The Economist is probably the smartest newsweekly going, so it's pretty stunning how bad this editorial is. It shows an almost willful disengagement with Obama's proposals.
The editorial argues that the newly popular idea of a Green New Deal is misguided. Yes, we need to address climate change. Yes, we need public spending to stimulate the economy. But we shouldn't direct public spending toward addressing climate change.
WTF, you ask? Well, according to Economist editors, there are only two ways to reduce greenhouse gas emissions, price signals or subsidies, and of those two, only the first work, because ethanol subsidies were bad policy and German renewable subsidies made silicon more expensive for other countries. Picking winners something something! Ergo, no Green New Deal.
That's really the whole argument.
Let us count the ways that's dumb.
First, a big chunk of the proposed Green New Deal spending is on green infrastructure: public transit and electrical grid. Does that count as "picking winners"? It will benefit everyone who travels or uses electricity and lay the foundation for future carbon-constrained economic growth. And infrastructure is widely viewed as one of the most effective forms of stimulus spending.
Second, another part of the Green New Deal is regulatory standards and targets -- efficiency standards, fuel economy standards, a carbon cap, the kinds of market-shaping parameters that drive innovation. Contra Economist, these are not alternatives to a New Deal but an intrinsic part of it.
Third, how about spending on R&D? Does that count as picking winners?
Fourth, during WWII you can be damn sure they picked winners -- they didn't have time to let the market settle on the the maximally efficient maker of tanks and bombs. They just dumped money into making the stuff. And the massive ramp-up of industrial capacity produced economic benefits that vastly outweighed whatever inefficiencies came from "bureaucrats" "picking winners" among, say, steel smelters.
Is this kind of free market jerk of the knee all we can expect The Economist to contribute to the important ongoing dialogue over green stimulus? Disappointing.
(As I speak: The Economist's own Free Exchange blog pushes back against the op-ed. Nice job, nameless Economist blog writer.)
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Comments
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Ted Nace Posted 7:29 am
11 Nov 2008
Help build CoalSwarm-- a shared informational resource on coal and alternatives to coal.
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Jason D Scorse Posted 9:26 am
11 Nov 2008
We need to focus on the root causes of problems.
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Jon Rynn Posted 10:48 am
11 Nov 2008
The problem that The Economist has is that it's ideologically committed to the idea that the market picks the optimal solution, within a particular market and in the short term. Let's assume that that's true; the problem is that, in the long-run, the entire system is in danger of collapsing. It's not a question of optimization; it's a question of survival. If we get a suboptimal solution but the system survives, that's much better than a large risk that the system will collapse.
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Pangolin Posted 11:36 am
11 Nov 2008
Performance based payment would be nice but as of several weeks ago the US is a socialist nation. It's time to choose a path and make it a road.
Put the Carbon Back
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Sam Wells Posted 12:07 pm
11 Nov 2008
The problem with the article in the Economist is that is just wasn't written very well. I detect the hand of a rookie or distracted, aged person.
That said, there is a case to be made that the government shouldn't directly invest in a particular technology, but only help provide the R&D, infrastructure, and seed money to start things up. That's MY point and I'll stick by my guns. I'm big on the infrastructure thing and I think many of us are, too, including Obama.
The Ethanol Disaster is something of a poster child for why the government should not be directly involved in heavy subsidies for the end products - combustion power, electricity, or whatnot. I realize that wind power is still addicted to a subsidy of a few cents a kilowatt hour, but my druthers are that this addiction should be rehabilitated.
In the case of wind power, if the infrastructure was improved - all those electric lines and towers - then they might not need such subsidies. If the archaic laws regarding power loading were fixed, they would do even better. If the government invested in "smart transmission," well now we're getting somewhere!
Onward through the fog
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Jon Rynn Posted 12:25 pm
11 Nov 2008
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amazingdrx Posted 1:16 pm
11 Nov 2008
The new deal did not end the great depression, WW 2 war production and related job growth ended the great depression.
"The Economist" is aptly named. It is as short sighted, dogmatic and just plain wrong headed as nearly every economist that believes in "free" markets like fundamentalists believe in their religion.
Pick some winners and order up millions of units of them Barack. Don't give Detroit a bailout until they agree to provide those winners at an affordable cost.
http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin
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Biodiversivist Posted 1:56 pm
11 Nov 2008
In the end, it all comes down to biodiversity. Poison Darts--Protecting the biodiversity of our world
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amazingdrx Posted 2:12 pm
11 Nov 2008
Economists' followers deserted them in droves. They never even had a messiah. Maybe that was their downfall. Dismal seyance (sic) indeed!
http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin
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Delay And Deny Posted 3:03 pm
11 Nov 2008
The primary problem...the problem at the root of it all is this: People aren't paid enough. What they are paid is just enough for them to survive. And the way they are paid is by making them slaves to some organization run by petty power bosses.
