It's Wednesday, and today I discuss a recently published analysis that has found that Australian…
All over the globe now there are cries for a Green New Deal. What constitutes the GND is another matter. Like the concept of the Job Guarantee, there are now countless versions springing out of various groups, some that only seem to offer a short-term, short-week job or other arrangements that fall short of the way Modern Monetary Theory (MMT) constructs the concept. There is only one Job Guarantee in the modern parlance and that is the MMT concept. Other job creation programs are fine but they should stop using the term Job Guarantee, which is a comprehensive macroeconomic stability framework rather than a job creation program per se. In the same vein, all manner of proposals seem to have become part of the GND. The problem is that many of these proposals sell the idea short and will fail to achieve what is really required – a massive transformation of society and the role the government plays within it. The imprecision is exacerbated by progressives who are afraid to go too far outside the neoliberal mould for fear of being shut out of the debate. So we get ‘modest’ proposals, hunkered down in neoliberal framing as if to step up to the plate confidently is a step too far. This is Part 1 of a two-part blog post series on my thoughts on the failure of the environmental Left and climate action activists to frame their ambitions adequately.
Many years ago, my research centre did work on issues relating to climate change – we modelled the employment impacts of shifting out of coal fired power to renewables, we developed a Just Transition framework to provide an adjustment structure for workers displaced by government decisions to engender these shifts.
At various public forums and presentations over many years, I also have argued strongly for a ‘rules-based’ approach to addressing climate change, as opposed to a ‘market-based’ approach.
This ‘rules-based’ approach would exploit the currency-capacity of the government – this dovetailing MMT nicely with climate action solutions.
Most people ignore the fact that the ‘market’ is just a government creation anyway in a modern monetary system – it is defined by law and regulated by policy choices.
I have always considered that anything like what we think of as a Green New Deal would have to have the government at the centre and not just altering rules about markets.
I mean nationalised, centralised solutions.
Further, it is fine to grow some vegetables and have a water tank in your garden with some solar panels on the roof. But these localised solutions are not of the scale required to match the problem. They might deliver solace to the home maker but will not save the globe from environmental destruction.
In this blog post – Climate change – Australian government further entrenches the market myth (August 29, 2012) – I discuss those views in more detail.
There is also a video presented there of a panel I was on in November 2009 with the then Federal Energy Minister talking about these matters.
The Australian Broadcasting Commission produced the program and the Transcript is available – HERE.
You will see that I argue that there is a fundamental choice to be made between a market-based solution or rules-based regulation to curb emissions.
This distinction – choice – is not central in the public debate because of the dominance of the neo-liberal ideology. Even The Greens are not advancing rules-based regulation in any coherent way.
The important point is that carbon trading schemes (CTS) are neo-liberal constructs which start with the presumption that a free market is the best way to organise allocation.
They recognise market-failure – that is negative externalities arising from the fact that the true cost of carbon use is not reflected in the final price we pay in the goods and services that rely on it and hence we over allocate resources to those industries.
But these trading systems then propose to use price incentives to reduce emissions through price incentives.
These trading systems amounts to nothing more than a privatisation of the commons asset which we call the atmosphere. The carbon trading systems create private property relations over public space.
I cannot believe progressive thinkers (including The Greens) would ever contemplate supporting such an approach.
In this blog post – Australia’s response to climate change gets worse … (November 15, 2009) – I present a fairly thorough critique of the orthodox and progressive approach to these issues.
There are many reasons why progressives should oppose these approaches.
The problem is that the Greens’ parties around the world have become the political front-line in the fight against climate degradation.
If you take a moment to analyse the policy positions, say of the Australian Greens, you will get a feel for the problem.
I have discussed my views on the Australian Greens in this blog post (among others) – Neo-liberals on bikes … (July 11, 2012).
On the Australian Greens’ – Home Page – we are told that “The time to act is now”.
… right now, things are getting serious. We’re seeing the impact of climate change all around us, threatening communities now and the quality of life we’ll hand over to future generations.
Now more than ever, politics needs a shake-up. We need to send a message to the major parties and demand strong action on climate change.
Climate activists regularly invoke the urgency of the problem. Now. Now. Time is short.
We get regular photos from far-flung places like – Alert (Canada) – reporting damage to permafrost, which has captured massive amounts of carbon but is now melting.
These scary scenarios definitely suggest urgency and I sense the climate denialists, like mainstream macroeconomics, are in retreat now as the evidence mounts that something rather bad is unfolding with respect to our impact on nature.
The urgency invocation is matched with eloquent calls for radical action – and these calls are increasing conglomerating around the Green New Deal banner.
But when one actually investigates the sort of action that is proposed – it soon becomes apparent that there is a massive shortfall in rhetoric and proposed action.
Consider the sort of action the Australian Greens propose – the quotes are from their current policy platform with my short assessment following.
1. “By making corporations pay their fair share, we can fund the things that benefit everyone: action on climate change, free TAFE and uni, dental care covered by Medicare and 500,000 affordable community homes.”
