Estimates vary for the price of Rep. Alexandria Ocasio-Cortez’s signature “Green New Deal” (my PJ Media analysis found it would cost $49.109 trillion over the first ten years), but most agree that the sticker price is extremely high. However, Robert Hockett, a Cornell University law professor, claimed that paying for the Green New Deal “isn’t a thing” and that inflation isn’t, either. Two scholars shot down his economics gobbledygook.
A fellow with The Century Foundation and regular commissioned author for the New America Foundation, Hockett also does regular consulting work for the Federal Reserve Bank of New York, the International Monetary Fund, Americans for Financial Reform, and a number of federal and state legislators and local governments.
Hockett’s key passage comes early in his Forbes article. “The money that’s spent, for its part, is never ‘raised’ first. To the contrary, federal spending is what brings that money into existence,” the professor argued. Citing the vaguely Keynesian idea that government spending adds value to the economy, he used economic jargon to suggest that conservative naysayers are either stupid or deceptive.
Hockett went even further, however. He claimed that America’s current economy struggles with deflation, so worries about inflation are misplaced.
Joel Griffith, research fellow in financial regulations at the Heritage Foundation, shot back against Hockett’s strategy.
“Large and small countries alike have experienced excessive rates of inflation as a result of governments debasing currency,” Griffith told PJ Media. “As examples, consider Germany in the first half of the 20th century, Argentina in the late 1980s, or Venezuela today.”
Inflation devastates savers and the economy. “Regardless, politicians are tempted to simply ‘create’ currency to pay for expenditures because the hidden tax of inflation is sometimes more politically palatable than either incurring more debt, raising taxes, or cutting spending.”
Griffith admitted that “the federal government indeed could ‘tax’ some of the funds out of circulation” to prevent some of this inflation, but these tax hikes would stunt growth.
The last ten years of American monetary history serve as a clear warning of monetary manipulation, he argued. “The Federal Reserve created trillions of dollars out of thin air, using these dollars to buy government debt and mortgage-backed securities.” To restrain inflation, “the Fed began paying banks to hold excess reserves at the Fed.”
“We haven’t seen a bout of inflation — thanks to this. But the economy has been distorted as the Fed has ensured much allocation of capital to housing and government debt,” Griffith explained. “This suppressed investment and lending to the private sector. Many economists believe this contributed to the historically slow recovery following the Great Recession.”
Griffith claimed that money-printing strategies “would be a Frankenstein monetary experiment. Inflation and/or stunted growth would result. Let’s heed the lessons of Venezuela, Argentina, and the Romans,” and reject these dangerous policies.
“This guy strikes me as not exactly serious,” Myron Ebell, director at the Center for Energy and the Environment at the Competitive Enterprise Institute (CEI), told PJ Media, referencing Hockett’s article. He argued that Ocasio-Cortez’s Green New Deal would devastate the economy just like Franklin Delano Roosevelt’s New Deal did.
“The New Deal was an expansion and continuation of [Herbert] Hoover’s disastrous policies, Hoover on steroids. It didn’t work and it prolonged the Great Depression,” Ebell explained. The big government “solution” actually worsened the economic problems at the time.
As for Ocasio-Cortez and supporters of her Green New Deal, “what they’re proposing is permanent depression. I’ve called it the ‘Back to the Dark Ages’ manifesto or the ‘Back to the Stone Age’ manifesto,” the CEI director said.
Even if there were no economic problems with the Green New Deal, the program’s environmental goals would prove impossible, Ebell argued.
“We get 80 percent of our energy from coal, oil, nuclear, and natural gas,” he said (82.9 percent, according to the Energy Information Administration). “We get a very minuscule amount of power now from renewable energy and that is heavily subsidized. There is no way that the grid can operate on 100 percent renewable power.”
In 2018, about 6.3 percent of U.S. power came from wind, with 1.3 percent coming from solar. “When you get around 20 percent wind and solar in the grid it becomes very unstable,” Ebell explained, largely because the production of both wind and solar energy vary enormously based on the time of day.
“They could throw however many trillions of dollars into it, and it’s just money down the rat hole. This isn’t just a question of dollars and cents, it’s about reality,” Ebell quipped. “They’re trying to create an alternative reality in the same way that the Nazis did and that Lenin and Stalin did and that Mao Zedong did. It’s an alternate reality that doesn’t work.”
The CEI scholar argued that the Green New Deal overlooks certain realities. “The fact is that the world is not energy rich, it’s energy poor. There are still billions of people who live with no electricity or little electricity,” he said. “Most of these people are in very hot climates and don’t have air conditioning, like India or Indonesia.”
“The second reality is that global warming might become a problem but it’s not a crisis,” Ebell argued. “The crisis has been manufactured in order to create a huge climate industrial complex that can command the redistribution of colossal amounts of money.”
“There is a huge climate industrial complex benefitting from this, but it’s not reducing emissions,” he said. Even “if the United States reduced its emissions to zero, it would have no impact on global warming, because Chinese emissions have gone up so rapidly.”
“The U.S. going back to the stone age will not do anything to stop global warming,” Ebell emphasized.
As for global warming, the false impression of a crisis is “driven by alarmists who use scary computer model predictions, which have been completely falsified by the actual temperature data.” Ebell claimed that the current rate of warming is “about one-half to one-third of what the United Nations average of computer models has predicted.”
Furthermore, if climate alarmists were truly focused on curbing emissions while providing power, they would support nuclear power, Ebell argued. “They’re really not serious. The leading alarmists are not sincere.”
“The whole thing is a scam. Sincere people on the Left are somewhat naive about the way powerful special interests operate — they don’t seem to understand that ‘Al Gore Incorporated,’ and various wind and solar companies, and Tesla, they’re looking out for their own self-interest, too,” Ebell said.
In short, the Green New Deal is an impossibly ambitious plan that would destroy America’s economy, fail to make America run on 100 percent renewable energy, fail to address climate change, and enrich the climate industrial complex. People like Al Gore would win big time, but Americans would lose, badly.
Professors like Robert Hockett can use economic jargon to make it seem like none of this is a problem, but Americans should be able to see through his gobbledygook. Printing money — under whatever economic justification — is no solution to these very real problems.
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