The only thing holding us back from big, bold, progressive change is ourselves. When critics wonder if we can afford to pay for the Green New Deal, they couch their concerns in the language of neoliberal economics: they say that investing in the middle class, raising wages, and doing too much too quickly will ruin the economy. This week, Naomi Klein and J.W. Mason join us to explain why the economic status quo is the greatest barrier to the Green New Deal becoming a reality, and how we actually can afford to change our economy so drastically.
Naomi Klein is an award-winning journalist and New York Times bestselling author. She is Senior Correspondent for The Intercept, a Puffin Writing Fellow at Type Media Center, and the inaugural Gloria Steinem Chair in Media, Culture and Feminist Studies at Rutgers University. Her most recent book, ‘On Fire: The (Burning) Case for a Green New Deal’, published worldwide in September, was an instant New York Times bestseller and a #1 Canadian bestseller.
J.W. Mason is a Fellow at the Roosevelt Institute, where he works on the Financialization Project, and an assistant professor of economics at John Jay College, CUNY. His current research focuses on the history and political economy of credit, including the evolution of household debt and changing role of financial markets in business investment. He also works on the history of economic thought, particularly the development of macroeconomics over the twentieth century.
Further reading and resources:
On Fire: https://www.indiebound.org/book/9781982129910
Can We Afford a Green New Deal? http://jwmason.org/slackwire/can-we-afford-a-green-new-deal/
Decarbonizing the US Economy: Pathways Toward a Green New Deal: https://rooseveltinstitute.org/wp-content/uploads/2019/06/Roosevelt-Institute_Green-New-Deal_Digital-Final.pdf
A Message from the Future with Alexandria Ocasio-Cortez: https://www.youtube.com/watch?v=d9uTH0iprVQ
With a Green New Deal, Here’s What the World Could Look Like for the Next Generation: https://theintercept.com/2018/12/05/green-new-deal-proposal-impacts/
Speaker 1: If you’re a fan of Pitchfork Economics, then you’ll love another podcast that we’ve been listening to. It’s called Capitalisn’t, and it’s about the ways capitalism is and, more often, isn’t working in our world. They cover everything from debate between shareholders and stakeholders to the morality of a wealth tax. Capitalisn’t clearly explains what can go wrong with capitalism and what we can do about it. It’s hosted by two economists, Luigi Zingales at the University of Chicago and Kate Waldock at Georgetown University. They’re super entertaining, smart, and funny, so check out Capitalisn’t wherever you get your podcasts.
Naomi Klein: We don’t just have a climate crisis. We also have a crisis of economic inequality, of racial inequality. If we need to make these deep changes anyway, why wouldn’t we rebuild in ways that redress these structural failings?
Josh Mason: Economists have this idea that everything is about trade-offs and everything is about decreasing returns. The more you do something, the less well it works. The more you do something, the more expensive it gets. Real economies aren’t like that.
Nick Hanauer: No, this is not a contest over facts, really. It’s a contest over power.
Speaker 5: From the offices of Civic Ventures in downtown Seattle, this is Pitchfork Economics with Nick Hanauer, one American capitalist’s take on how we got into this mess and how we can get out.
Nick Hanauer: I’m Nick Hanauer, founder of Civic Ventures.
Jessyn Farrell: I’m Jessyn Farrell, and I’m senior vice president at Civic Ventures and a former state legislator.
Richard Nixon: Each of us all across this great land has a stake in maintaining and improving environmental quality. Clean air and clean water, the wise use of our land, the protection of wildlife and natural beauty, these are part of the birthright of every American. To guarantee that birthright, we must act, and act decisively. It is literally now or never.
Nick Hanauer: Today on Pitchfork Economics, we’re going to talk mostly about the Green New Deal. To be clear, the podcast is not a podcast about climate change, but you can’t escape climate change if you’re being realistic, obviously, because it’s such an existential threat, not just to the economy, but the planet.
What strikes me when I talk to folks about climate change, and particularly the activists working to address the issue, is how similar the terrain is, the political and policy terrain is, to the straight-up political economy stuff that we mostly focus on, that if you zoom out just a little bit, what you can see is that the claim “Raising wages kills jobs” or “Tax cuts for rich people create growth” are a lot like “Anything we do to address climate change will kill jobs and cost you more money.” It’s the same kind of threat, a very deliberately constructed narrative designed to protect the interests of a few folks.
Jessyn Farrell: Yeah, that’s exactly right. One of the things that strikes me is that, over time, corporations have become more and more sophisticated at making that argument, which is to say that your costs will go up, you will lose jobs, your life will get worse, if we do environmental regulations. When you back up-
Nick Hanauer: If you hold us to a higher standard.
Jessyn Farrell: Exactly. When you back up to the birth of the environmental movement and the heyday of environmental regulation, which was actually before the blooming of the neoliberalist era in the mid to late ’70s, you have this moment where we were actually passing environmental laws. We were creating the EPA. We were passing the Clean Air Act.
But over time, the corporate world got really good at taking a page from that same playbook in neoliberalist economics, which is to suppress wages and keep workers from having their fair share of power and money, and translating that into the environmental space. The environmental community and the broad-based environmental movement I think has really been struggling ever since to take that on, until this moment when we’ve come to the Green New Deal, which I think is a completely new framing and new narrative, which is really powerful.
Nick Hanauer: Exactly. The truth is implementing the Green New Deal won’t cost people jobs. It will create millions and millions of good new jobs. What it will do, of course, is make the shareholders of ExxonMobil slightly less rich.
Jessyn Farrell: They’d be a little less comfortable.
Nick Hanauer: Yeah, exactly. I acknowledge their pain, but that-
Jessyn Farrell: That’s super compassionate of you.
Nick Hanauer: But that is not an existential threat to the planet. Climate change is, right?
Jessyn Farrell: Right. Exactly. If we’re really going to get on top of this and learn lessons from the past, it is that you cannot do mass activism in the environmental space without taking on the-
Nick Hanauer: Or any space.
