A worrying idea was put to me yesterday. This is that for many people the Green New Deal might simply be a new form of austerity.
One reason given was that many people think it would result in the introduction of carbon taxes, and these are regressive. That might be austerity by any other name. This is one reason why I am really not very keen on such taxes.
Another issue raised was based on the problems faced in France. You cannot begin to tax people's mobility without giving them viable alternatives. No wonder when France tried to do this people took to the streets. I think the lesson has been noted: investment in new infrastructure has to proceed any restriction on use of the old.
There was also concern that the Green New Deal would take the fun out of life. Might it remove all holiday flights? No, not necessarily. But if you want to take them many times a year that could be another matter. In other words, the need for equity in any transition has been noted.
And will everyone have to be a vegan? Not that I am aware of. But food tastes may change - just as they have massively over my lifetime (thankfully).
I am not pretending that the world will be the same after a Green New Deal as it is now. That is not possible. Saying which, I mean it is simply not possible to replace current energy sources with renewable ones and diesel and petrol cars with electric ones and think that is somehow a Green New Deal. It won't be. That's just greenwash that will save us from nothing. In other words, to suggest that the Green New Deal will not create a little discomfort along the way is, I am afraid, not true. Those really stuck in their ways may not like all of it.
But let's look at the upside too.
The Green New Deal aims to deliver jobs on a true living wage in every constituency of the UK.
And it will supply the training to let the Green transition we require happen. Which will mean more spending on local communities. And the creation of long term job opportunities for young people.
And there will be a lot of work for local small businesses.
All of which will spill over into revitalised local communities.
I would want to go further. I know I have problems with savings which withdraw money from the economy without offering resulting economic activity in exchange. But suppose the Green New Deal was funded by Green ISAs, backed by a Green Investment Bank and paying 3% a year - which is almost impossible to get anywhere, but which has almost no net cost to the government as a means of funding right now. Wouldn't savers just love this? And wouldn't moats or all of the £50 billion a year to pay for the Green New Deal then be financed at no likely net cost to the taxpayer? For those in doubt, https://www.gov.uk/government/
And then let's go a little further. Suppose there was a guarantee that the funds you saved would be invested in your area, and that you would be told how and when. How would that feel to the average saver - who gets a return and work and assets in the community in which they live and work? Wouldn't knowing that beat any boring investment statement?
And is that austerity? I don't think so. But we're aware of this issue in the Green New Deal Group and our aim is to prevent any such thing as green austerity happening. Preserving life on earth should be anything but austere.
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The New Deal was about getting people back to work. (a worrying feature is that it was the war which really put the US back to work) Parts of the GND aim to do the same at decent wages and embed employment opportunities and a Living Wage in society, as you describe. But it also has to be about redistribution. If the infrastructure developments required by the Transition simply hand the business and profits over to the usual suspects then it will be a failure. Since Thatcher successive governments have created redistribution alright, but it has gone up the way to the wealthy as happened thanks to QE where those with assets prospered. The GND must redistribute to and protect those at the bottom.
The issue with business is much bigger
I will be addressing some of that next week
We will be tackling it head on too
“people think … carbon taxes … are regressive … problems faced in France.”
The introduction of Tradable Energy Quotas https://www.flemingpolicycentre.org.uk/teqs/ would a) do the essential thing and cut emissions, b) transfer some wealth from energy profligate people to those who are careful — and avoid some of the complaints of the ‘yellow jackets’, c) send a signal that energy over-consumption matters and, d) enable those of us conscious of the future of our children to look them in the face with a little less guilt – and grief for the world they will inherit.
“You cannot begin to tax people’s mobility without giving them viable alternatives”. Yes, low speed but frequent public transport needs massive investment – but electric-cars-for-everyone is a recipe for extinction.