Thereby perpetuating the myth that taxes fund government expenditure on progressive pursuits.
2. “We will establish a new, publicly owned competitor to the private power companies, dedicated solely to driving down your costs instead of driving up its profits … we’ll increase competition in the existing retail market and end the profit- at-all-costs business model.”
Not nationalisation but competition to drive down prices. Profits stay in the system.
3. “ending toll road rorts” to enhance public transport.
Not ending private toll roads – just the rorts.
4. “We will create publicly owned energy and banking providers and stop Labor and Liberal governments from further privatising our essential services, including the electricity grid and the NBN.”
Not reversing the privatisation – just not letting it spread further beyond its already extensive reach.
5. “A green economy is one where we tax pollution and use that revenue to support households and transform our energy sector to renewables … we will legislate to re-introduce an economy-wide carbon price on direct emissions from facilities which emit more than 25,000 tonnes of CO2-e per year”
6. Supporting “global trading and offset markets”.
How will they control the rorts in the international markets? How will they stop heavy lobbying from large polluters for under priced permits, a problem that plagues the European Union Emission Trading Scheme?
How will they ensure that offset system do not have disastrous effects in poor countries and regions?
How will they address the exploitation of local subsistence communities in poor countries that has been rife as a result of dodgy offset schemes in existing trading systems?
The Australian Greens are not an isolated case.
The US Green party tells us it is “left-wing” in orientation and want to “Enact an emergency Green New Deal to turn the tide on climate change”.
Think about that – an emergency GND.
Its – Policy Platform – rehearses all the right ‘motherhood’ statements about climate change and has some very optimistic targets relating to reducing greenhouse gases and the like.
Despite these targets having had little impact to date.
But, what economic policies will they introduce to motivate this emergency GND?
Enact a Fee & Dividend system on fossil fuels to enable the free market to include the environmental costs of their extraction and use.
We will enact this same fee on imported fossil fuels a second time to give the free market an incentive to wean America off foreign oil and gas.
Pay for adaptation to climate change in countries with less responsibility for climate change.
I didn’t find one mention of nationalisation but lots of mentions of “decentralized” activity, “re-localized” activity, taxes to create incentives.
I could go on.
Have a look at the European Greens, and other Green parties around the world. You will see a similar orientation.
And driving this sort of market mania are contributions from people like Amory Lovins, from the Rocky Mountain Institute. A relatively recent incursion into the debate from Lovins was published in the New York Times (April 18, 2019) – A Market-Driven Green New Deal? We’d Be Unstoppable – where the title tells you almost everything.
I was reminded by this by an excellent article by Ted Nordhaus that was published in the latest Issues in Science and Technology – The Empty Radicalism of the Climate Apocalypse (Volume XXXV, No. 4, Summer 2019).
I will consider Ted Nordhaus’ intervention in more detail in Part 2 of this series.
But first, back to Lovins.
I first read his work in 1976, as a student when he published his famous article in Foreign Affairs (Volume 55, No.1, October, pp65-96) – Energy Strategy: The Road Not Taken? (which is behind a paywall now on the Internet – if you have library access the article is available from JSTOR at https://www.jstor.org/stable/20039628).
This is the article that set the pattern of how I consider the progressive environmental movement started to lose its way.
It was a commentary on US energy policy and was written not long after the famous Club of Rome publication in 1972 on – The Limits to Growth.
I just looked at my version and it was 211 pages long and sold for $US2.75. Clearly all those fiscal deficits since have cause prices to rise (joke – do not quote me – just laugh!).
They published computer simulations which showed that the current rate of economic growth was unsustainable in terms of the rate of resource depletion.
It really started the environmental debate around the world and attracted massive criticism from mainstream economists at the time (for example, Robert Solow) as being the work of “amateurs making absurd statements about economics”.
The point here is not the accuracy of the predictions presented (they were quite inaccurate and reflected the state of computing capacity at the time, in part) but that the scene was being set for people to challenge the material growth obsession by economists in the context of the natural environment.
What followed on almost immediately was the – 1973 oil crisis – when the OAPEC (the precursor to OPEC) imposed an oil embargo on nations supporting Isreal during the Yom Kippur War, which was an Arab attempt to regain land illegally seized by Israel during the Six Day War in 1967.
The price of oil rose by around 400 per cent in roughly six months after the embargo was imposed.
Many people started jumping on the energy bandwagon at that time and I always thought of Lovins first major article (cited above) in that context because he sought to outline and contrast “two energy paths that the United States might follow over the next 50 years”.
At the time, Lovins had the ear of governments and researchers intent on developing an alternative energy path.
There was a lot of reasonable discussion in that paper.
He claimed that the US should reject the dependency on fossil fuels and nuclear energy, and, rather, take what he called the “soft path”.
Much of his concern for the fossil fuel path was based on the financial cost of the capital investment required and he questioned President Ford’s capacity to fund the energy requirements with compromising other necessary public programs.