Jessyn Farrell: Or in any space, without taking on neoliberalism. Again, that’s why the Green New Deal is potentially this moment where we can be optimistic.
Nick Hanauer: Yeah. Today on the podcast, we get to talk to a really fabulous guest, Naomi Klein, who is an award-winning author and journalist. She’s got a new book out on climate change called On Fire: The Burning Case for a Green New Deal. It was released recently. The New Yorker has described Naomi as the most influential figure on the American left, and Bill McKibben called her the intellectual godmother of the Green New Deal. It’ll be really fun and exciting to talk to her.
Naomi Klein: I’m Naomi Klein. My new book is On Fire: The Burning Case for a Green New Deal.
Nick Hanauer: We’re thrilled to get to talk to you about it. Our podcast is devoted to mostly economics, but I suppose one of the major themes of the podcast is that, in particular, Americans’ brains were trained to believe that economics was a science in the way that physics is, and that is simply a description of the world, when, in fact, mostly it’s stories and narratives, and the degree to which we accept those narratives defines the structure and shape of our societies and our lives.
The importance of that dynamic is you see that in high relief when it comes to doing things like addressing climate change, and your book is pointed directly at that, at the necessity of changing the narrative, the necessity of building movements around that. We’d love for you to just share for our listeners the basic argument in your book and what you think you need to do, or we need to do, if you’d rather.
Naomi Klein: Well, I think I’ll start with what I think we need to do. I think the main thing we need to do is listen to what climate scientists are desperately trying to get us to hear. A good place to start would be with the summary of the report that came out last year from the Intergovernmental Panel on Climate Change. Almost exactly a year ago, they put out a report about the need to keep the warming of our planet below 1.5 degrees Celsius additional warming above pre-industrial levels.
We’ve warmed the planet by 1 degree Celsius so far on average, and we are already seeing some really terrifying effects, the near loss of Arctic sea ice. We are seeing glaciers disappear from the Alps to Iceland to Bolivia. We are seeing massive historic forest fires from California to the Amazon to Siberia. We have lost much of the Great Barrier Reef. These are major features of our planet, and we are breaking them.
We need to understand how serious this is. The IPCC has told us that if we want to keep warming below 1.5 degrees Celsius, we would need to cut global emissions in half in 12 years, and they said that a year ago, which means it’s 11 years now.
They said that in order to do that, we cannot simply introduce a gentle carbon pricing scheme. In fact, when that question was put to the panel of scientists when they released the report, they started laughing and said… Not to say that it’s not important to have carbon pricing, but that to cut global emissions in half, you would need, and this is a quote from the summary of the report, “fundamental transformation of nearly every aspect of society.”
The main message I have is if we do need to change the bones of how we live, how we move ourselves around, where we get our energy from, how we grow our food, why wouldn’t we seize that opportunity to make things fairer at the same time? Because we don’t just have a climate crisis; we also have a crisis of tremendous levels of economic inequality, of racial inequality, gender inequality. If we need to make these deep changes anyway, why wouldn’t we rebuild in ways that redress these structural failings? That, to me, is what a Green New Deal is about.
Jessyn Farrell: You really lay out right now how much we’re in this crisis and this moment of emergency. I’m looking at your book, and it has a red cover, fire iconography. One of the questions that’s on my mind is, why aren’t we acting like our house is on fire? What do we need to do to get us to be responding in this more urgent way?
Naomi Klein: I believe that if we want to understand why we have failed to act like our house is on fire when the scientific community has been doing their very best to get our attention and explain to us that it really is, a lot of it has to do with this epic case of historical bad timing, where the moment where this lands on our lap, certainly as Americans, but as a global community as well, the first intergovernmental meeting on climate change happened in 1988. 1988 was the year that James Hansen, formerly of NASA, testifies on Capitol Hill and says he can now say with 99% certainty that humans are causing the planet to warm. All of this is happening in ’88. The Intergovernmental Panel on Climate Change was formed.
If we think about what is happening in the political economy in 1988, the Berlin Wall is about to collapse the next year. The first free trade agreement is signed between Canada and the U.S. that becomes the template for these pro-corporate, neoliberal trade deals around the world. It’s the ascendant moment of this Reagan-Thatcher economic project that Joseph Stiglitz has called market fundamentalism.
This is really the worst time in human evolution when we could have faced a collective crisis like climate change because it does demand that we break every single one of the precepts of that ideological economic project, which, as you said, Nick, we’re trained to think that it is scientific. That’s certainly what Milton Friedman and Friedrich von Hayek wanted us to think. In fact, they were passionate about making economics no longer a part of political science, but on par with science and chemistry, so no one could argue with it. This was their moment, in the late 1980s, it was certainly Friedman’s moment, when finally they had politicians who were really listening to them around the world.
To deal with the climate crisis, we need huge investments in the public sphere. We need to regulate corporations and tell them you can’t dig up all that carbon. We need resources to pay for it, which means we shouldn’t be slashing taxes for corporations and wealthy individuals, which is what we’re doing in this period.
If we really want to understand why we fumbled this as badly as we did when we all started getting together to talk about it in the late ’80s and early ’90s, I think a lot of it has to do with this ascendant moment, the end of history moment, the “there is no alternative” moment. I think, fortunately, we are in a different moment now, and I think that’s partly why we are seeing the movements emerging the way they are, including movements in the United States like the Sunrise Movement, demanding a Green New Deal, hearkening back to FDR’s original New Deal, a moment in American history when there was far less fear about interfering in markets, about investing in the public sphere.
Yeah, I guess that would be my best… I could go deeper. I could also say that it’s… I could also bring it back to the 1500s and the idea of treating nature like a machine and us as its masters. I could talk about Christian text and telling us that nature is our dominion. It depends how far back you want to go.
