#11 The Battle for The Green New Deal

The Battle over the Green New Deal

Forfatter

Gregory Ferguson-Cradler

Illustrasjon

Catrine Kooyman


Climate politics have returned to the national agenda in the United States. After the last major national climate change proposal died an unceremonious death over a decade ago, the issue has now returned in far more ambitious form. Championed by activists and a new group of progressive lawmakers, the «Green New Deal» seeks to address the awesome challenges of global warming with a conscious appeal to the legislation that established the American welfare state – Roosevelt’s New Deal.

Normally in American politics, fault for lack of any sort of climate change ideas or movement at the national level is laid fully in the laps of the Republican party. No doubt, the Republicans’ utterly radical nihilism can hardly be denied. However, the seemingly responsible party on the other side of the aisle has not exactly been bubbling over with ideas either. Green policy was not in the lists of priorities of the national Democratic party after the 2018 elections and the subsequent push by activists that invigorated the party – particularly its progressive wing – has been largely met with a cold shoulder from the party leadership.

«The reference to the New Deal is deeply important as the GND takes on the legacy of the 1930s in all its complexity»

Yet, while the House leadership has sternly shown the freshmen progressives and activists their supposed place in the pecking order, this has been drowned out in a wave of attention around the Green New Deal (GND). The GND, then, is not only of potential planetary importance but it is also an issue that illustrates the state of the Democratic party today, its fissures and internal battle lines that might well determine the direction and shape of the party going forward. Should the Democrats move forward as the party of responsibility and realism in the face of Republican extremism, aiming to pass important legislation by keeping objectives centrist to appeal to moderate Republicans in the spirit of concession-driven bipartisanship? Or is a fundamental restructuring of American capitalism in order and the only way to sufficiently respond to the scope and scale of the climate challenge? This article summarizes some of these debates before moving on to suggest a deeper, structural defense of the GND that has been little noted as of yet. At the heart of the discussion is a seemingly simple question: how interrelated are the twin crises of climate and inequality?

Leadup

Investments in renewable energy, green jobs and safeguarding of labour rights, are fundamental parts of the Green New Deal. Photo: Nicholas Doherty/Unsplash.

While the name of the Green New Deal goes back a decade, the history of the precise term itself matters little. The reference to the New Deal, however, is deeply important as the GND takes on the legacy of the 1930s in all its complexity. On the one hand, the New Deal denotes the cluster of legislative packages passed by the Franklin D. Roosevelt administration in response to the damage wrought by the Great Depression. It established a welfare state in the US, employed many of the unemployed when no one else would, and established a class compromise that served as the foundation for the golden-age American democratic capitalism in the postwar era. So too, however, did it leave large parts of the population out in the cold, including domestic and agricultural workers. The exclusion most heavily hit women and black populations. This was not, as Jefferson Cowie has recently shown in an enlightening book, a casual or incidental flaw in the legislation. It was part of the grease that made passage possible in a small and ultimately fleeting policy window. It could easily have not come to pass. As Cowie argues, lack of anything even remotely resembling the welfare state would have been a continuation of the norm in American politics, rather than any sort of anomaly.[1] Thus, the New Deal was the closest thing to a social democracy the United States has ever had, yet its entire existence was prefaced by its being exclusionary. This legacy is very much in the minds of the largely young and decidedly multi-ethnic group of activists now promoting it.

For much of the last decade and especially following the defeat of cap-and-trade in the early Obama years, leftist climate activism has taken a distinctly local and moral tone. Exhortations coming from the left, such as Noami Klein‘s widely-celebrated This Changes Everything: Capitalism vs. the Climate, have painted pictures of hope in the form of activists, local communities, and indigenous populations battling against rapacious forces of business and capitalist greed willing to do anything – mine any mountain, pollute any valley – for a profit. The problem with so much of this activism, perhaps because it felt so defeated and hopeless, was that it offered no way forward. There were good people versus bad people. The willingness to pollute and contribute to global warming and other environmental crises was a moral failure. Structures of power and capital – and with it an understanding of how fossil fuel-based economies actually function – were notable only in their absence.

