Robert P. Murphy on the "Green New Deal"

See Flaws with a “Green New Deal,” Part 2 of 2. Excerpt:

"The Green New Dealers’ desire for top-down regulations and massive new spending programs not only shows the futility of a carbon tax deal, it also underscores just how wasteful the program would be. Even if one believed in a “negative externality” from greenhouse gas emissions, there is no reason to suppose that policymakers have the knowledge or the incentives to correctly pick the proper ways in which the economy should adapt.

Especially when we are realistic about the political process, it should be obvious that funneling more than one trillion dollars in green “investment” spending through Washington will involve a gross misallocation of resources. For example, the draft text’s call for “retrofitting all buildings to be energy efficient” is a blank check to funnel money into the coffers of politically powerful groups in the construction industry. Anyone who thinks these funds will be spent according to the “social cost of carbon” needs to watch a few episodes of House of Cards.

Stringent Fuel Economy Standards Cause Automobile Fatalities

In his recent endorsement of the Green New Deal, Paul Krugman confirms that “it should emphasize investments and subsidies, not carbon taxes.” Ironically, Krugman and I for once agree that a political deal between conservatives and progressives is a no-go. As he puts it: “[C]laims that a carbon tax high enough to make a meaningful difference would attract significant bipartisan support are a fantasy at best, a fossil-fuel-industry ploy to avoid major action at worst.”

After throwing carbon taxes under the bus, Krugman moves on to argue why top-down regulations and spending programs can achieve significant emission cuts without imposing too much pain on ordinary Americans.

How is this possible? Krugman explains:

The majority of U.S. greenhouse gas emissions come from electricity generation and transportation. We could cut generation-related emissions by two-thirds or more simply by ending the use of coal and making more use of renewables (whose prices have fallen drastically), without requiring that Americans consume less power. We could almost surely reduce transportation emissions by a comparable amount by raising mileage and increasing the use of electric vehicles, even if we didn’t reduce the number of miles we drive each year.

Krugman is quite flippant in his above quotation with the word “simply,” as if eliminating coal—which in 2017 provided thirty percent of U.S. electricity—is no big deal. Krugman says we can simply “mak[e] more use of renewables,” without telling his readers that in 2017 (non-hydro) renewables accounted for less than 10 percent of electricity.

Regarding fuel economy, the simple fact is that in order for vehicles to achieve more miles to the gallon, automakers must make them more expensive, but also lighter and smaller. That means more Americans dying in car accidents than would otherwise be the case. How big a deal is this? Reputable studies have estimated that CAFE standards have caused anywhere from 40,000 – 125,000 excess vehicle fatalities.

Of course, proponents of stricter CAFE standards could quibble with these numbers, but the more significant point is that neither Ocasio-Cortez nor Krugman even admit that there is a tradeoff. They speak of cranking up mileage standards as if it’s a mere technical problem, without reckoning the tremendous human cost."