Diverting to the energy sector not only this hefty share of discretionary investment but also about two thirds of all the rest would deprive other sectors which have their own cost-escalation problems and their own vocal constituencies. A powerful political response could be expected.
By this time, the US was floating the dollar and was a currency-issuer. So Lovins was already framing the discussion about optimal energy policy in the growing neoliberal terms about government financial constraints.
Worse was to come.
He talked about the need for individuals to take local action to save energy use:
1. “we can plug leaks and use thriftier technologies”.
2. “we can make and use a smaller quantity or a different mix of the outputs themselves, thus to some degree changing (or reflecting ulterior changes in) our life-styles.”
3. “We might do this because of changes in personal values, rationing by price or otherwise, mandatory curtailments, or gentler inducements.”
4. “car-pooling, smaller cars, mass transit, bicycles, walking, opening windows, dressing to suit the weather” etc.
One gets the drift.
The “soft path” deploys what he considered to be “soft technologies” = “flexible, resilient, sustainable and benign” – which have five characteristics:
1. “rely on renewable energy … sun and wind”
2. “are diverse … energy supply is an aggregate of very many individually modest contributions …”
3. “flexible and relatively low-technology …”
4. “matched in scale and in geographic distribution to end-use needs …”
5. “matched in energy quality to end-use needs” – which relates to not using “premium fuels and electricity for many tasks for which their high energy quality is superfluous”.
The emphasis is on “small scale”, localised and individual action. His alternative “hard path” scenario involves centralised solutions to providing energy.
But what really turned me off at the time was his emphasis on market solutions.
Though economic answers are not always right answers, properly using the markets we have may be the greatest single step we could take toward a sustainable, humane energy future. The sound economic principles we need to apply include flat (even inverted) utility rate structures rather than discounts for large users, pricing energy according to what extra supplies will cost in the long run (“long-run marginal-cost pricing”), removing subsidies, assessing the total costs of energy-using purchases over their whole operating lifetimes (“life cycle costing”), counting the costs of complete energy systems including all support and distribution systems, properly assessing and charging environmental costs, valuing assets by what it would cost to replace them, discounting appropriately, and encouraging competition through antitrust enforcement (including at least horizontal divestiture of giant energy corporations). Such practicing of the market principles we preach could go very far to help us use energy efficiently and get it from sustainable sources.
That was in 1976.
I was appalled that the progressives would gather around this approach that saw making the ‘market’ freer (in the parlance – removing subsidies etc) as being the “greatest single step” to climate action.
As a young student who was working to develop alternative skills in economics to arm myself against the mainstream market approach to everything, Lovins writing appeared to be a progressive surrender.
His most recent Op Ed in the New York Times (cited above) on the Green New Deal continues this theme.
We read about a “business-led transition” to define the Green New Deal path.
Lovins and his co-author write:
1. “the Green New Deal … will need to harness America’s immensely powerful and creative economic engine, not dismantle it.”
2. “This means unleashing the market in sectors where we already know how to profitably reduce emissions (electricity, transportation, buildings), creating markets for solutions in areas where there aren’t yet enough answers (heavy industry, agriculture) and fixing market failures (unpriced carbon, for instance, or rewarding utilities for selling more electricity rather than cutting your bill).”
3. “we should let competition and flexibility rule our electricity system”.
4. “correcting our biggest market failure by putting a price on carbon by taxing it …”
5. “Fully leveraging the power of the market through smart, trans-ideological policy would make us unstoppable.”
This reliance on the ‘market’ is fraught, especially if we are truly talking about an emergency.
The typical economist says that you can pay for pollution through growth.
Mainstream economists think that the solution is to refine the alleged trade-off between economic growth and pollution by ensuring that all costs are accounted for in the prices offered to the market.
This assumes that there is some known pollution level that is safe.
But market systems do not know when a biological system dies – so we need to be more risk averse than economists would recommend.
As Ted Nordhaus convincingly observes:
At a moment when advocates make a range of demands that are simultaneously vague and controversial, from ending capitalism and economic growth to rejecting materialism and consumption to reorganizing the entire global economy around intermittent sources of renewable energy, almost no one, in either electoral politics or nongovernmental organizations, seems willing to demand that governments take direct and obvious actions to slash emissions and replace fossil energy with clean …
Practically, the specific decarbonization policies advocated by environmentalists and progressives are incremental, lukewarmist, and neoliberal, boiling down to some variant of either regulating corporations to stop them from doing things that produce carbon emissions or subsidizing them to use energy and other technologies that reduce carbon emissions-mostly the very small set of technologies and practices that environmentalists approve of: wind, solar, bioenergy, electric vehicles, and organic farming.
In Part 2, I will explore these ideas and Ted Nordhaus’ intervention in more detail (Monday).
That is enough for today!
(c) Copyright 2019 William Mitchell. All Rights Reserved.