John Locke Update / Research Brief

Green New Deal Relies On Threat Or Use Of Government Force

posted on in Economic Growth & Development, Economics & Environment, Fiscal Insight, Spending & Taxes
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As the specifics (and many of the absurd objectives) of Rep. Alexandria Ocasio-Cortez’s Green New Deal (GND) have come to light, the common refrain from Democrats who support it is that the plan is “aspirational.” In other words, they believe the world that Ocasio-Cortez envisions is somehow ideal. It is the world we all aspire to live in. But is it?

Let’s be clear. The world that so many Democrats are proclaiming as “aspirational” will be achieved and maintained almost completely by the use or threat of government force. The goals outlined – the elimination of air travel to be substituted for with high-speed trains, the rebuilding or “retrofitting” of all structures, the elimination of cows (and along with it beef and cheese) – cannot be realized without explicit or implicit threats of force.

In other words, the plan is to transform society forcibly. This has been the starting point of every totalitarian regime of the last 100 years. And, in fact, there are no examples of governments that have started with this premise and attempted to carry out their plans that have not ended in totalitarianism, regardless of whether they arose from violent takeover, as was the case in Russia or Cuba, or from some form of democratic process, as has been the case with Nicaragua and Venezuela.

The fact is that when a complete transformation of people and their lifestyles – from their morals and religious beliefs to their eating habits and travel plans – is the goal, which surely is the aim of the GND, then no one would be allowed to say no to the state. No homeowner would be allowed to say, “No, I don’t want the government to rebuild my house. I like it the way it is.” No farmer would be allowed to say, “No thanks, I want to continue to raise my dairy cows or beef cattle.” No landowner would be allowed to say, “No, I don’t want my property taken to make room for a new high-speed rail line.”  No airline company would be allowed to say, “I think we want to stay in business and continue to serve those travelers who prefer flight to rail, no matter how high speed it is.” Such resisters would all have to be thwarted, and it won’t be through logical persuasion or simple cajoling. It will be by the use of fines, prison, or worse.

Could this lead to 1 million percent inflation or worse? The answer lies in how the government would pay for GND’s societal makeover. In addition to calling for a 70 or 80 percent tax increase on the wealthiest Americans, she advocates for increased debt to be underwritten by the Federal Reserve. It is what she and others are referring to as “Modern Monetary Theory.” Without explaining the theory behind this junk social science, the bottom line is that the plan would be funded by massively inflating the money supply. The money to pay for the GND will be “created out of thin air” or, actually, ledger entries at the U.S. Treasury. It might be a cliché to say that inflation is too much money chasing too few goods and services, but it is true nonetheless.

Ocasio-Cortez’s funding scheme hits the price-level from both sides of this equation. She calls for massive new debt financing paid through massive new increases in the money supply, while simultaneously incentivizing the economy not to produce valuable goods and services by imposing exorbitant new taxes and onerous regulations. The combination will be a disaster of Venezuelan proportions. As the output of basic consumer goods and services shrink and the money supply grows, prices will necessarily rise and shortages will develop. This means the tax base will shrink, which will add pressure to expand the growth of the money supply even further to pay for the GND’s programs. This will produce additional increases in the price-level and more shortages. The resulting spiral downward should be obvious. It is exactly how Venezuela ended up where it is today, in extreme poverty and with a currency that is almost worthless.

Attribution:Senate Democrats [CC BY 2.0 (https://creativecommons.org/licenses/by/2.0)]
https://upload.wikimedia.org/wikipedia/commons/9/99/GreenNewDeal_Presser_020719_%2826_of_85%29_%2846105848855%29.jpg

Roy Cordato is Senior Economist and Resident Scholar at the John Locke Foundation. From January 2001 to March 2017, he held the position of Vice President for Research at the Locke Foundation. He also holds the title of Lecturer at… ...

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