The Democrats’ proposed Green New Deal would place the U.S. economy on a war footing, warns Jeffrey Miron and Ryan Bourne at Cato.org. As they explain, democratic socialism is the scenic route to serfdom.
The Green New Deal (GND) is the opposite of market-led decision-making, the antithesis of anti-central government. The goals of the GND are: (1) a net zero carbon target within 30 years, (2) an overhaul of the transport sector, (3) conversion of all buildings to make them energy efficient.
Superficially socialism can seem like good news, with “more social welfare in exchange for a lightly regulated economy with a well-designed tax system, to generate high levels of income to redistribute.”
Alas, this sanguine view is delusional. Today’s socialists, while jettisoning the desire for direct government ownership … (and) their vision implies far more intrusive government than the social democratic rhetoric suggests.
Federal Government – the World’s Largest Employer?
The GND’s social goals do not end with fiscal transfers, either. A jobs guarantee paying a family wage would see the federal government become the world’s largest employer, placing workers into its favored environmental, infrastructure and caring sectors. The GND also demands emboldened labor unions, strengthened labor market regulation, and beefed up trade rules to protect domestic workers and manufacturing. Elsewhere, socialists have extolled “free” college, breaking up financial institutions, and a $15 minimum wage.
The Absurdity of Modern Monetary Theory
Far from a broad-based, pro-growth tax system to deliver the revenues for this agenda, modern socialists range from favoring direct money printing (aka Modern Monetary Theory, a view dismissed as nonsense by every reputable economist across the spectrum) to endorsing extraordinarily high, distortionary tax rates on the rich. In fact, some want punitive tax rates to reduce inequality, even if this raises less revenue.
Illusory Distinction Between Government Ownership and Financing
Where today’s socialists want more generous social protections through guaranteed health care, childcare, and other benefits-in-kind, the distinction between government ownership and financing will be illusory in practice.
Government as Major Consumer = de Facto Price Controls
Once government covers the costs of a service, it sets limits on how much it pays as the major consumer, creating de facto price controls. Governments attach conditions to their spending, too, defining who can work in an industry or the standards producers must meet.
How Regulation Leads to Nationalized Industries
These regulations create shortages in high-cost areas, necessitating subsidized provision to meet demand. Before long the industry is effectively nationalized through regulation.
Jeffrey Miron served on the faculty at the University of Michigan and as a visiting professor at the Sloan School of Management, M.I.T. He is director of economic studies at the Cato Institute and the director of undergraduate studies in the Department of Economics at Harvard University
Ryan Bourne holds a BA and an MPhil in economics from the University of Cambridge, United Kingdom. Bourne has extensive broadcast and print media experience, and has appeared on BBC News, CNN and Sky News.