- Frank Knight and the Place of Principles in Economics and Politics - May 13, 2021
- Hayek’s Still Relevant Response to Today’s Paternalist Planners - May 12, 2021
- Biden’s Agenda of “Democratic” Paternalism and Planning - May 3, 2021
When a small child runs around waving their arms saying, “I’m a bird, I’m a bird,” we often will say what a creative imagination they have. If an adult runs around doing the same, we usually say that that person needs help because they are clearly out of touch with reality. Anyone who takes the time to read the proposed Green New Deal legislation can only conclude that the authors are living in a fairyland that is also deeply out of touch with reality.
Read through the list of desired and, indeed, demanded activities the congressional sponsors say they want the federal government to undertake over the next decade. The sponsors resemble a child running around the toy store saying, “I want that, and that, and that, and that, and…” while all the time completely oblivious to the fact that everything they want costs money that their parents do not have an unlimited quantity of.
The child may very well throw a temper tantrum when they are told that not everything they want can be had, or at least not right now all at the same time. What the child is not yet fully cognizant of is the existence and meaning of scarcity, costs, and trade-offs. Food, clothing, a room in which to sleep, and various other nice things from their parents just seem to be there. So why can’t they just have all these other things as well, and just for the asking?
The Green New Deal’s Grab Bag of Desired Things
House Resolution 109 (February 7, 2019), “Recognizing the Duty of the Federal Government to Create a Green New Deal,” has a long list of sponsoring congresspersons who seem to be not much different from that child in the toy store. I want an end to climate change; and I want an end to poverty; I want an end to social injustice, and an end to racism, sexism, and ethnic discrimination; I want a fossil fuel–free environment with renewable-energy sources and high-speed railways; I want everyone to have a well-paying, secure, and meaningful job, guaranteed by the government; I want everyone to have good, inexpensive government-supplied housing; I want everyone to have a free education all the way to the PhD level; I want manufacturing and agriculture to be balanced through government support and subsidies; I want happy and respected indigenous peoples; and I want guaranteed and comfortable government-secured retirement pensions for everyone; plus, I want everyone to have guaranteed vacations.
In addition, each of the sponsors of the legislation says, I also want labor unions to have the power to determine work conditions and set wages; and I want all the groups in society, and most especially the ones that I consider to be underprivileged and under-represented and not treated nicely, to sit at the table of governmental decision-making and make sure that every one of these groups gets what I know they want and deserve. And I also want the U.S. government to guide and subsidize the rest of the world to do the same. And I want the government to do it now, before the oceans rise, the sky falls, and greedy capitalists who don’t care about anything other than their selfish profits destroy all living things on the planet.
Then with beautiful little birds chirping in the air in a clear blue sky, we will all live happily ever after in the Green New Deal paradise. The End.
Ignoring Criticisms to Pursue Political Purposes
A variety of critics have pointed out that the potential financial costs if the government attempted to implement all of this would likely run into the tens of trillions of dollars, looking over the next few decades. Others have calculated that the possible environmental benefits in monetary terms between now and the end of the 21st century most likely would be way too small to justify the lost growth in the overall American economy. And still others have reminded people of the dangerous loss of personal freedom and decision-making that would result from shifting to the required government central planning if the Green New Deal were to be fully implemented. (See my article “The Green New Dealers and the New Socialism.”)
That most of the politicians who have signed up in support of the Green New Deal seem unconcerned by these consequences should not be too surprising. First, they are spending other people’s money — that is, money to be taxed from the American people or borrowed with future taxpayers expected to foot the bill. Besides, once you are talking in terms of trillions of dollars, one loses all sense of reality. Who can even picture in their mind what those kinds of sums really mean? It all seems like play money in a Monopoly game.
Second, all those politicians suffer from electoral near-sightedness. Their vision extends no further than the next election. For members of the House of Representatives this is only two years after the last election, which means they were already running for re-election even before they were sworn in to their term of office in early January 2019. Their mindset is that of “Après nous, le deluge” (After us, the flood). The full, long-run effects of vote-getting short-run policies will only emerge much later, possibly long after many of them are no longer in office. And if they are still in government when some of those longer-run consequences start to appear, who will go back and check their voting record from decades earlier to prove that it’s really all their fault? The finger can be so easily pointed in other directions.
Third, far too many of them are guided by an ideological zeal that is accompanied by a power lusting for remaking the world in their own image. Which one of them does not suffer from the hubris of the would-be social engineer, the redesigner of society according to their own presumptuous conception of how people should live, work, and interact with their fellow human beings? Nary a one demonstrates any modesty or hesitation in believing that they know better how humanity should live than all those actually living out their individual lives in the world according to their own lights concerning what would be best for them and their families.
Few Politicians Know the Meaning of Bottom Lines
According to the Congressional Research Service in its December 2018 profile of Congress, less than 40 percent of all members of the House of Representatives and less than 30 percent of those in the Senate had any prior experience in business. Before winning their congressional positions, the large majority had careers in state or local government offices, or in the law profession, or in teaching.
