Tim Worstall predicts — well in advance of hearing any details of Alexandria Ocasio-Cortez’s Green New Deal — that it won’t work:
Alexandria Ocasio-Cortez speaking at the Reardon Convention Center in Kansas City, on 20 July 2018.
Photo by Mark Dillman via Wikimedia Commons.
Alexandria Ocasio-Cortez is to reveal the details of her Green New Deal in the next few days – the one thing we absolutely know about this being that it won’t work. This isn’t a commentary upon climate change nor the desirability of doing something about it. This is just a simple statement of fact about the universe we inhabit. As with the climate the economy is a complex, even chaotic, thing. Plans to substantially reform it therefore don’t work, no matter how egghead the planners nor pure in motive the instigators.
All of this being why the very reports which tell us we should do something about climate change – say, the Stern Review – tell us that we shouldn’t try to have those detailed plans for what we’ll do and how we’ll do it. Instead we’ve got to use the only management technique we’ve got for something this complex, markets and prices. Which is why near every economist who has even thought about the problem advocates either cap and trade or a carbon tax.
This is, of course, just a rerun of Friedrich Hayek’s point in his Nobel Lecture, “The Pretence of Knowledge”. That universe out there is a complicated place. There’s just no manner that the planner can gain enough information about it, in anything like real time, to be able to plan it. We’ve thus got to use other methods to bend that reality to our will. We can jam a crowbar into prices with a carbon tax for example, but we can’t start planning who should be taking how many car journeys in what sort of vehicles powered in what manner.
So, the Green New Deal from Alexandria Ocasio-Cortex, it fails at this first and basic hurdle. She’s using the wrong method to try to solve the agreed upon problem. Central planning just doesn’t work.
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The reason we want cheap solutions to climate change is that this justifies producing more of a solution. Again, the justification of doing something about climate change is that it will be expensive. So, we should spend up to the amount of the damage to prevent it. Say it will cost $100, then we’re willing to spend up to $99.99 to stop it. This makes us one cent better off. We’re not willing to spend $200 to stop those $100 damages, that would make us poorer.
And more – we should spend that $99.99 as efficiently as we can because that means we’ll stop more climate change for our dollars. That also makes us richer.
Don’t forget, we’ve all already agreed that we’re going to have some climate change. Our arguments are over how much and how much are we willing to do to stop how much of it?