Jessyn Farrell: Well, we want to get to that, too, I think. But I think your putting this squarely in the ascendancy of neoliberalism is really important, and that moment in the late ’80s. It’s a great segue into the Green New Deal.
My fundamental critique of the Green New Deal is it allows us to take on neoliberalism in a very explicit way, which is to say environmental regulations don’t kill jobs; instead, it is the source and possibility of broad-based and shared equitable prosperity. I’d love to hear you talk a little bit about why the Green New Deal gives you cause for optimism, if that’s not overstating the case.
Naomi Klein: No. It gives me a lot of optimism because it is the first time I think we’ve talked about a policy response to the climate crisis that is on the scale of the crisis. It’s the first time we’ve put justice at the center of that response, and it is I think the first time we have a strategy that is designed to undercut the biggest barrier that we’ve had, which is this ability to pit jobs versus the environment, as you just said, because if we look at what happens when you try to have a narrow carbon-based approach, a more technocratic approach to the climate crisis, and you try to do it within a neoliberal framework, what you often get is backlash.
The most glaring example of this is what has happened in France over the past year with Emmanuel Macron, a pretty straight-up neoliberal leader who comes out of the banking sector, comes in, introduces these so-called modernizing policies that translate into economic austerity, attacks on social protections in France, attacks on trade union rights, hands out a bunch of tax breaks to millionaires and corporations, so he’s following the neoliberal playbook to a T, but he also says, “Oh, and I want to do something about climate change, so I’m going to tax your gasoline.”
Lo and behold, people perceived this as yet one more economic stress, and they perceive it as tremendously unfair because they see that the people who are actually driving the climate crisis are doing pretty well and actually getting a whole bunch of goodies from this from Macron. So you have the yellow vest movement, the gilets jaunes movement, and their slogan is “You care about the end of the world. We care about the end of the month.” The whole thing falls apart. We have riots in pretty much every major city in France, and Macron backs off and says, “Okay, we won’t have the tax after all.”
With the Green New Deal, what we’re saying is “Everybody has a right to care about the end of the world and the end of the month. Here’s a plan about how we get emissions down to what scientists are telling us we have to do in a way that’s going to create millions of unionized jobs and better public services, healthcare, childcare, education. While there are areas where we are going to have to contract in the face of this crisis, there are also tangible ways in which people’s lives are actually going to get easier. It isn’t all loss. There are tangible benefits to this as well.” I think that’s a much more sellable message if politicians are willing to be out there selling it.
My concern is that we’ve had a ton of misrepresentation about what the Green New Deal is. On Fox, they just basically lie about it and say it’s just all about taking away your hamburgers and destroying your quality of life. Reliably, you have Democrats who get spooked enough by that that their response is just to try to change the subject instead of really strongly going out there and going, “No, this is a jobs program. This is how it’s actually going to make your life better and easier. Yeah, there are going to have to be some sacrifices, but we’re going to make sure that the polluters are the ones that pay the bulk of this,” so that it is perceived as fair. That’s something FDR understood very well during the Second World War when they had to introduce rationing, was that it was absolutely critical that corporations had to face big changes and sacrifices as well. The slogan was Fair Shares for All.
I think Americans are willing to make sacrifices, but not if they’re perceived as unfair, not when you’re being told to take a 20-second shower in California and you can see that the golf club down the block has their sprinklers on nonstop. That’s a nonstarter.
Nick Hanauer: I think that the way in which addressing the climate crisis intersects and is mixed up in addressing the inequality crisis makes it doubly hard to solve, that you have the circumstance where a few people have won and almost everyone else has lost, and you have a giant proportion of the public who are hanging on by their fingernails. That creates a context in which change is hard and risky, and where it’s easy to generate resistance to change.
Naomi Klein: Sure. Right now, you have strikes at GM because workers are facing factory closures and huge layoffs, and the company is blaming electric cars for it. You can understand why workers feel that they have to choose between jobs and a healthy environment. We haven’t had robust policies that don’t force people to make those choices, but in order to do that, you actually would have to regulate corporations.
Nick Hanauer: Yeah. The other thing that I think comes through really clearly in your book is that this is not a contest over facts, really; it’s a contest over power. Certainly, in the world of political economy, one of the reasons that progressives got rolled for so many decades was that they thought they were having a contest over facts, when, in fact, the other side was having a contest over power. Once you understand the problem in that way, it clarifies the need for different kinds of approaches. Really, until our side recognized that that was the game that was being played, it was very hard to win.
Naomi Klein: I realized this wasn’t about the facts, it wasn’t about the science, the first time I went to a Heartland conference, which is ground zero for climate change denial. I write it up in the book. I think when I first started hearing about climate change denial, I bought this idea that it was coming from the scientific community, that there was a significant portion of the scientific community, small, marginal, who really disagreed with the otherwise scientific consensus around this.
But you go to these Heartland conferences, and the Heartland Institute is a free market think tank. It has nothing to do with climate science. They have bankrolled this whole thing. They bring in a few… I have to be careful about what I say about these climate scientists, but they’re just steeped in fossil fuel money. They all have contradictory ideas. Somebody’s talking about sun spots. Somebody’s talking about the Little Ice Age. It’s just completely incoherent, and nobody even tries to resolve it. Somebody says it’s happening, but it’s not that bad. The point is just to throw a bunch of mud at it.
I interviewed Joseph Bast, who’s head of the Heartland Institute, a Chicago-school economist, and he said to me straight up, he said, “I realized that if the science was true, it would justify any kind of regulation, and it would be…”
Jessyn Farrell: Heaven forbid.
Naomi Klein: He said, “So I took another look at the science.” He was very honest with me about the fact that his problem with the science was its political implications, that it was completely incompatible with the entire project of the Heartland Institute, which was to fight for deregulation, low taxes, slashing the public sphere.
