The ‘green’ vote is becoming a determining factor in the US election campaign. Bernie Sanders’ proposal has a very special profile. Besides the EU political elite and corporate lobbyists, there is little to stop this sort of solution being adopted in European nations.
You can read Part 1 here
Juan Laborda teaches Financial Economics at the University of Carlos III and Money and Banking, Syracuse University (Madrid)
Originally published in Spanish at vozpopuli
Translated and edited by BRAVE NEW EUROPE
The global economy is slowing noticeably, so that as risk aversion in financial markets increases a new recession will occur, the second phase of the Great Recession. The weakest link now are the innumerable non-financial firms that have entered a new quagmire, a flood of debts of their own making. They have been boosting their stock prices with corporate acquisitions and/or never-ending buybacks of their own stock, both financed by low-interest loans and junk bond issues. Along with zombie banks, we will now also have zombie corporations. In the face of the coming crisis, it is necessary to implement new economic policy measures as alternatives to the dominant orthodoxy. The mistakes made during the Great Recession cannot be repeated.
The alternative is already defined by Modern Monetary Theory (MMT). Even someone as suspicious as Mario Draghi considers that conventional economic policies no longer work, so it is necessary to study alternatives such as MMT. The aim is to translate this into concrete economic policy measures and actions, namely two, the Job Guarantee and a Green New Deal. Of all the “Green New Deals” that have been announced, the most interesting is Bernie Sanders’ plan to fight climate change because of the amount of money it would mobilise -16 trillion dollars-, also due its approach as a public investment instrument, and because of its ambitious timetable. In my previous blog (here) I detailed the implementation schedule and the resources it would mobilise. In this one I shall focus on the political will and its connection with the Job Guarantee proposal.
Sanders’ Green New Deal is serious
The various aspirants of the Democratic Party to face Trump in next year’s presidential race have shown their willingness to declare the fossil fuel industry as their adversary. But even among the contenders willing to fight the producers of coal, oil, and natural gas, Sanders took the most aggressive position. He will order the Justice Department to prosecute fossil fuel companies. “They have evaded taxes, desecrated tribal lands, exploited workers, and poisoned communities,” his proposal explains. President Bernie Sanders will ensure that his Justice Department and the Securities and Exchange Commission investigate these companies and file criminal and civil lawsuits for any crime, just as the federal government did with the tobacco industry in the 1980s. This adds to Sanders’ calls for civil litigation, increased pollution fines, higher taxes on emitters, and a requirement for fossil fuel producers to bear the costs associated with environmental disaster risks.
Sanders would undoubtedly clash with a rich and powerful enemy if he became president. Fossil fuel producers have a massive network of think tanks, lobbyists, and lawyers who have long frustrated climate change ambitions, and, with their very existence at stake, are likely to fight more than ever with demands, public relations campaigns, and political pressure.
Fighting Climate Change and a Job Guarantee
Sanders boldly claims that his Green New Deal will “end unemployment” due to the number of workers it will require: 20 million jobs. Currently, approximately 6 million Americans are unemployed. These new jobs are closely linked to the creation of the green infrastructure needed to achieve 100 percent renewable energy for electricity and transportation and the overall reduction of carbon emissions. The plan lists the different areas where jobs would be created. On the one hand, industry, to build energy-efficient cars and boats; on the other hand, the implementing of energy efficiency in housing. Also worth mentioning are new renewable energy plants and expanding wind and solar energy; the adoption and promotion of sustainable agriculture; and investment in such areas such as engineering, research and development.
The plan calls for a new version of the Civil Conservation Corps, a public works programme of the Franklin D. Roosevelt era that put unemployed young people in the Great Depression to work on forest management, flood control, conservation projects, and the development of state and national parks, forests, and historic sites. It also allocates $1.3 trillion for workers currently working in fossil-fuel- and carbon-intensive industries to find jobs with large social benefits and a living wage.
While much research shows that infrastructure investments would certainly boost the economy and increase jobs – especially an investment as large as that proposed by Sanders – the real long-term impacts on labour demand levels are more difficult to project, according to a 2014 study by the Economic Policy Institute. In addition, promises of jobs with green economy proposals often encounter barriers when it comes to the composition of the workforce. A 2019 Brookings Institute study found that the clean energy economy workforce is currently “larger, dominated by male workers, and lacks racial diversity when compared to all occupations nationwide. The Sanders plan seeks to address this problem through job training and local hiring, and through targeted investments in underrepresented groups, such as support for women-owned businesses, women farmers, as well as low-income and disadvantaged communities.
The time is ripe
The growing movement of climate change activists wants the world to respond to the rising tide of extreme weather and climate disasters just as it would to another Great Depression or even war, as if it were an emergency. Sanders’ Green New Deal reiterates this S.O.S, saying that the magnitude of the problem requires a comparable “resource mobilisation during the New Deal and World War II”. This push to radically reshape the way Americans approach climate change is largely based on political stalemate. Climate policy has made no progress in Washington, where Republican leaders have made it their political platform to block any climate policy, incremental or bold.
Sanders’s Green New Deal is the only path to an integrated solution. The political action is clear. Put ordinary people at the centre and offer them a tangible interest in the future of the country, a part of its enormous wealth, and a role to play. Then organize people around that vision and demand it from elected representatives. If elected representatives do not press for it, make sure they are defeated. Sanders is certainly not the first to use the language of national climate emergencies. But this plan fits into his push for a political revolution to combat everything from the health care services to the fossil fuel industry.
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