«For much of the last decade and especially following the defeat of cap-and-trade in the early Obama years, leftist climate activism has taken a distinctly local and moral tone (…) The GND, on the other hand, shines a bright light on structure and political economy»

The GND, on the other hand, shines a bright light on structure and political economy – the problem is not that of immoral, inherently greedy people or of «capitalism» – whatever that might entail and whatever the solution to that might be –  but is much more concrete: the organization and structure of the American political economy. This is a huge step forward. The text of the resolution, as introduced to the House of Representatives in February 2019, begins with summaries of climate science and impact estimates, citing in particular the recent Intergovernmental Panel on Climate Change (IPCC) report on impacts of 1.5 degree warming. Moving through the threat of climate change, it then shifts to noting the «several related crises» that include declining life expectancy, wage stagnation, and skyrocketing income inequality. Therein is the call to create a Green New Deal to achieve a transition to a zero-emission society, create good jobs, invest in infrastructure, and promote justice. The resolution then concludes with several pages of goals and proposed projects.

Pushback

Several major critiques of the GND have since appeared, to which we now turn. At the farthest right edge of rational and intellectually-honest argumentation is an appeal to the middle ground. This is the angle pushed by the Niskanen Center, a center-right think tank that sees its mission to one day lead the Republican Party out of the wilderness and back to sanity. The head of the Center, Jerry Taylor, recently penned an open letter (an 11,000-word open letter) to Green New Deal activists, presenting himself as the realistic grown-up teaching the starry-eyed youth the hard lessons of the real world. He wants them to succeed, he declares, but this is not how politics works.[2] Amazingly, in a document constantly taking the GND to task for lack of realism and containing sub-titles like «Magical Thinking Regarding Partisan Power», by the end of the document (and you have to get to the very end) the reader is presented the apparently not satirical argument that climate legislation needed for meaningful action can happen only by appealing to centrist Republicans who will be compelled by force of reason to vote for it.

This is, to put it mildly, fantasy. Many, if not most, of the Obama administration’s legislative priorities – climate, health care, foreign and fiscal policy – had their origins on the Right. Put in the context of most of continental Europe his policies were center-right or even far-right. The reception he got from Republicans can hardly be overstated; he might as well have been the second-coming of Vladimir Lenin. All Democratic proposals of any significance, no matter their contents, were met with blanket Republican opposition.

This has two implications. First, the Republican party has staked out a position where it merits exactly zero attention in designing and planning of policy. The party’s intransigence and bad-faith are guaranteed. Any analysis that does not begin from this position is either hopelessly naive or purposely misleading. Secondly, the Republican descent into an alternate reality fundamentally weakens centrist, «progressive neoliberal» Democrats as well.[3] This, together with the decidedly progressive orientation of the generation that has lived their entire lives under individualist, market fundamentalism – be it of Republican or Democratic variety – presents the left with a surprising potential window for major policy undertaking.

This brings us further left, where we get to the heart of the Democrats‘ soul searching and the GND‘s most trenchant and intelligent critics. One fundamental critique aims to drive a wedge between the two parts of the GND – that which is green, and that positing a new New Deal. According to this critique, made extensively across editorial pages, social media and the economic blogosphere, these are two separate issues. By affixing social democratic goals – job guarantees, housing, and higher education provision – to climate policy, the GND imperils the very climate action that it was designed to enable. Not just will it be hard to push through any sort of Congress, but it might be too expensive, too administratively difficult, or simply too much government to work. According to this critique, Democrats should focus on technology with massive state-sponsored research and development, infrastructure spending, a price on carbon, and progressively-structured taxes and subsidies.[4] The core of this argument is that, by wanting to have it all, the GND runs the risk of getting nothing, dooming us all to disastrous warming. Let’s save the planet first, then we can debate social democracy. The Green New Deal proponents in this way are rhetorically even turned into climate adversaries: by insisting on having it all, they put the planet at the risk of getting nothing. From here it is a short step to arguing that the Green New Deal is actually harmful to the climate and will only exacerbate global warming.

