Towards a Free New Deal

The ecological crisis is real, but we would be wise not to lose our heads over it. Some of the worst policies in history have been enacted out of a misplaced sense of urgency, resulting in greater damage than the original threat.

The New Deal, for example, made unemployment worse during the Great Depression by preventing wages from adjusting to lower price levels.

As bad as that was, you would be hard-pressed to design a more wrongheaded piece of legislation in 2019 than Alexandria Ocasio-Cortez’s Green New Deal. Here, one has to be careful not to play into her hand by allowing the imaginative folly of the proposal suck all of the energy out of the room. However, in addition to offering a more compelling environmental agenda, I’d like to spend a moment dissecting her idea as a model of what’s wrong with populist economics.

Green👏 New 👏 Deal 👏

Conservatives and progressives alike have fallen for the Green New Deal., apparently forgetting the government’s abysmal track record at picking winners and losers under President Obama (ahem, Solyndra).

Few know the policy details, so it’s mostly the persuasive effect of the name at this point. It’s spacious and clean. You can fill in the blanks with whatever vague, optimistic images you can imagine — bird-friendly wind turbines, electric monorails, ‘Towers of Power’—the bigger and flashier, the better. To achieve this effect, the GND pairs the contradictory but seemingly-harmonious goals of boosting employment and making large public sector investments in environmental infrastructure. But while the Green New Deal might provide some temporary jobs for the “covered” (i.e., unionized) sector, it would come at the expense of large swaths of “uncovered” workers who are priced out of a restricted labor market.

Tower of Power, or Eye of Sauron?

Lastly, the GND attempts to achieve a debatably righteous goal through the most costly and wasteful means possible—means which would not achieve the stated goal even if it was desirable. It seeks to limit greenhouse gas emissions by “decarbonizing the economy,” which means large, upfront investments in capital intensive projects. The catch is that these investments produce massive carbon emissions now on the hopes of future carbon offsets—offsets which are almost always revised significantly downward. For evidence, look at the flailing California High Speed Rail project, which under conservative assumptions would not offset the emissions from its own construction for 71 years:

“In a 2010 UC Berkeley study, Professors Mikhail Chester and Arpad Horvath estimated that the entire California high-speed rail project would generate 9.7 million metric tons of carbon dioxide during construction.” —California overstates bullet train climate benefits, by Marc Joffe, East Bay Times

I can’t imagine people using 2019 transportation technology in the year 2090, but the romance of rail is apparently powerful enough to persuade voters into supporting these boondoggles in places where it makes no economic sense. [Side note: the high-speed rail from SF to LA has been downgraded to a medium-speed rail between Bakersfield and Merced—not exactly major population hubs.]

The Achilles Heel of Clean Technology

Almost every article I read on environmental policy neglects a basic time-accounting element of energy consumption. This is especially true with regards to electrical vehicles, which still require fossil fuels to generate the electricity and to power their complex, energy-intensive manufacturing process. A centrally-planned energy infrastructure will almost inevitably require more base inputs (read: oil and gas) to produce less output. Planners will inevitably overlook the true life-cycle costs of their solar and wind farms, which include the costs of mining rare earth minerals and all of the intermediate capital for maintenance and repairs of untested technology.

Austrian business cycle theory provides insight into how central planning distorts the structure of production. Booms and busts happen when we invest in long-term fixed assets at the expense of intermediate capital and maintenance of the overall economy. Investments made without real underlying savings cannot be sustained except through ever-increasing debt spending, which means printing money. Thus, we can’t simply wave a magic policy wand and do away with burning carbon, since all of the lower orders of production (the stuff we use to make the stuff we buy) depend on it. Even if we burned everything to the ground, the Green Economy would still need to be built and maintained with the congealed petroleum that we call ‘capital.’

All energy decisions must be based on an understanding of the “energy return on energy invested” (EROEI), which has been very high for fossil fuels although is declining with scarcity. There are simply no good renewable alternatives that come close to the same EROEI as fossil fuels. Distorting the capital structure will only make us more reliant on petroleum in the long-run, as centrally-planned infrastructure crumbles and we are left with under-developed substitute technologies.

