The Green New Deal: a bold plan to save the planet

The Green New Deal proposed by a group of US politicians would be expensive and unworkable, says Matthew Partridge.


Ocasio-Cortez: the talk of the town
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American political history is a long story of "waves of progressive enthusiasm breaking on the rocky shores of Washington DC, to no lasting effect", says David Roberts on Vox. A group of Democrats, including Congresswoman Alexandria Ocasio-Cortez, aim to change that. They have launched a "radical environmental plan" that has become the "talk of the town". Their "Green New Deal" is "a massive programme of investments in clean-energy jobs and infrastructure", meant "to transform not just the energy sector, but the entire economy". It aims to make the US economy carbon- free by 2030 and to "make it fairer and more just".

Is it workable?

The "vast programme for economic egalitarianism" proposed which includes a universal basic income for those "unable or unwilling to work" makes the deal even more "unworkable". Adding the cost of the environmental and social programmes together suggests that government spending would have to rise by $6.6trn a year or by 34% of GDP.

Still, it would be a mistake to ignore the plan completely, says Robert Hockett in the Financial Times. True, the environmental aspects alone make for a larger undertaking than that of any American government since Franklin D Roosevelt's original New Deal and the US mobilisation for the World War II. But the problems the plan addresses "require solutions where bigger is better, imperative and, paradoxically, more affordable" than the alternatives. Economies of scale and the snowball effect (where rising temperatures increase carbon emissions) mean that, where climate is concerned, "acting faster will yield greater impact than acting sluggishly".

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Shifting theOverton window

Nonsense, says Niall Ferguson in The Sunday Times. Floating wild schemes that have no chance of being implemented in order to shift the debate is "what you get when you recruit your legislators more or less directly from college". This isn't just some fringe plan it has been "endorsed by (thus far) five of the leading candidates for the Democratic nomination in 2020". The whole kerfuffle shows that the Democrats "are not one party, but two: a liberal and a socialist". The reality is that the former can beat Trump, "but not if it is associated with the latter".

EU makes a welcome stand for markets

The justification offered that Europe needs "a national champion in train and signalling manufacture to compete with the likes of China's CRRC" is "nonsense". CRRC does notyet provide any meaningful competition to Siemens and Alstom in non-Chinese markets. And in any case "there are better ways of competing against the cheating, stealing Chinese behemoths than creating a matching monopoly".

It may be a pyrrhic victory, says Ben Hall in the Financial Times. France has decided the EU merger rules are "obsolete"; Germany has demanded changes to "better take into account the demands of international competition". This is a mistake competition policy is there to serve customers, not just two countries with big corporate interests.

Still, if anyone is prepared to make the case for competition and markets it's Margrethe Vestager, the European Commissioner for Competition, says The Economist. During her time in the job, she "has taken on mighty corporate interests where others would have wavered", including Apple, Google, German carmakers, and even bond traders. Indeed, she has even been tipped as the next president of the European Commission. "Europe's liberals talk much about the need to rebuild confidence in the EU in populist times. In Vestagerthey have a chance to pick a head of the European Commission who actually believes in enforcing the rules."

Dr Matthew Partridge

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri