What is the Green New Deal? And how will it affect energy investors?
Last week, rising liberal star Alexandria Ocasio-Cortez submitted a House resolution calling for a series of public work projects, programs, financial reforms, and regulations specifically aimed at addressing climate change.
Right now, this resolution is the most official version of what’s being called the Green New Deal.
Leading up to AOC’s recent bill, there was quite a bit of disagreement over what exactly the Green New Deal is and should involve. And there’s still some.
The Washington Post quoted GND backer Rep. Raúl Grijalva (D-Ariz.), saying on Friday, “There’s not unanimity. I’m sure there’s colleagues that feel that should have been more prescriptive than it is. And I’m sure there’s colleagues that feel that we’re providing an issue to the other side.”
So what exactly does AOC’s most recent Green New Deal do?
Well, nothing.
In its current state, AOC’s Green New Deal wouldn’t create any new federal programs. Instead, it mostly serves as a collective agreement that the House will focus on climate change in its policy decisions going forward.
So a win for this bill would be nothing more than a symbolical victory for climate change advocates.
AOC’s resolution claims that the United States has contributed a disproportionate amount to climate change relative to other nations and therefore has a greater responsibility to curb its greenhouse emissions.
One item of particular note is that the resolution calls for a 10-year plan that aims to meet “100 percent of the power demand of the United States through clean, renewable, and zero-emission energy sources.”
As pointed out by James Temple, senior editor for energy at MIT Technology Review, “That suggests the entire nation should run on wind, solar, and maybe some geothermal electricity. It’s an absurd strategy for rapidly and affordably reaching the low-to-no-carbon energy system required to limit the threat of climate change.”
Right now, the Green New Deal is nothing more than a bunch of rhetoric and politicians shaking hands. So for energy investors, AOC’s resolution is probably a non-event.
But the GND has something else up its sleeve.
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The Green New Deal has a secret.
You see, at the core of the Green New Deal is a federal jobs guarantee, which specifically aims to create “green” jobs through the public sector.
That means without the jobs guarantee, there is no Green New Deal.
(Editor’s note: The Washington Post published an article overnight with a statement from Saikat Chakrabarti, Ocasio-Cortez’s chief of staff, who said, “The job guarantee is in the resolution. We are absolutely not backing off from that or anything else in the resolution…”)
Of course, there’s much more that’s been added to the proposal, including financial reforms focused on wealth equality and regulations aimed at the 1%. But the jobs guarantee is the heart of the Green New Deal.
So at the end of the day, you really wouldn’t be too wrong in thinking that the Green New Deal is just a Jobs Guarantee wrapped in green packaging.
Now, this is really interesting…
Because the Green New Deal isn’t the only rapidly expanding progressive policy with a federal jobs guarantee at its core.
The raging sensation that is Modern Monetary Theory (MMT) is just as committed to a jobs guarantee program as the GND, maybe even more so.
So what we have is 1.) a major government initiative and 2.) a paradigm-shifting macroeconomic theory, both with a federal jobs guarantee at their core.
What’s that about? Who’s behind this federal jobs guarantee idea?
Well, of course, there’s no one person behind the idea. But I think we can say without reservation that the Levy Economics Institute of Bard College is a major contributor. And I think it’s fair to say Stephanie Kelton, economics professor at Stony Brook University and former Economic Advisor to Bernie Sanders during his 2016 presidential campaign, is the leading public voice promoting MMT.
Now, I personally believe that a tempered and apolitical federal jobs guarantee is actually a great idea. I’m not necessarily against some of the proposals.
But I think it’s important for people to know exactly what they’re supporting.
At the end of the day, if you support the Green New Deal, you’re also supporting a federal jobs guarantee.
Until next time,
Luke Burgess
As an editor at Energy and Capital, Luke’s analysis and market research reach hundreds of thousands of investors every day. Luke is also a contributing editor of Angel Publishing’s Bull and Bust Report newsletter. There, he helps investors in leveraging the future supply-demand imbalance that he believes could be key to a cyclical upswing in the hard asset markets. For more on Luke, go to his editor’s page.
P.S. If you want to take a look at AOC’s proposal, check it out for yourself here.