You have these heavily motivated, ideologically motivated parties like Heritage, the CEI, American Enterprise Institute, Heartland, the Ayn Rand Institute. This is who is at the climate change denial conferences, and it makes it pretty clear that it is not about the science. It’s about protecting this particular very profitable worldview.
I think, in part, there’s been a failure on the part of liberals who saw this and thought that the right way to respond to it was to say, “Oh, no, no, no, we can do this just by changing our light bulbs and having a revenue-neutral carbon tax that is just going to give everybody their money back,” and trying to cram this into its own neoliberal framework where it wouldn’t be too threatening to the market. But it was actually, in a weird way, I think the right that understood better that actually that stuff was never going to work, and that they really had to deny it all because ultimately it’s too threatening.
Jessyn Farrell: You write about, and you mentioned earlier in the interview, the fact that these social movements are really on fire in this moment, and it would be really great to hear you reflect on how we can use activism and movement-building in this particular moment to change narrative, to push things like the Green New Deal. What is it that we need to be doing right now to fight against all of this?
Naomi Klein: The biggest challenge we have, or one of the biggest challenges we have, is that the most successful part of the neoliberal project in the ’80s and ’90s was less the idea that these policies were actually going to create the best possible outcomes. Those ideas have lost a lot of power. There’s very few people who will say to you with a straight face, “Yes, if we make the wealthy richer, it will eventually trickle down and lift all boats.” The era of the true neoliberal believers has really passed.
I think what has not passed, what still lives with us, is the idea that there is no alternative to it. The Thatcherite, there is no alternative. The Fukuyama, this is the end of history. The idea that we as humans are only capable of pursuing our most short-term selfish urges. These messages are really, really deeply ingrained, and they do come from economics, because the truth is there’s a lot of ways to be human.
Nick Hanauer: Yeah. I just want to point out that that idea, the homo economics, that people are rational and selfish, and by so describing our nature, has given a generation of people permission to be our most selfish. All of that over the last 40 years has been shown to be nonsense. It’s just objectively false. I mean, people can be selfish and short-sighted-
Naomi Klein: People are lots of things. Right.
Nick Hanauer: Yeah, that’s right. But in general, people are cooperative and altruistic and so on and so forth. That’s the part of us that we need to… We need a culture that promotes that.
Naomi Klein: The most important thing that we need to do right now, I think we need to lift up narratives that show other ways of being human, including examples in American history that tell stories about other times when people pulled together in the face of crisis. I think we also need stories of the future that challenge the idea that the way that we are going to respond to a future of ecological crisis is by just being worse versions of ourselves. I think Hollywood has fed us many, many different iterations of that same narrative, and it almost becomes a self-fulfilling prophecy. After a certain point, if that’s the only version you’ve seen, you start to think that’s the only kind of person you can be.
I think all of that is important, and I also just think organizing is important. What I’m focused on is what parts of the Green New Deal are really being left out. I just hosted an event where I teach at Rutgers, and we had an event about the care economy and the Green New Deal, bringing together teachers and home care workers and nurses and disability rights activists, and talking about how this is low-carbon work, it’s overwhelmingly done by women, it doesn’t burn a lot of carbon to take care of each other, to take care of the elderly, the sick, young people, but these are bad jobs because it’s women’s work, it’s overwhelmingly work done by immigrants. As we talk about job creation under a Green New Deal, let’s not just talk about making sure-
Nick Hanauer: Well, they’re not bad jobs. They’re poorly paid jobs.
Naomi Klein: Well, right.
Nick Hanauer: They’re good jobs.
Naomi Klein: The work is good. The work is important.
Nick Hanauer: But the pay sucks.
Naomi Klein: But the conditions are punishing. The conditions are punishing. These care workers are first responders in the midst of these crises. There are devastating stories about Filipina home care workers who burned with their clients because they wouldn’t leave them, and there was no plan to evacuate them in the midst of the California fires. We need to respect this work, and we need to make sure that they’re good jobs because this is the fastest-growing labor sector in the American economy. The trouble is, because it’s women and overwhelmingly immigrant women that are doing the work, we’ve allowed them to be bad jobs.
Yeah, let’s recognize that they’re not only good jobs; it’s the work that binds together our communities, that makes us less stressed. And it’s low carbon, and we can make it lower carbon. As we talk about green jobs, and this is something I’m just banging on and on and on about, let’s not make it just about the guy in the hardhat putting up the solar panel.
Nick Hanauer: Putting up the solar panel, right.
Naomi Klein: That’s good-
Nick Hanauer: The home healthcare worker is also a green job, yes.
Jessyn Farrell: That’s such a great insight about how the care economy can really be a part of the Green New Deal. It’s great to bring that high note into this conversation. Just as a final question, it would be really great if you could take a moment and reflect on why you continue to do this work.
Naomi Klein: Oh, dear. Look, I am-
Jessyn Farrell: High note.
Naomi Klein: High note. I don’t know if I can be only high on it. It’s a mixture of terror at what will happen if we don’t do this work. I have a seven-year-old. He is so in love with the natural world. I never want to have to tell him that we allowed the places that he loves to collapse because we could’ve done something and we didn’t.
I guess it’s a combination of fear of these worst outcomes, but also I’m so inspired by this new generation of activists that are out there who are really not afraid of deep change. I think they didn’t grow up with the same economic ideological indoctrination that I had, that my generation had. They’ve grown up in the rubble of the post-2008 financial crash, and they know that these systems are collapsing. They want to make connections. They are fiercely internationalist.
Greta Thunberg, when she spoke at the UN, she said, “You stole my childhood,” and it was so heartbreaking to hear her say that. I just feel like, “Geez, if these kids are giving up their childhoods, the least we can do is give up evenings and weekends and try to organize our coworkers, and maybe our retirees can give up a few cruises. They’re giving up so much.”
So maybe it’s not a high note, but I just feel like this is a moment where everybody has to step up in such a big way. Every half a degree of warming that we’re able to ward off is a win, and every policy that we introduce that lights up the humanitarian parts of ourselves and keeps us from turning on each other is going to help us hold onto our humanity in the hot future that is ahead.