“World’s richest 10% produce half of carbon emissions” https://www.oxfam.org/en/pressroom/pressreleases/2015-12-02/worlds-richest-10-produce-half-carbon-emissions-while-poorest-35
Virtually every reader of this blog is in that ‘richest 10%’. “We are facing an enemy more dangerous than the Nazi’s in 1939 and yet we are unwilling to contribute to the war effort. … As icecaps melt, feedback loops kick-in, extreme temperatures abound, oceans heat, species disappear, crops fail, oceans rise, extreme weather intensified, drought spreads, pollinators disappear, permafrost – not predicted to melt for another 100 years – thaws and floods knock out a huge swath of North America’s food production, is it still possible that people are still blind to the imminent threat we face? … Yet we are collectively not willing to pay” https://www.facebook.com/search/top/?q=marc%20doll&epa=SEARCH_BOX
And, it seems, we are not willing to take even the first obvious step — the introduction of energy rationing. Your post, Richard, does not even consider it.
I agree, it does not
It’s an issue that does, however, very obviously need to be considered
Curiously, research at the beginning of WW2 showed people were not willing to personally sacrifice for the war effort. But they were happy to accept rationing applicable to all people. There may be a message in that.
I love all of your ‘going further ‘ remarks.
The only thing muddying the water is that this is a little redolent of what Thatcherism promised – everyone becoming a common shareholder of privatised utilities and all that stuff that never really delivered the lies in the well made TV adverts. Voters might be suspicious.
All I am saying that we need to spell out clearly how GND will be different this time that’s all because I think the way this could work would be great.
Last night Channel 4 was talking about the proposed Heathrow runway, and one woman affected by the proposals (a 30 year project!) objected to all the money and time and potential loss of habitat being put in ‘just so people can book flights for the same prices as a takeaway coffee’.
There is still areal problem getting people to see that the prices they are charged for flying are totally unrealistic; the carriers avoid tax on their fuel and get other subsidies.
We’ve created a monster in air travel that needs to be brought down in my view.
PSR
We met yesterday to discuss how to address these issues
I think there is awareness of the need to do this
Richard
Understood & great!
Hi Richard,
To help me understand, are you saying that the return to an investor/saver in a Green type Deal would be interest on the amount they deposit/lend, as opposed to interest + capital growth?
Also, if said person wanted their capital back in the future, how would that be funded?
Thanks,
Robin
These would be bonds
They have repayment dates
And as with all bonds replacement bonds usually provide the funding for repayment
What if investors wanted their money back before the end of the term? There would need to be a secondary market in the bonds? If not they would be illiquid. If there is liquidity through a secondary then theses bonds face the same criticism you direct at the wider savings market.
Of course there would be a market for the bonds
Have you heard of billions of bonds being issues without a secondary market?
But what is the problem with that? At least they are being used to create new investment. Share capital has not done that for a very long time
“Of course there would be a market for the bonds…Have you heard of billions of bonds being issues without a secondary market?”
Of course they would have a secondary market and they then become identical to every equity/bond in financial markets..I.e all the purchases made in the secondary market are churning capital and not providing new investment…so I presume you immediately become critical of green bonds as you do for other savings instruments in capital markets?
To ensure every £ of money represents a true investment then there can be no secondary market aka true venture capital.
Are you aware how rarely such bonds are traded?
And how limited the chance fo speculation would be?
I can only guess Worstall has been writing about this so many of you are mindlessly turning up here
Maybe you should try to think for yourself
Hang on. If people are buying bonds in the secondary market, they are not creating new funds for investment, they are merely speculating for financial gain, the source of much of your ire attributed to equity investors.
The only time the bonds create any value is when they are initially valued, in much the same way that a company sells shares to the public to raise capital for their business.
What snake oil are you trying to sell us here ?
Do you really think there will be speculation in such bonds at the rates on offer?
Come on…..