Defenses

To be sure, the text of the GND making the connection between environment and economy is somewhat clumsy. It opens with a quick summary of the climate crisis and conclusions of the recent IPCC report. A page and a half in it shifts gears, noting that the US is «currently experiencing several related crises» before beginning to list the nations’ socio-economic troubles. Several «whereas» clauses later the text suggests that mobilization to defeat climate change will offer an historic opportunity to create new jobs, provide more prosperity, and right systemic injustices.

According to this first argument, implicit in the text of the resolution, climate policy is always, already economic policy. The economic-environmental policy of building highways and creating the modern suburb, crafting farm bills that now define American agriculture, and the effect of implicit subsidies reaped by fossil-fuel industries show that there is no politically neutral climate-economic policy.[5] It‘s not a bad argument and it’s not a wrong argument but neither is it a decisive rejoinder to its progressive neoliberal critics. Why, after all, do you need universal healthcare, a jobs guarantee, or free college to reach zero emissions?

The second defense appeals to strategic politics and the necessity of coalition building. This says that we need to offer something to everyone if we want climate legislation to pass. This argument suggests that the various strong social aspects of the Green New Deal might not be obviously necessary to cut carbon out of the economy but in the messy world of coalition-building and horse-trading politics, this is the only way to achieve the major change the GND would require. Paul Krugman has suggested that this is simple policy-making pragmatism.[6]

«the various strong social aspects of the Green New Deal might not be obviously necessary to cut carbon out of the economy but in the messy world of coalition-building and horse-trading politics, this is the only way to achieve the major change the GND would require

One attempt to split these differences is the now well-cited argument that the core strategy of the GND is not actually new at all but simply harks back to a time when the United States had an articulated and forceful industrial policy, a line of policy that runs back to Alexander Hamilton and the earliest days of the republic. The GND returns to this, so this argument goes; it is an industrial policy for the twenty-first century.[7] Clearly, though, this is a reading of only a small fraction of the proposal as a whole. It is also not obvious how important manufacturing actually should be to the US. Sure, the US has lost much of its manufacturing sector. Employment in manufacturing has crashed in the last two decades from a peak of almost 20 million in the late 1970s and some 17 million in 2000 to just 12 million today. In percentage terms, however, the decline has been essentially constant since 1944, from over 38% experienced during the last days of WWII to well under 10% of US total employment.[8] No doubt this has led to untold hardships but it is a long and structural trend that would be hugely difficult to reverse.

Germany‘s manufacturing sector, the Exportweltmeister, is some 22% of total employment as of 2017, yet it too has been in steady decline since the 1970s.[9] This also makes Germany dangerously susceptible to Chinese economic swings and the temper tantrums of presidents of major trading partners. More importantly, is the objective of the green economy and post-carbon age really to make material stuff? The R&D components of the GND should by all rights be far more important than any manufacturing renaissance. This is where degrowth and more run-of-the-mill economists meet. If degrowthers say we need less growth in order to acheive less output, the response of the mainstream is that, no, we need less material output rather than decreased growth per se. This is, in fact, the trend in modern economic history.

«Whether or not carbon is taxed directly, decarbonization will cost something. If pursued rigorously, it will cost quite a bit»

In thinking about what a transition to a post-carbon society will look like, we must pause to consider how radical the change will need to be. On the one hand, whether or not carbon is taxed directly, decarbonization will cost something. If pursued rigorously, it will cost quite a bit. Current estimates for a ton of CO2 are on the order of 250€ by 2030. Proceeds from such a tax can be returned to taxpayers and redistributed to soften the blow on the poorest but the overall shock to the economy will lead to a significant, if temporary, reduction in overall economic activity, as Jean Pisani-Ferry has argued.[10] Huge swaths of the population will be made less well off and will need to be compensated if climate action is to be politically feasible in a democracy – or indeed any state relying even remotely on popular legitimacy, including semi-democracies and even authoritarian regimes.

This also explains why the carbon tax might be losing steam in climate politics. It may be more efficient on paper and is favored by many, especially on the progressive neoliberal side of the Democratic party. However, messier and theoretically less efficient measures such as subsidies or clean-energy mandates focus on the positive aspects of the transition rather the (costly) negatives. Thus, the GND’s omission of a carbon pricing mechanism could turn out to be a politically astute move.[11]

How do social welfare and climate fit together?