Jessyn Farrell: Yeah, we really appreciate those thoughts. I think that that’s a really good place for all of us to focus our attention, on those policies and efforts that really lift ourselves up as humans and not divide us. We really, really appreciate your time with us today. This has been a really meaningful interview.
Nick Hanauer: Yeah, thank you so much. We, of course, have been-
Naomi Klein: Thank you. I really appreciate it too. It was such a nice conversation for me. I’m sorry I get a bit bleak sometimes.
Nick Hanauer: No, that’s okay.
Jessyn Farrell: We got it.
Nick Hanauer: It’s okay.
Jessyn Farrell: Yeah.
Nick Hanauer: It’s okay. Well, thank you so much for spending time with us.
Naomi Klein: Thank you.
Nick Hanauer: We will talk more in the future, I predict.
Naomi Klein: Take care.
Nick Hanauer: Thank you.
Jessyn Farrell: Sounds good. Thanks.
Naomi Klein: Bye-bye.
Nick Hanauer: Bye.
Jessyn Farrell: Well, that was a really moving and interesting interview from Naomi. There are a lot of things that are really interesting to reflect on. One of the things that she highlighted was that traditional economics tells such a grim story about what human nature is, and that if we’re going to get on top of the climate crisis, we have to create policies that actually animate our better selves. That’s our job.
Nick Hanauer: Yeah. I think she alluded to the fact that neoliberalism, the existing economic meaning system, just assumes the worst about us, and by so doing, encourages the worst of us, that we should be-
Jessyn Farrell: Right. We build policies-
Nick Hanauer: … short-sighted, we should be greedy, we shouldn’t worry about the future, that if we do all those things, it will all somehow magically work out. That is the icky underside of neoliberalism, and we have to move beyond that, that we need a new meaning system, a new narrative, a new kind of economics that both expects and encourages us as people to do more than that, to be more than that, to work together to solve problems, to be our best selves.
Our next guest is our friend Josh Mason, who is this fabulous professor of economics at John Jay College at City University of New York.
Jessyn Farrell: I’m really looking forward to hearing from him how intellectual rigor and the economics profession can really be a part of this movement. We heard about big, broad change and how social movements matter, but what can the economics profession bring to be part of this transformation?
Nick Hanauer: Yeah, and ideally not be an obstacle.
Jessyn Farrell: Yeah, exactly. Not raining on everybody’s parade.
Nick Hanauer: That’s right, which is where the economics profession has been because the classical formulations, the neoliberal interpretations are that it’s all trade-offs, that we could survive as a species and breathe clean air and not have everything go extinct, but then we’d be poor.
Jessyn Farrell: Right. It’s either-or. That’s right.
Nick Hanauer: It’s just absolutely idiotic and nuts.
Josh Mason: I’m Josh Mason. I’m an assistant professor of economics at John Jay College at City University of New York, and also a fellow at the Roosevelt Institute.
Nick Hanauer: You are the coauthor of a very cool new report, Decarbonizing the U.S. Economy: Pathways Towards a Green New Deal, which is what we really want to zoom in on in this podcast. You’ve written this report where you offer a three-pillar approach to use the entire range of policy tools available for decarbonizing in an equitable and pro-growth way. Let’s start by you summarizing those three pillars, what this approach is.
Josh Mason: Well, the conversation that we’re part of here is one that a year ago was really dominated by the idea of a carbon tax. It’s really striking, especially among economists, but in the broader mainstream policy world, how strong this consensus was that the most important tool, and maybe almost the only tool, that you need to shift the economy away from carbon is to put a tax on it. There was this letter signed by an enormous list of eminent economists really saying, “This is it. This is what you need to do.”
Where we’re coming from is to say although pricing carbon probably is part of the story of what we need to do, it’s not the main thing. This is a problem that really needs to be addressed by massive public investment. Markets are not actually very good at the sort of tasks that we need to do.
When you’ve got a little choice to make on the margin, a little more of this, a little more of that, things that are pretty similar and you can trade them off against each other, great, let’s use prices to make those choices. But when you have to do a massive reorganization of the economy, when you have to shift from doing something to doing something completely different in a short amount of time, when you need to really reallocate resources on a very large scale and when you need to develop new technologies and new forms of production, history tells us markets don’t do that. Whether we’re talking about industrial development in countries like China and Korea and Japan, whether we’re talking about mobilization for war, whenever we see an economy shift in a very short time period from one kind of activity to another, you see there’s a lot of planning and a lot of central direction and a big role for the government.
That’s really the argument we’re making, that you need a central role for public planning and public investment in any sort of program that’s going to actually get us off carbon fast enough to preserve our civilization.
Jessyn Farrell: One of the things that is always the question around any proposal around reducing carbon emissions is the political side. You wrote that deploying those three pillars will require overcoming political resistance and all of the skepticism about the government’s ability to organize and finance large-scale projects. So how do we overcome that?
Josh Mason: One of the most important things, maybe the most important thing, is that you have to deliver benefits to people here and now. One of the things we’re trying to push back against is this climate austerity, the notion that dealing with climate change means sacrifice, it means giving stuff up, it means lower consumption, it means lower standards of living. When climate is approached that way, and that’s something, obviously, maybe you get certain people on the left who think we really need just a drastically lower living standard, but you also get it on the right, again, with the emphasis on the carbon tax, where it’s basically a matter of just forcing people to spend less in certain areas. I think when you’re telling people they’ve got to make sacrifices, maybe they ought to listen to that, but they won’t because most people are economically struggling already. If you tell them…
You’ve got to do this in a way that actually makes people better off today, and that’s why you’ve got to really come out in front. That’s another reason for the public investment angle, because it has to be about jobs. It has to be about putting people to work in good-paying jobs. It has to be about the public investment that’s going to say to people, “If you can’t drive your internal combustion car anymore, here’s an alternative for you. We’re going to roll out transit in places that don’t have transit today. We’re going to make electric cars affordable, and we’re going to have a public system of charging stations, which is the network that governments can produce and private investors don’t.”