Many in Congress have had little or no experience in running an enterprise, satisfying customer demands, meeting employee payrolls, or ensuring that a company’s bottom line remains in the black in the face of market competition. This does not mean that law or teaching are not worthy occupations, or that they preclude someone from having a good understanding of the market process or the value of securing individual liberty; after all, I’m in the teaching profession myself. But those who have operated a business are likely to be more aware of the reality and workings of financial costs and benefits, uncertain investment decision-making, the need for making inescapable trade-offs, and personal risks of success and failure that occur in the world of competitive private enterprise.
Of course, having been a businessperson before entering politics does not ensure that someone is immune to the power-lusting or social-engineering bug, nor does it prevent such a person from easily falling into the mindset of spending other people’s money. Even those who claim to be for free enterprise, individual freedom, and limited government too often show themselves cut from the same political cloth as any others running for or holding political office. Indeed, those businesspeople who end up in political positions too frequently seem badly infected by the interventionist and welfare-statist viruses. (See my articles “If Political Candidates Advocated Liberty” and “Donald Trump the Corrupt Creation of America’s Bankrupt Politics.”)
Green New Dealers’ Scarcity-Free Fairyland
It is not really surprising that those who have most enthusiastically signed on to the Green New Deal are those in the “progressive” wing of the Democratic Party, and especially those who are the self-declared democratic socialists among them. Only a socialist can still believe that government planning can solve all the problems of the world, that merely commanding resources and directing people can take care of humanity’s economic and social shortcomings, and all within a decade of setting the plan in motion.
Read through House Resolution 109, and not once do you find any reference to limits, scarcity, trade-offs, costs, or consumer choice and private-enterprise decision-making. Like a throwback to the Stalinist five-year plans of the 1930s, great transformations will be conjured up: new infrastructures in the form of roads, transportation, buildings, energy, and production will be redesigned and introduced in every corner of society with merely the will and command to free the world of fossil fuels and their effects. To be fair, they have shown greater modesty than the Stalinist enthusiasts of that earlier time; the Green New Dealers have given themselves a decade to perform these miracles, rather than work within the frame of a Soviet-style five-year plan.
They admit at several points that there may be the constraints of what science and technology will allow to be physically achieved; but they also propose the necessary government funding for research and development so that even nature should not serve as an inescapable obstacle to Utopia. The government experts will surely know which technologies deserve support to meet the targets and goals laid out in the economy-wide encompassing green central plan.
Nor should there be any concern about the money for all this, because that is what taxing the rich and government borrowing are for; and last but certainly not least, the money to pay for it can always be created since that is what central banks are for. The latter especially may have to be used since America is also to guide and subsidize similar green plans in the other parts of the world. Who said American progressives and democratic socialists don’t believe in making America great again? What could be greater than Americans paying for all that may be needed to save the entire planet? If that does not make you proud to be an American, what does?
Listen to their responses to those who challenge their green plan. Again, like the immature child, they pout and stamp their feet that the only problem is that the rich don’t want to pay up what they owe society. Or the racists and sexists want to maintain the existing social order of things so they can have the power to oppress the victims of their exploitive profit seeking. If not for the enemies of the good, all would be possible without limit or natural constraint.
Green Planning and the Abolition of Rational Calculation
Is it really necessary nearly 100 years after the publication of Austrian economist Ludwig von Mises’ famous essay “Economic Calculation in the Socialist Commonwealth” (1920) to point out that it is not enough to know in technological terms what you would like to do or achieve? It is fundamentally essential in a world of inescapable scarcity of the means to attain our various desired ends to know in value terms what are the competing and most highly valued uses for which the limited factors of production might be applied.
How will the Green New Dealers know whether they have invested too much in a high-speed railway line in Nebraska compared to one in Idaho? Or how will they know whether either one has been worth it at that time and in those places compared to solar panel constructions in North Dakota or wind turbines in Mississippi? How will they know whether a government housing project in Boston has really been affordable in comparison to a new “free” medical clinic in Tucson, Arizona? How will they know any of this in relation to a vast and complex variety of consumer items that citizens all around the country would have been willing to buy, if their incomes had not been taxed and there had been a competitive free market in the production and sale of finished consumption goods?
The answer is, there will be no real and meaningful answer. Without a private competitive market for the factors of production (land, labor, capital) in which private enterprisers offer factors prices based on their alternative entrepreneurial judgments about the types and quantities of consumer goods that market demanders might be willing to buy in the future at particular anticipated prices, there is no way to know whether the means at society’s disposal (that means all of us as individual buyers and sellers) have been cost-efficiently used to attain as many of the alternative and competing ends we would like to see possibly achieved. (See my article “Why Socialism Is Impossible.”)
