The Status of the Green New Deal

The Green New Deal (GND), championed by Alexandria Ocasio-Cortez and Edward Markey, presents a utopian vision of a rapid transition to 100% clean energy by 2030, coupled with sweeping social and economic reforms. This vision, however, rests on a foundation of economic fantasy, divorced from the practical realities of resource allocation and economic calculation. The GND promises a complete overhaul of the energy sector, eliminating fossil fuels in favor of wind and solar power within an unrealistic timeframe, while simultaneously guaranteeing jobs, improving public health, and reducing military spending. These ambitious goals are predicated on the belief that centralized planning and government fiat can effectively direct resources and reshape the economy.

The GND’s proponents envision a World War II-style mobilization, fueled by massive government spending and a “robust carbon fee program,” to achieve this rapid transformation. They claim that the plan will “pay for itself” through healthcare savings and economic growth, while also addressing social injustices and promoting community ownership of the energy system. This rhetoric appeals to progressive ideals, but ignores the fundamental economic principles that govern resource allocation and production. The plan’s disregard for market forces and its reliance on government mandates are precisely where its fatal flaws reside.

The GND’s underlying assumption is that government planners possess the knowledge and capacity to effectively allocate resources and manage the complex processes of energy production and distribution. This assumption ignores the crucial role of market prices in conveying information about supply and demand, guiding investment decisions, and coordinating economic activity. Without the “common denominator” of market prices, as Ludwig von Mises argued, economic calculation becomes impossible, leading to misallocation of resources, inefficiency, and ultimately, economic stagnation.

The Inflation Reduction Act (IRA), lauded by AOC and the Biden administration as a key component of the GND’s implementation, exemplifies the pitfalls of this central planning approach. Despite promises of millions of new jobs and a transformed economy, the IRA has failed to deliver on its lofty goals. Inflation remains high, and the promised infrastructure projects have been plagued by delays and cost overruns. This failure is not simply a matter of political will or regulatory hurdles; it is a direct consequence of the flawed economic model upon which the GND and the IRA are based.

The experience of the Biden administration with the IRA highlights the inherent limitations of government-directed economic planning. As Ezra Klein of the New York Times observed, delays and obstacles have become endemic in American government, hindering the implementation of even relatively straightforward infrastructure projects. While Klein attributes these problems to regulations, bureaucracy, and a lack of urgency, the deeper issue lies in the absence of a market-based mechanism for coordinating economic activity. Without the incentives provided by profit and loss, and the information conveyed by market prices, government planners are left adrift, unable to make rational decisions about resource allocation.

The GND’s failure stems not from a lack of ambition or good intentions, but from a fundamental misunderstanding of economic principles. The belief that government can effectively manage the economy through top-down directives, while simultaneously ignoring the signals provided by market prices, is a recipe for disaster. The GND and the IRA, with their emphasis on centralized control and disregard for market forces, represent a modern-day manifestation of the socialist economic model that Mises so eloquently critiqued a century ago. The disappointing results of these initiatives serve as a stark reminder of the enduring wisdom of Mises’s insights and the crucial importance of market prices for a functioning economy. The ongoing struggles to implement the GND and the IRA demonstrate the inherent limitations of central planning and the vital role of market mechanisms in achieving economic prosperity. Attempts to circumvent these fundamental economic principles are doomed to fail, regardless of the political will behind them. The GND, while appealing to idealistic notions of social and environmental justice, ultimately founders on the rocks of economic reality. Its reliance on centralized planning, government mandates, and a disregard for market forces makes it a utopian fantasy, not a viable blueprint for a sustainable future.