You’ve got to do that spending upfront if you want people to accept this. If it’s just about “You’re going to give this up, and your grandchildren will thank you,” it’s not going to fly.
Jessyn Farrell: One of the areas that I worked on a long time before being a state legislator and coming to work at Civic Ventures was this issue of transit and building out a great regional network in Seattle. I think you light on something that’s really important, which is you have to talk about the benefit that people are going to get. People are willing to raise their taxes, in my experience, but it isn’t the tax that has to drive the conversation; it’s the really great thing that people want to pay for. Of course, one of the major critiques of any big, robust proposal around carbon is that it’s going to cost too much, so how do you address that? What’s your comment back?
Josh Mason: Yeah, that’s right. I think it depends who you’re talking to. If I’m in a room with policy people, I will make the argument that we actually can and, in fact, should be borrowing a lot more money. The federal government today is borrowing, average on new debt is about 1.4%. It’s extremely low. It shows that there’s a desperate desire on the part of investors to hold those bonds, and it’s crazy not to be taking advantage of that.
It’s crazy not to be giving the markets what they want, which is more federal debt, while at the same time dealing with this existential crisis and also raising people’s living standards. Concerns about excessive government deficits today are just insane. Maybe insane is too harsh, so let’s say-
Jessyn Farrell: No, that’s okay.
Josh Mason: … they haven’t caught up with reality. If it was 1987 and interest rates were 10% and debt service costs were eating up 15% of the federal budget, you might be concerned, but we are so far from that world today. People, unfortunately, have not always caught up in their thinking about government debt.
Nick Hanauer: By the way, we will happily take down a trillion and a half dollars’ worth of debt to give tax cuts to rich people, right?
Josh Mason: Yeah. In a way, I think it’s actually almost positive in the sense that I feel like… I was on a little debate with Rich Lowry from National Review recently, and somebody like that, he’s like, “I can’t claim that the Republicans are any better on this stuff. I can’t claim that you’re somehow pushing the envelope when you talk about debt financing for the Green New Deal because it’s bipartisan.” I think in a certain way we could thank them for having demolished some of this fear of deficit spending. At least, I hope that’s how it turns out.
Nick Hanauer: Can you take us through and slightly more detail what the economics are of the three pillars? If Joshua is in charge, what would you do?
Josh Mason: Well, let’s start with the carbon price. I think we do need a carbon price. There are things that prices work well for. There’s places where we need to get people to shift where there is already an alternative, and carbon prices are good for that.
The big piece, again, is the public, and we need to stop subsidizing fossil fuels. We need to stop encouraging new fossil fuel development. That stuff needs to stay in the ground. Again, the central piece is a program of public investment. There’s a lot of stuff that’s really low-hanging fruit. There’s some stuff that’s hard, but there’s a lot of stuff that’s not that hard that the federal government can go out and do if you just have a commitment to do it on the right scale. I think wind power, for instance, that’s a real success story for the way that you can see public money, public subsidies, public support for research and development really pay off.
Part of the larger argument here is that there are… I have your question in my head, but I just want to say the economists have this idea that everything is about trade-offs and everything is about decreasing returns. The more you do something, the less well it works. The more you do something, the more expensive it gets. Real economies aren’t like that. They aren’t like that.
Nick Hanauer: No, they work the opposite way.
Josh Mason: As you do something more, you get better at it, and it gets cheaper. This vision, I feel like, is really one of the real divides. The people who have this decreasing returns, scarcity vision, they like the carbon tax. We’re just going to have to give up stuff today, so then we can have more spending on other stuff. It’s going to be costly, it’s going to be less efficient, but we just have to make that sacrifice.
Nordhaus, who just got the Nobel Prize, the whole analysis is just like this. How do we trade off lower living standards today? Real economies don’t work that way. When you invest, you get increasing returns. You get better at doing something.
Something that’s really expensive like solar voltaics, I remember it wasn’t that long ago people said, “This is never going to be plausible. It’s a niche thing. You can use it out in the desert. You can use it on a highway sign where there’s no good connection. But it’s never going to be cost-effective.” The costs have come down so much because there’s been investment in it, wind power even more so.
When you see it that way, then you realize there’s a big role for the government in knocking us off of one equilibrium and getting us onto a better one, and getting you over that steep part of the curve where costs are still high and you get to the point where these new sectors are going to be cost competitive. The big thing is you’ve got to go and you’ve got to spend a lot of money. You’ve got to do a lot of public investment. There’s a lot of stuff the government should build it, operate it, own it, but there’s a lot of other stuff the private sector can do. You’ve got to give them that push, you’ve got to give them the right incentives, and you’ve also got to give them some subsidies.
The big thing, this I think is another thing we really have to overcome, is the big advantage the federal government brings to this is its capacity for bearing risk. Banks and finance, they’re very risk averse. They don’t want to go in to make a loan unless there’s a short-term payoff. Businesses are even worse.
There was an article in the Financial Times, I don’t know, six months ago saying a lot of manufacturers are really excited about carbon-reducing investments and green technology and looking for ways they can improve their manufacturing processes to have less net emissions and all this stuff. Oh, but there’s just one catch. It has to pay for itself within one year. If it doesn’t fully cover its own costs in a year, can’t do it.
You see, that’s this very cautious, risk-averse approach to investment that the private sector brings, and so the public sector needs to come in and be the risk bearer on this stuff. The public sector needs to come in and say, “We’re going to subsidize this or we’re going to mandate it, and we’re also going to help pay for it. We’re going to finance it, and we’re going to take the risk that it doesn’t work out.”