I have to admire the naive optimism of GND boosters like Vox’s David Roberts, who writes:

Decarbonizing transportation will involve radically accelerating the spread of electric vehicles, possibly by banning gasoline and diesel vehicle sales by 2030, and figuring out what to do with aviation and heavy transport.

Again, accelerating the spread of electric vehicles would not decarbonize transportation — it would merely front-load it, which is the worst possible course of action if CO2 is rapidly contributing to our demise at the hands of climate change. “Decarbonizing buildings” would similarly entail another construction bubble and the associated emissions that would produce.

Even more naive is the hand-waving around “figuring out what do with aviation and heavy transport,” as if the evolution of these epoch-shaping technologies is under the control of small-minded central planners.

Finally, the “Jobs Guarantee” cements the Green New Deal’s status as a daringly bad policy. Even progressives are rolling their eyes at this one. Transfer payments—not minimum wages or government jobs programs—are widely acknowledged as the best way to alleviate poverty among those with families or other dependents. Although no substitute for a robust labor market, entitlements are what have worked in the Nordic countries, not a Leviathan bureaucracy tasked with pairing highly specialized jobs with a constantly fluctuating pool of unemployed workers lacking the required technical skills. Perhaps if the GND advances another of its planks—abolishing ICE—these jobs could be filled by high-skilled undocumented foreigners who live as second-class citizens under a treacherously ambiguous immigration system. But I digress.

So What Should Be Done?

So far this article reads like a screed. It is tempting to fight Leninism with Leninism, since the alternative feels like a rehashing of free market platitudes, which do nothing to attract those with concerns about the health of the planet and the fairness of the current world order.

But rather than asking “What is to be done?” a la Lenin, we should be asking, “What are we doing now that we shouldn’t be doing?”

Here are four things we can do under a “Free New Deal”:

1. End Subsidies to Big Ag/Oil

Government subsidies to Big Agriculture and Big Oil are two of the biggest environmental culprits — not only in the form of tax breaks, but also the failure to make them internalize the costs of negative externalities.

A gas tax is still a better way to get people to stop driving Hummers and start buying Priuses.

Absent a good method of measuring the costs of things like soil erosion, biodiversity loss, water pollution and CO2 emissions, the government could use the proceeds to fund independent research that can approximately price these externalities. The effects of carbon taxes on actual emissions are estimated to be negligible, however, suggesting that better solutions must be found elsewhere.

2. Privatize Federal lands for Green Grazing

The best solution may have come from a recently retired Utah congressman—the anti-AOC—a rural farmer and grandfather of 48 named Michael E. Noel. If anyone has a stake in the future of planet Earth, it’s Noel. He recently persuaded President Trump to downsize two national monuments in Utah, handing the land back over to the state. This will make room for more holistic land management practices that have been shown to sequester carbon in the soil (true “decarbonization”).

While there are clearly negatives associated with the clear-cutting practices used in to make room for factory-farmed cattle, “green grazing” by buffalo and other megafauna was the norm on the North American range for millions of years. Before humans arrived and hunted them to extinction, large herds of herbivores kept carbon locked up in the soil with their dung-and-hoof-work, and there’s no reason they can’t do it again.

The Free New Deal does not endorse creating clone armies of Woolly Rhinocerotes until and unless BLM tries to seize the few remaining acres of private land in the American west.

Before retiring, Noel introduced H.C.R. 8 Concurrent Resolution on Carbon Sequestration on Rangelands, which “calls on the President of the United States to direct those federal agencies currently permitted by law to implement management practices that increase soil carbon sequestration to develop, in a timely fashion, comprehensive plans to achieve the maximum amount of carbon sequestration possible in ways that will increase the economic and environmental productivity of rangelands.”

This is a state-based solution that merely requires the Federal government to step out of the way. Different states may employ different frameworks for managing their land’s carbon storage capacity, mixing private and public ownership with different kinds of usage- and decision-rights.