Would you like to stop being foolish? In use the word advisedly
if we, for a moment, put aside the issue of climate change driven by the burning of fossil fuels,
there is the matter of energy austerity, we are currently in a state of energy austerity, it may well have started in the 1970’s, it certainly exists now and will only become increasingly severe as time moves on,
energy austerity isn’t ideological, it isn’t imposed by governments, it’s imposed by physical reality,
although there are still enough fossil fuels in existence on planet earth to successfully fry the biosphere before they are finally used up, the remaining deposits are mostly the lower quality, more complex to process, more toxic when burnt and more technically challenging to extract,
in economic terms it can be expressed as ERoEI, energy returns on energy invested,
the oil era started in places like Pennsylvania in the late 1800’s where liquid oil was literally seeping out of the surface of the ground in certain areas and all you had to do was poke a hole in the ground and it would squirt out and you could capture it,
you could gain 200 barrels of oil for the expenditure of one barrel of oils’ energy, ERoEI 200:1
in Europe the previous generation of ‘wonderfuel’ coal was in the process of depletion already,
oil started to replace coal, UK coal production peaked around the time of the first World War,
note how Churchill as Head of the Admiralty pushed the Royal Navy to convert from coal to bunker oil,
oil continued to take over as coal declined, peak production of coal in Germany was reached around the time of World War 2,
as oil expanded it’s ERoEI did start to drop a little but was offset by improvements in extraction efficiency and technology,
by the 1970’s the USA hit peak production, around 2010 the world has reached peak production,
as production continues discovery is dropping, as current production declines less new potential production is being discovered or exploited,
currently, to keep production levels going, we are resorting to more desperate means to extract the remaining deposits,
complex, risky and expensive efforts such as Deep Water Horizon in the Gulf of Mexico,
digging up the Athabascar oil sands and steaming the gloop out of it in Canada,
the Orinoco baisin in Venezuela may have the largest oil deposit remaining in the world but it is mostly a thick treacle that has to be steamed out of the ground and then blended with runnier oils from a different region before it is viscious enough to be processed into a final product,
hydraulic fracking, a technique previously used to extend production in existing but now depleting oil fields in now being used as a primary form of extraction, shattering deep rock for a momentary puff of natural gas or a dribble of oil,
vast amounts of debt are being poured into oil and gas extraction with rising costs and diminishing returns,
the ERoEI that started in the late 1800’s at 200:1 has now diminished to 10:1
in 1850 there were 1 billion people on the planet, today there are 7.5 billion and rising,
there just isn’t enough cheap and freely available fossil fuel energy to go round anymore and as energy is the driver of all modern economic activity we can see it in the stagnation of the global economy,
the era of fossil fuels is coming to an end and we can choose to adapt and change to that reality or just soldier on in a futile effort to perpetuate it,
renewable energy certainly can help us move away from oil dependency but it will never be able to replace the vast amounts of fossil energy that we have become accustomed to relying upon in the last 100 years,
unfortunately, with the present political obsession and the economic neccessity for growth to keep our teetering Fiat money Ponzi global economy going, renewables are just being used to add to the total energy mix, no fossil fuel consuption is being reduced, growth demands ‘More!’ and we scurry around trying to feed the insatiable beast, by any means possible,
oil is running out, so is gas, so is coal, it will become more expensive as it happens,
renewables have improved in efficiency and dropped in cost but the majority of gains may already have been made, gains in efficiency will always drop off as optimum efficiency is approached,
renewables may have become more economically viable as their ERoEI has risen and fossil fuels ERoEI has dropped but renewables will never be able to supply the sheer concentration of energy locked in those fossil ‘Wonderfuels’ of yesterday,
building a 300MW tidal power project is a wonderful thing but it won’t offset the decommissioning of a 3,000MW nuclear power station,
we are looking at a future with more people and less energy to go round,
we need to accept this and find an equitable way to provide sufficient energy for everyones basic needs but we will never be able to provide enough for individuals greed,
and we need to accept growth is over, because there is no longer a surplus of energy to drive it,
as much as we need something like a GND to facilitate the transiton to a new reality we also need to wake up and smell the roses, the future isn’t going to be like the past, the 20th century energy party is over,
welcome to energy austerity, let’s make sure it isn’t translated into economic austerity by those wishing to continue their profligate consumption whilst others have to bear a greater loss to theirs,
and finally bringing back climate change to the subject, the longer we leave this transition, the worse the climate chaos will become and the more challenging doing anything will be,
[…] Cross-posted from Tax Research UK […]