I think this is something… We have to change this mindset that the public sector is very risk averse. I kind of say this jokingly, but it’s true. We need a lot of Solyndras. If we don’t have a lot of projects that go bad and don’t work out, then we’re not doing what we need to be doing, which is taking on the risk and pushing the envelope. If we’re only doing stuff that pays off, that’s the stuff the private sector would already do.
Nick Hanauer: I just wanted to mention an economic empirical principle that you alluded to but didn’t talk about specifically, which is Wright’s Law. People are familiar with Moore’s Law, which is this idea that over time, basically, transistor components get cheaper and better and faster. But Wright’s Law is an adjacent principle. Basically, it’s the experience equivalent of Moore’s Law, which is that the more of something you do, the cheaper it gets to do it. In fact, there’s a lot of evidence to show that Wright’s Law is even more accurate a predictor of the future than Moore’s Law.
I think it’s really worth underscoring that one of the really important roles that government can play in all of this is that by front-loading demand for these important transformational technologies, you make them cheaper, and the more of them you do, the cheaper they get. That creates a feedback effect which drives the price down radically over time, and this is what’s happened with wind turbines. The more of them we make, the better we get at it, and the bigger they become and the more efficient they are and the better the whole thing works. If you let the market just unfold in the way that it will without encouragement, well, that process may take 30 years.
Josh Mason: Right, or never happen at all.
Nick Hanauer: Or never happen at all.
Josh Mason: Yeah, that’s absolutely right.
Nick Hanauer: But a concerted effort with public investment can make a thing 10 times more efficient in a very, very short period of time. That’s why I think this principle of public investment is so important, because it’s just unambiguously true that by getting after these things, we can make them work better much faster, which is what we need to do.
Jessyn Farrell: It really strikes me, too, that this issue of public investment is not a new idea. This is firmly and squarely embedded in many of the great moments in the 20th century, whether it’s big investments in the highway system or in the higher education system. I think that’s one of the key things, that public investment is a tool that we’ve used over and over and over again with really great results. I think, Josh, your point around the market simply not being able to be the sole source of the solution is really, really important.
Nick Hanauer: Yeah. Where do you think the consensus is today in the economics community? Has it shifted? Obviously, the good folks at the Hoover Institution are probably all still dug in, but where’s your profession today on all of this?
Josh Mason: Well, I’m always an optimist, but I think it’s shifting fast. I think it’s moving fast. I’ve been having these conversations. This Green New Deal is all so new, this whole thing just almost appeared a little over a year ago, but I’ve been having these conversations for most of the past year and I just feel like the carbon tax as the be-all and end-all, that’s just gone, at least among people, let’s say, in the left side of the Democratic establishment world who would’ve said the only question is, is the carbon tax everything we need to do or 80% of what we need to do? Now nobody wants to take that position. That’s one.
Two, I think the consensus around debt and public finances has really moved. I think it’s very hard to find people, even compared with a decade ago, who are going to argue really strenuously that we need to worry a lot about the government debt and we should put a priority on getting the deficit down and starting to pay down the debt. I think a lot of this language we had in the Obama administration, I think it’s very hard to imagine even in a Biden administration that kind of rhetoric coming back. I don’t think people believe it anymore, and I think the pressure from beneath that says the government really needs to be doing more is too strong.
Nick Hanauer: Yeah, absolutely. I think you’re right.
Josh Mason: Yeah, in the economics profession, sorry, I should just say the shift on debt is really striking. There’s some really high-profile people, Olivier Blanchard, who is the current head of the American Economic Association, was previously the chief economist at the IMF, who made a big splash, I guess it was back in January, at the Maine Economics Conference of the year, where he gave the keynote address, which basically said we’ve been wrong to worry about government debt, we’ve really overestimated the costs, and actually it’s not clear that in today’s environment where interest rates are very low that there are any costs, at least until government debt gets much higher than it is now.
I think for somebody… Then you have people like Larry Summers, former treasury secretary, as establishment as it comes, making the same kind of argument. Jason Furman, who was the CEA chair under Obama, he wrote a really nice piece towards the end of his tenure there called The New View of Fiscal Policy, where he basically said all of these ideas we had that government spending is a last resort, only in emergencies, you’ve got to start thinking about paying it down right away, it’s just short term, he says no, none of that stuff is true. It’s actually much less costly than we thought, and we probably need a lot more of it.
I think there’s really been a shift in the economic… At least, the policy-oriented part of the economics profession. The purely academic stuff, I don’t know, but the people who are engaged with the real world-
Jessyn Farrell: They need to come out into the real world.
Josh Mason: … I think there’s a move.
Jessyn Farrell: Exactly. That’s right. Well, one of the things we say around here is you can’t change the world without changing minds, so it’s good to hear that there are some folks out there in your profession who are changing their minds.
Nick Hanauer: Yeah, that’s great.
Jessyn Farrell: Do you have any final thoughts or comments for us, like what you see needing to happen next?
Josh Mason: I think we just have to convince people that this is an opportunity. This is not about austerity and sacrifice. This is a chance. The people on the right say this, and they’re suspicious, the thing about watermelon, green on the outside and red on the inside. But you know what, we should embrace that, because actually dealing with climate in the way that we really need to deal with it is the best opportunity we have for also getting a more egalitarian economy, a more efficient economy, one where we really see wages rising and standards of living rising and people having better lives. It’s actually the solution. If we do it right, it’s the solution to a lot of other problems we’ve been struggling with too.
Nick Hanauer: Josh, one of the things we always ask our guests is, why do you do the work that you do? What draws you to it?
Josh Mason: Well, years and year ago, I was working for the AFL=CIO. I was a speechwriter. People wanted to talk about what their pensions were invested in. That was sort of my gig. It was a little bit depressing, and I thought, “I don’t want to just be a communications person. I want to be in the room where the conversations are.”
Who’s in the room? Well, the lawyers are in the room and the economists are in the room. Sociologists and historians, they’re wonderful, but they don’t get to be in the room. Economics seemed like the best way you could be a real intellectual and also be part of the actual political debates, and so I think that was the right choice. I would encourage other people to make a similar choice.