But the proposed Green New Deal implicitly does away with a functioning, competitive price system. Instead, what the Green New Dealers offer is a free-for-all of political plundering through interest group horse-trading and pandering. That’s what they say in the proposal: “A Green New Deal must be developed through transparent and inclusive consultation, collaboration and partnership with frontline and vulnerable communities, labor unions, worker cooperatives, civil society groups, academia, and businesses.” The government, labor unions, and stakeholder groups will also acquire equity ownership in the private enterprises that, clearly, now will be producing for environmental-sustainability and social-justice outcomes rather than for self-interested profit guided by market-based prices to satisfy consumer demands.
Green New Dealers Ignore How Little They Really Know
Is it also necessary nearly 75 years after the publication of Friedrich A. Hayek’s classic essay “The Use of Knowledge in Society” (1945) to remind people who should know better that it is the height of arrogance to presume that the designers of the Green New Deal and any others appointed to detail and implement such a grand epoch in American central planning, that there is more dispersed, decentralized, and ever-changing knowledge possessed in the minds of all of humanity combined than any group of social engineers can ever hope to master and integrate to solve the various problems of society?
Here, too, is an instance of the infantile ignorance of the green social engineers who believe that, like Olympian gods high above the ordinary mortals of humankind, they can direct the best future for not only all those in the United States but the entire population of the world. Straitjacketing everyone within the confines of the green plan means that hundreds of millions of people are prevented from deciding how best to use what they know that many others do not, and in ways that in the competitive, price-guided market process enable all to benefit from what everyone else knows. (See my article “F.A. Hayek and Why Government Can’t Manage Society.”)
The Green New Deal Leads to Planned Chaos
With the implementation of the Green New Dealers’ dreamland, America will begin the transition from a system of price-guided production serving and satisfying market-based consumer demand to what Ludwig von Mises called the “planned chaos” of waste-creating surpluses of unneeded and wrongly made goods along with life-frustrating shortages of desired and essential consumer items and producer commodities.
No longer singularly directed by competitive prices, the forms and types of production will increasingly be determined by the political dictates of the coalition of “inclusive” groups participating in the democratic decision-making of remaking America into the green world of the future. But precisely because of the direct and indirect supply-chain interdependencies of sectors of the economy in a social system of division of labor, resulting imbalances and distortions in one sector will have inescapable spillover effects on many other sectors.
A component part needed for one production process is lagging in availability because of manufacturing delays in the factory supplying that part because its energy supplies are dependent upon faulty solar panels caused by inferior inputs allocated to its manufacture under the green plan.
In another part of the country, highways are crisscrossed with newly installed electric-car powering stations, which are underutilized or not used at all because far fewer electric-powered automobiles have been produced than the planners had planned. Or the traffic flows in that area of the country have turned out to be far less than the green planners had projected because of other mismatches between central plan and local realities.
The types of competitive, market-based flexibilities in resource allocations and production adjustments that are constantly adapting the supplies to the demands in the face of unexpected and changing circumstances in a system of private, free enterprise under the incentives of profit and loss are all lacking under the green plan.
Prices and wages cannot adapt to the changing circumstances because various politically connected stakeholders in these imbalanced corners of the economy insist on preserving their socially just standards and locations of living while numerous historically “victimized” groups insist that any change that does occur must protect or improve upon their existing material or social status in society; to not listen to these groups would imply continuing residues of racism, sexism, and social injustice. And there are, of course, the diehard Green New Deal ideologues who insist that personal sacrifices must be happily made because there is no going back to “capitalism.” It’s either the green plan or an end to the planet.
With each passing day, every passing month and year, the dislocations in the economy grow with accompanying acrimonious accusations, buck-passing rationalizations and excuses, and grandiose political justifications for the increasing shortages, decreasing qualities, and lagging achievements in all the green plan had promised.
There are outspoken complaints by more and more people; here and there groups of consumers and workers and disappointed members of old or new victimized groups publicly demonstrate with anger and insistence that something better be done. They are met with the green planners promising plan corrections and social improvements, along with accusations about shadowy and dangerous enemies of the beautiful green world being built.
Green Planning Equals Political Plunder
The “democratic” socialism about which its new proponents almost lyrically sing is really an extended political plunderland of all those groups listed in the proposed legislation whose leaders will get together and decide how much of other people’s money, social positions, and future life opportunities will be divvied up among their assigned followers at the expense of others in society. It is a gangster politics of coercively imposed outcomes that reduces both victims and recipients of redistributed booty to the status of slave-like dependents of those in governmental power who are determining their fates.
In spite of the colorful rhetoric of the common good, the general welfare, and social justice, the political arena is populated with those hungering for political power, with those wanting to take from others what they cannot peacefully acquire, and with those who dream dreams of remolding the human matter of society into a better world of their fanciful imaginations.
Everyday democratic politics is corrupt and wealth-inhibiting enough in the context of the modern interventionist welfare state. But if the Green New Dealers have their way, this will be taken to an entirely new and more destructive level as one great plan for global salvation is imposed on everyone, everywhere, with no avenues of escape in our age of electronic Big Brother surveillance and control. Once embarked on, history suggests that such central-planning systems are very difficult to reverse without great and costly hardships to nearly everyone in society.
[Originally Published at AIER]