Photo: Christopher Burns/Unsplash

While the defenses of the GND have been fruitful and productive, they haven’t nailed it on the head. In the final segment of this article, I sketch out a deeper and potentially more compelling line of reasoning. In brief, neither defenses nor critiques of the GND recognize just how fundamental a shift in the foundations and relations of production and provisioning of services decarbonization could cause.

Among those most aware of the structural implications to the climate challenge are central banks. The Bank of England has noted two «tiers» of financial assets that could be severely and negatively impacted by the energy transition. In the first tier are companies impacted by limits on production and use of fossil fuels, including particularly ‘stranded’ carbon assets that will have to be left in the ground. In the second category are those that will be affected indirectly by energy costs during a transition. These two tiers represent some 30% of global equity and fixed-income investments.[12] And these are just those at severe, negative risk during the carbon transition, the total portion whose daily work, organizational structures, and business plans will be affected is surely larger. How might this affect income and power distributions at an aggregate level?

«neither defenses nor critiques of the GND recognize just how fundamental a shift in the foundations and relations of production and provisioning of services decarbonization could cause»

One telling example comes from Germany, a country well-known for its power- and income-sharing institutions, particularly when compared with English-speaking countries. As retold in a recent article in the Economist, Volkswagen and its new CEO have taken on the climate change challenge. However, the management and shareholders of Volkswagen are most driven not by pie-in-the-sky love of Mother Earth and only secondarily by long-term growth of the company. The shift to a post-carbon world promises something far more valuable: the opportunity to fundamentally weaken labor and increase share-holder earnings at the expense of its workers. Naturally for the Economist, this is the very definition of «good governance» which is helpfully explained to the reader of the article with a quote from a representative of an equity research firm.[13] Manufacturing, as the article explains, is expected to be some 30% cheaper for electric vehicle drive-trains than internal combustion engines. Volkswagen can thus use technological changes in the green shift to argue for labor cuts and decreased union and worker representation in company decision-making processes. So too is it using the argument to portray labor as fundamentally anti-environment, an argument that, for Volkswagen, is ironic to say the least.

As the carbon transition kicks into higher gear, this is a process that will be repeated over the entire breadth and width of the global economy. The transition will involve deep and structural reorganization of production and rendering of services. It would be utterly naive to think that capital will not try to use this to its advantage, whether these shocks are negative or, as in the case of Volkswagen, actually positive. In our new Gilded Age, with capital’s hold on wealth and influence never greater, we have to expect owners, investors, and their agents in management to prevail in installing their preferences the overwhelming majority of the time.

Thus, it is clear why the argument of the progressive «realists» that we should first save the planet, then take on inequality should ring false: The transition is not something that will happen by itself while everything else remains static. The model needs to be dynamic. The transition, without any effort to structurally empower workers and other disadvantaged, will only empower the already powerful. A decision cannot be avoided: An argument for ‘just saving the planet’ is, in our current political economy, inherently also an argument for further exacerbating economic and social inequalities.

«An argument for ‘just saving the planet’ is, in our current political economy, inherently also an argument for further exacerbating economic and social inequalities «

The logic of the Green New Deal’s «non-climate-related articles» – job guarantees, workplace rights, protection of unions and means of collective bargaining – can be seen as measures to give workers and non-elites the means to negotiate on a more level playing field. Furthermore, we might ask if perhaps the many non-market, non-monetized mechanisms of the GND might not also have the effect of furthering social solidarity, things that money and profit are famously good at tearing apart. This is ‘politics against markets’ to use Esping-Andersen’s famous turn of phrase.[14] Maybe non-market-based policy is to be favored because it furthers collective action even if it is less efficient in a narrow fiscal sense?

Environmental economics advances the concept of the environmental externality – the cost of economic activity that is not generally borne by the producer and thus not factored into the price.  Perhaps inequality furthered as the result of economic activity should also be conceived of as an externality. As with any other externality, the cost to society should be factored into the cost of production. Current work on green finance and central banking has posited that finance and central banking have a ‘carbon bias’ in the many ways in which the rules and maintenance of finance – both jobs of the state – prefer carbon-based activity by not calculating the externalities of carbon creation.[15] We might then also seek to identify and rectify ‘inequality biases’, therefore making it relatively more expensive to conduct activity that increases inequality. Thus, financing and tax arrangements could be structured to significantly favor worker-owned and operated firms or state-owned businesses, perhaps contained within a sovereign wealth fund.