I would also say, and here’s my little plug, I was very fortunate in being in one of the view heterodox or radical economics departments at the University of Massachusetts at Amherst, where there’s obviously a serious economics education, you learn all the stuff, more or less, that people get in the other departments, but you also are really engaging with the ideas of Keynes and Marx and these alternative traditions in economics. I think that’s so valuable when you start thinking about questions out in the world, where you’ve got this little repertoire of models people come out of other departments with that just aren’t very helpful for them. I was really fortunate in that, and that’s something I’m trying to pay forward.
We’ve got here at John Jay, we just started a master’s program in economics where we’re trying to reproduce a bit of that just at the MA level, not just for PhD students. If there’s people listening to this who are thinking they’d like to continue with an education in economics and are interested in doing stuff that’s a little more politically engaged and a little more engaged with these other radical traditions, they should look us up.
Nick Hanauer: I love it.
Jessyn Farrell: That’s a great ending note.
Nick Hanauer: Well, thank you, sir, for spending time with us, and we shall chat soon again.
Josh Mason: All right, I’m looking forward to it.
Nick Hanauer: Thank you so much.
Jessyn Farrell: Thank you.
Josh Mason: Thanks.
Nick Hanauer: Bye.
This is Nick Hanauer. You’ve reached the magic voicemail box where you can leave me a question. All you have to do is state your name, where you’re calling from, and your question.
Eric Wood: Hi, this is Eric Wood. I was wondering if you guys think there is an opportunity to use the force-multiplying effects of climate change in the next decade or even sooner to shape more equitable economic policy. Disasters are really often associated with negative concepts like disaster capitalism or poor government response, but there is that initial absolute value to a window of opportunity that exists within public sentiment after a major disaster. So the follow-up question is, how can we, we being the people who don’t buy into market failurism, take advantage of a social phenomenon like this window of post-disaster public opinion pliability? I’m wondering what you guys thought. Thanks a lot.
Nick Hanauer: I think that Eric makes a phenomenal point that I believe Rahm Emanuel made even sharper, which is “Never let a great crisis go to waste.” Indeed, the climate crisis is real, and if we let the neoliberal narrative win the day, which is “We could solve climate change, but then we’d all be poor,” but in fact, that’s a lie, and the whole impetus around the Green New Deal is both a new idea and a narrative, which is that, in fact, this existential crisis creates the biggest economic opportunity for everyday citizens that we’ve seen in 100 years.
Jessyn Farrell: Right. I think it really nails that point, which is that this is a fight that requires movements, it’s a fight that requires money, but ultimately it’s a fight that requires a new narrative about how the economy works and how we interface with environmental regulations, with our impact on the environment. So long as we are stuck in the mindset of “raising wages kills jobs, but environmental regulations kill jobs too,” we are going to lose the fight. What I thought was really exciting about our conversation with Naomi Klein was, in particular, that we have the opportunity to reframe a new narrative, and the Green New Deal just really allows us to do that.
Nick Hanauer: That’s right. If you zoom all the way out, the dominant neoliberal narrative around climate is “if we do anything to address this, there will be trade-offs and we will be poor.” That is a straight-up lie. It’s a straight-up lie designed to protect the interests of the very rich and the very powerful. The truth is that if we address climate change, we will all be richer, we will all be more prosperous, not just because the Earth won’t come apart, but because the act of organizing ourselves to address these issues and to build alternatives to fossil fuel will be the greatest economic opportunity that the world has seen probably in 100 years, and probably in the history of the world. It’s a fantastic positive opportunity to do the right thing and, economically, a creative thing, a thing that will make people richer, but you’ve got to win that narrative and you’ve got to go straight at the existing narrative, which is “we could do something, but then we’d all be poor,” and show people that that’s a lie.
Jessyn Farrell: Right. One of the things that I think is really interesting is as you think about remaking the economy so it is based on broad-based prosperity instead of traditional trickle-down, oligarch, all of that good stuff, you then not only… Again, in the Green New Deal frame, it’s not just then about building solar panels and all of the green energy kinds of jobs, but it also then can become around building a real care economy so that those jobs, whether you’re a teacher or taking care of the elderly or teaching the youngest, a childcare worker, those jobs become green jobs because they are low-emissions jobs. There’s an opportunity to make those jobs great jobs. I think that’s just this really interesting moment where, if we’re really talking about broad-based prosperity and good jobs, and jobs that are also good for the environment, you suddenly open up all of these possibilities.
Nick Hanauer: Right. Exactly. For sure, if we want to have a Green New Deal, it’s going to take a lot of people organizing themselves to press forward. Our good friends in the fossil fuel industry will be actively working to make it not so. But it’s the Sunrise Movement that is organizing across the country, and if listeners are interested in getting involved, they should get on the tubes, the internet, the intertubes, and look it up and connect.
Jessyn Farrell: Again, if we do our work building movements, supporting institutions like the Sunrise Movement and the organizing work that they’re doing in local communities, and driving a new narrative, we’ll get to the political conditions where the next president can embrace and be a proponent of the next Green New Deal.
Nick Hanauer: Yeah, the next Green New Deal, which would be awesome.
Jessyn Farrell: Yeah.
Nick Hanauer: In our next episode of Pitchfork Economics, we are going to talk about taxes, particularly on the rich.
Speaker 1: Pitchfork Economics is produced by Civic Ventures. The magic happens in Seattle in partnership with The Young Turks Network. If you like the show, make sure to subscribe, rate, and review us wherever you get your podcasts. Find us on Twitter and Facebook at Civic Action and Nick Hanauer. Follow our writing on Medium at Civic Skunk Works, and peek behind the podcast scenes on Instagram at Pitchfork Economics.
As always, from our team at Civic Ventures, thanks for listening. See you next week.