thing, surely? Don’t shoot it down before it’s happened because it’s not green enough.
The reality of the current political situation is that such a scheme would need to be sold on its economic and societal benefits as much as its environmental ones.
E.g. – strategically the UK is in a vulnerable position being dependent on fossil fuel supplies which are held mostly be despotic regimes, and are going to soon run out. This makes us more energy independent and helps to avoid being held hostage to price hikes from other nations.
– and it will save householders money on their rising energy bills.
For example…
Thanks
All I see are countries getting ready to contest their final claims for what is left of the dirty energy and resources the planet has. I am not hopeful at all.
As Tom Waits says:
“If there’s one thing you can say
About mankind
There is nothing kind about man”
We seem intent on self destruction.
Well I’m all for it.
As a Positive Money supporter I am campaigning for an alternative to QE.
There seems to be a lot of support for Helicopter Money but in my view something strategic such as Green QE would be a far safer and more effective use of publicly created money. Assets at the end of it, not frittered on imported consumer goods.
That is why I have problems with the PM approach
I don’t have a problem with those investments as such. Clearly they are going to be necessary. The problem is actually the Keynesian multiplier. By putting more money into the economy you put more money in peoples’ and firms’ pockets, and some of this, other things being equal, will get spent on emission producing activity. The problem is, as any ecologist knows, systemic. So how do we have the Green Deal and prevent the consequent, unintended, rise in emissions? One way is via the idea of resource caps (not the same as emissions caps – you need to slow the flow into the economy – once its in, it’s too late). That could be linked via a cap and share scheme to something like Universal Basic Income (which Richard has explored very helpfully). Or you could use taxation – most obviously a carbon tax. I’d be very interested in Richards thoughts on these options – joining up the Green Deal with other policy areas with environmental and social benefits. But the key point is that there4 is little time – anything that sounds like “economy first and then environment” will fail.
That makes much more sense, thanks
Have you read my suggestion for a Carbon Usage Tax (CUT) in The Joy of Tax?
Thanks. I’ve been meaning to look at the book and will now.
I am completely in favour a fiscal stimulus to transition towards carbon neutrality. There are both short term and longer term issues at stake here. Changing topic slightly, one of the great successes of the EU has been to re-establish European and UK science in a world leading position not only in climate and energy science but across the board. You could make a case the fusion reactor being built in France is one of the most exciting and important projects happening anywhere given its potential. It might be at least reassuring if there were some public statements from government that there is the intention to maintain and build on the success of European scientific collaboration (which includes the movement of people). Otherwise we may be looking at all the expertise leaving or retiring and we end up buying from abroad, like with nuclear fission at Hinkley.
We need fiscal stimulus, and we need it now, let alone post-Brexit.
Whether that be Green New Deal, or just a New Deal, I am less worried about.
I’m less convinced of the need for new taxes (and I’d reduce some of the present ones especially as they impact on people with lower and middle incomes), but I’m open to change my view when I’ve read your book (currently on order). Lower taxes in the right place will also act as a stimulus.
But well-thought-out government spending would be better, and is needed in any case.
FWIW, I used to be very pro-PM, but having done a lot of reading, re-reading and re-thinking, I now think MMT trumps PM. MMT experts’ views on PM-type proposals seem to range from neutral at best, to very anti. I’d have thought there was scope for co-operation and something better coming out of it, but as things stand, I don’t see PM’s hand holding any aces, and some cards may turn out to be jokers.