Soil health is our ultimate wealth. Returning to the Austrian capital theory with its time-structured conception of production, soil can be located at the very base. Any wealth built on an eroding foundation is fake.

Map of federally-owned or managed land. A Free New Deal would open lands to management by actors with actual incentives to restore them.

3. Allow forest clearing and wood gasification or biomass-to-methanol

It’s time to come to terms with the fact that humans have inexorably altered the landscape, and we are now a part of the natural ecosystem. Just as Native Americans periodically burned the underbrush, we must clean up after the mess we’ve created. There are gigatons of dead, rotting wood and other biomass that already pose a fire threat in the western United States. The President has been criticized for blaming the Forest Service on the recent California wildfires, but there’s a grain of truth in what he’s said. Under pressure from environmental groups, the U.S. Forest Service has been preventing the necessary decluttering of our nation’s tree farms.

Part of this strategy is simply harvesting more timber—the ultimate renewable green building material. It also might involve setting up a distributed network of small biomass processors that can turn large pieces into wood chips, which can then be burned in wood gasifiers.

If a tree decays in the forest and there’s no one there to burn it, does it make emissions?

All Power Labs, a startup here in Berkeley, has invented a promising wood-burning gasifier generator that represents the cutting edge of environmental technology. If a tree decays in the forest and there’s no one there to burn it, does it make emissions? The answer to this real-life Zen koan is yes—normally, woody biomass just breaks down into methane and other greenhouse gasses. Burning it in a gasifier is actually carbon negative to the extent that it leaves behind some “biochar.” Unlike a centralized “Tower of Power” hooked up to long transmission cables (which entail a loss of efficiency that increases with distance), small gasifiers could be run by small collectives near the sources of wood, perhaps in conjunction with new ranching practices.

If federal government wanted to incentivize this, they could offer tax credits to anyone who purchases such infrastructure, and additional subsidies for production of carbon-offsetting biochar.

4. Relax Coastal Regulations and Support Ocean Stewards

I am biased towards this solution as a seasteader, and aspiring steward of the ecology of San Francisco Bay. Growing seaweed may not be feasible in our local polluted waters, but there are some exciting projects around the world, including Phil Cruver’s shellfish farm in Federal waters off the coast of Los Angeles.

Fast Company is touting Catalina Sea Ranch as a potential savior of the sea, and there are many more possibilities for regenerative aquaculture. One thing slowing it down is the patchwork of overlapping regulations and agencies tasked with protecting our coastline. Some of these regulations are valid (I don’t want a mega wind farm in my backyard—GND approved or otherwise). However, there are many technologies that can be deployed at or below the waterline in ways that enhance biodiversity without interfering with existing maritime activity or marine wildlife. Cruver’s operation is a hybrid of a for-profit and an environmental philanthropy. He invested much of his personal fortune in the hopes of creating a truly sustainable business. I met Cruver in 2012, when he had just recently begun navigating the byzantine rules of the California Coastal Commission, U.S. Army Corps of Engineers, and other state, local, and Federal authorities. Now, six years later, he’s finally gotten something off the ground.

I was initially disheartened reading the pieces in support of the Green New Deal when the reasoning behind them so clearly contradicts even the stated goals of environmentalists. I now have to conclude that the GND has nothing to do with the environment and everything to do with power for those who wish to reclaim it using whatever issues move the crowds to the polls.

People are too smart to fall for the “make work” projects of yore and the something-for-nothing accounting tricks of socialist economics, but socialism cloaked in environmentalism is proving to be very popular. Make no mistake, the Green New Deal is a raw deal. When faced with the budget-breaking implications of her proposals, Ocasio-Cortez deflects and says that we must embrace more sweeping changes than her more moderate colleagues can countenance. But economic logic, while necessary, is not a sufficient condition for overriding the appeal of AOC’s Green New Deal. We need a positive vision of how freedom translates into better jobs, healthier soil, cleaner air and clearer water.

We need a Free New Deal.



Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store