0
$\begingroup$

Under the proposed "Green New Deal" there are several aspects of revolutionizing and changing the US economy.

To paraphrase some of the proposed changes:

  • 100% of US power to be renewable.
  • Refit the entire US energy grid to a "Smart" grid.
  • Upgrade all residential and industrial buildings for energy efficiency and safety.
  • Eliminate greenhouse gas emissions from most industry.
  • Training, jobs, and living wages for all that want it.
  • Creation of new public banks.

This question is not about the politics of the proposal.

Is it even possible to transform the US economy in this manner? Would the transition alone cause cascading problems or influence other economies in significant manners?

Is there a difference between evaluating the impacts with Keynesian Economics vs Modern Monetary Theory?

Please note, this is not to discuss the merits or efficacy of MMT.

$\endgroup$
  • $\begingroup$ Welcome to the site! However, this question is too broad to be suitable for this site. I understand that these proposals have been made as a package, but the issues raised by both jobs / living wages for all and public banks are very different from those raised by the energy proposals. Relating the proposals to specific economic theories, and to impacts on the world, are further complications. A question focused on just one of the proposals would probably be more appropriate - but it would be worth checking that it doesn't duplicate a previous question. $\endgroup$ – Adam Bailey Jan 8 at 10:05
  • $\begingroup$ @AdamBailey Please forgive me, this being a political topic I am looking for non-political perspective from how it changes the economy (this type of change seems like it would fundamentally cut against market economy to a more mixed, with possible need for command to obtain all of the stated goals). Maybe the question is poorly phrased. $\endgroup$ – David S Jan 8 at 15:17
0
$\begingroup$

What you posted here is for most part not an economic question but I will try to answer it using economics as much as possible.

  1. First are those points possible

100% of US power to be renewable. Refit the entire US energy grid to a "Smart" grid.
Upgrade all residential and industrial buildings for energy efficiency and safety.

These three can be answered at the same time it is possible to achieve all these goals the question is whether US taxpayers would be willing to do so and at what cost. Making 100% US power renewable would at the margin be definitely costly as marginal costs of most activities are reasonably assumed to be increasing.

Economics aside 100% is probably not necessary even if you place high value on environment.

Eliminate greenhouse gas emissions from most industry.

Whether this is possible or not is question for an engineer not an economist. However, let’s suppose that technologically it’s possible. Again due to increasing marginal cost completely eliminating greenhouse gas emissions from most industries in near term may be too costly to be reasonable.

Training, jobs, and living wages for all that want it.

Training and jobs - sure that is how most communist countries used to operate so it is definitely possible. You could reduce unemployment to zero if you would just assign anyone jobless to dig holes and then fill them up again.

Once more the question is if this would on the margin benefit society or not.

Creation of new public banks.

Again possible. Although again not sure if this would on the margin be beneficial.

  1. The answer to whether it’s possible to transform an US economy in this manner, I presume in some near future, without economic difficulties would be probably no. Although, if US citizens would value these goals more than all the excessive costs at which they would have to be achieved then sure.

  2. This question:

Is there a difference between evaluating the impacts with Keynesian Economics vs Modern Monetary Theory?

is not really answerable. Modern monetary theory is just a theory used in a branch of monetary economics that has not much to directly contribute to the debate of the afore mentioned problems. It’s a monetary theory so its purpose is to explain monetary phenomena. You could use it to evaluate whether during recession it would be better to use monetary or fiscal stimulus, but most of the aforementioned policies are microeconomic, environmental or labor policies.

Keynesian economics is collection of 20th century macroeconomic models. As well as NMT, Keynesian economics itself has little to offer in a way of analyzing the aforementioned problems.

Moreover, most of the proposed changes are set simply too vaguely to be genuinely analyzed, even if you would use appropriate branch of economics and models.

For example, take this stated goal:

“Training, jobs, and living wages for all that want it.”

This is simply too vague for any genuine economic analysis. What kind of training does this policy want to do? How do you plan to finance these training programs? How many hours a week should be this training done? What kind of jobs should these be? How do you define living wage?

Once you would actually put these proposals into concrete terms it would be possible to conduct some economic & econometric analysis using models and theories from the respective sub-fields that deal with these issues, but as it these goals cannot be seriously analyzed.

$\endgroup$

Your Answer

By clicking "Post Your Answer", you acknowledge that you have read our updated terms of service, privacy policy and cookie policy, and that your continued use of the website is subject to these policies.

Not the answer you're looking for? Browse other questions tagged or ask your own question.