Conclusion

The increasing number of protest-movements against environmental regulations around the world – from the yellow vests in France, coal miners in US Appalachia, and anti-toll road activists in Norway – should make anyone on the left uncomfortable and worried. In important ways the underprivileged are suffering disproportionately from the need to undertake climate politics. Both these people and the right populism they are frequently drawn to might be a huge potential roadblock to preventing catastrophic warming. This is the message of the Economist on Volkswagen, where we are told that it is unions standing in the way of climate progress.

«We do not have to accept the opposition of underprivileged, right-leaning populists against the climate. This is the framing the Green New Deal sets out to reject»

We do not, however, have to accept the opposition of underprivileged, right-leaning populists against the climate. This is the framing the Green New Deal sets out to reject. If labor, rural, poor, or other disadvantaged groups line up against climate legislation – even if, perhaps especially if, they seem to be backed by other interests keen to limit climate legislation and divide climate activists from other parts of the population – this is far from inevitable. It is because specific political economic institutions pit them against one another. We could have institutions in which the poor stood to relatively gain from environmental legislation and economy-remaking policy. That we don’t is an indictment of our system, not them. This is the challenge, but also the promise, of a comprehensive transition to a carbon-free future.


References

[1]     Jefferson Cowie, The Great Exception: The New Deal and the Limits of American Politics. Princeton: Princeton University Press, 2016.

[2]     Taylor, Jerry, «An Open Letter to the Green New Dealers», Niskanen Center Blog. 31.03.2019.

[3]     This is perhaps best summarized by the admirably honest reflections of a self-described neoliberal Democrat, Brad DeLong, «A Clinton-era centrist Democrat explains why it’s time to give democratic socialists a chance», Vox. 4.03. 2019.

[4]     One smart take of this variety is Bloomberg columnist Noah Smith, «How to Design a Green New Deal that Isn’t over the Top», Bloomberg Opinion. 12.02.2019.

[5]     A strong statement of this is Jedidiah Purdy, «The Green New Deal Is What Realistic Environmental Policy Looks Like», New York Times. 16.02.2019, p. A21.

[6]     Krugman, Paul, «Purity vs. Pragmatism, Environment vs. Health», The New York Times. 12.02.2019, A27.

[7]     For this point, see Robinson Meyer, «A Centuries-Old Idea Could Revolutionize Climate Policy», The Atlantic. 19.02.2019. It also builds on the influential arguments of Mariana Mazzucato, The Entrepreneurial State: Debunking Public vs. Private Sector Myths. New York: Penguin, 2018.

[8]     Baily, Martin Neil  and Bosworth, Barry P., «US Manufacturing: Understanding Its Past and Its Potential Future», Journal of Economic Perspectives 28/1 (2014): 3-26, summarized in The FRED Blog, «The Decline of Manufacturing», 21.04.2014.

[9]     Dauth, W, S Findeisen and Suedekum, J., «Trade and Manufacturing Jobs in Germany», American Economic Review, Papers & Proceedings 107/5 (2017), and FRED Economic Data, «Percent of Employment in Manufacturing in Germany».

[10]   Pisani-Ferry, Jean. «The Case for Green Realism». Project Syndicate. 27.02.2019.

[11]   Leonhardt, David. «The Problem with Putting a Price on the End of the World». The New York Times Magazine. 09.04.2019.

[12]   Bank of England Prudential and Regulation Authority, The impact of climate change on the UK insurance sector. September 2015.

[13]   The Economist. «VW’s newish boss is going full-steam ahead with electric cars». 14.03.2019.

[14]   Esping-Andersen, Gøsta, Politics against Markets: The Social Democratic Road to Power. Princeton: Princeton University Press, 1988.

[15]   D’Orazio, Paola and Lilit Popoyan.  «Fostering green investments and tackling climate-related financial risks: Which role for macroprudential policiesEcological Economics 160 (2019): 25-37.