Here's my solution: Free the Economic Slaves.
Instead of trying to figure out how to "save the jobs" of people who are not only enslaved, but also typically working for organizations that destroy the planet, or make lots of useless stuff, or require people to buy lots of energy and technology just to get to their job and do useless things, how about this...pay them.
Look at all the billions, yea, trillions, spent to "bailout" companies. What happens? All that money gets drained by the charlatans at the top.
As I calculated in my comment about coal, you could buy off entire industries -- if you just started paying their employees not to go to work any more.
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Sean Casten Posted 11:09 pm
11 Nov 2008
I find myself in the odd position of agreeing with your central point (the Economist got it wrong), but disagreeing with almost all your supporting arguments. Couple brief responses:
The problem isn't ethanol subsidies, even thought they put it that way; it's the presumption that ethanol's competition (or, more broadly, the competition to all alternative fuels) are so heavily subsidized themselves, but the article - like much conventional wisdom - assumes that those compete on a clean slate. A strong case can be made for a world without subsidies; but we shouldn't assume that pulling back one is all it takes to get there.
Spending on infrastructure is a massive game of winner picking. Does any Grist reader truly believe that federal highway funds don't divert funds from public transit? Why should investment in a grid to support wind/nuke/whatever else not skew resources accordingly? That may or may not be a good thing, but it's very definitely winner picking, even if it's not quite so explicit as when one throws money at Industry X.
Ditto for R&D. Basic science isn't winner picking, but tech development is. From Hydrogen Highways to carbon sequestration, there are massive federal research dollars that fund specific programs and divert resources away from other avenues. (For a non energy example, think of R&D over the last 8 years to support & research the benefits of abstinence-only education at the expense of other programs - or money that got pulled out of stem cell research to go elsewhere.) These become significant sources of earmarks and pork in and of themselves, as reps get research programs targetted to the skill sets of the universities & labs in their home-districts, making these often not only about winner-picking technologies, but winner-picking researchers as well. Of course, many good things come out of R&D as well, and I don't mean to suggest a great cynical write-off of the whole enterprise. But generally speaking, the more R&D skews towards the development of specific technologies and the away from basic science, the more it necessarily is picking specific paths... and even if we like those paths, it's still picking.
Having said all that, I do agree with you that the article boiled a complex decision down into an either/or debate that is neither accurate nor up to the standards of reporting one normally finds in the Economist (normally very good at shades of gray). But that's not to say that they were universally wrong, or that the Green New Deal is universally good.
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Jon Rynn Posted 12:37 am
12 Nov 2008
Second, while in a sense highway funding diverts from transit funding, in budget politics, I think it all depends on how you set up the categories. Do you say, "infrastructure gets this much, now all of you (highways, transit, etc) fight it out"? Or is transit (or whatever) competing with every other part of the budget (particularly the military, in my view). So the whole budget process is obviously picking winners.
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Sean Casten Posted 2:05 am
12 Nov 2008
I think we agree on both fronts, although I may have a stronger opinion of the way that beltway pork distorts both processes. (e.g., investments in bridge construction in the Honorable Senator Byrd's district - just to pick an example, not to pick on Byrd - is a hell of a lot more typical than the noble fund for good infrastructure investments that passes a standard test of societal goodness. So too on the R&D side.)
In all cases though, my objection is simply to the stipulation that green infrastructure and green R&D is somehow less prone to the same winner-picking pressures than those that bedevil existing programs.
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Jon Rynn Posted 2:37 am
12 Nov 2008
But I think that that's to be expected, and has to be planned in, almost, as the cost of putting up a new infrastructure. Sure, try to root it out, make as much of the process as transparent as possible (put all contracts on-line for instance -- a bunch of us had a terrible time trying to get NYC to give us the recent subway construction contract, for instance) -- but, unfortunately, pork will definitely be part of the process.
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David Roberts Posted 3:11 am
12 Nov 2008
I just think the "picking winners" thing is used as a lazy conversation-stopper among free market ideologues. Yes, investing in infrastructure is winner-picking. So is not investing in infrastructure. Investing in R&D is picking winners. So is not investing in R&D. The notion that the feds can avoid some picking of winners is a pipe dream. You know that I have great respect for the power of markets to achieve our ends, but some people use that to avoid arguing about ends at all, like Mama Market will decide what's best if we just lie back and let her.
If we don't invest in a better grid and better public transit and better clean energy R&D, fossil fuels will remain dominant, whether or not we price carbon. That won't be something the market decided, it will be something we decided. There's picking winners and then there's taking responsibility for collective welfare.
grist.org
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