That Rep.-elect Alexandria Ocasio-Cortez, D-N.Y., is already bugging Nancy Pelosi is admirable. This is rather what radical politicians are elected to do: get something done. It’s also good news that Ocasio-Cortez has found somewhere in Washington to rest her weary head before the congressional salary kicks in. But there’s a problem with what she’s agitating for: a “Green New Deal.”
The idea is a total stinker.
No, not just because it comes from progressives, although that’s always a useful indicator. Not because it’s about climate change — that’s an argument I’ll not be getting into today. But because her demand is that the government start to do something, on a grand scale, which we know the government is extremely bad at doing.
The theory is well enough known, if not always agreed with. As economist F.A. Hayek pointed out, government simply never can have the information required to make detailed plans for anything at all. Broad brush stokes of policy are the best that can be achieved, and even then we’ve got to be careful about the consequences of them.
Thus, this idea that we’re going to mobilize some carbon army to insulate nearly every building in the country isn’t going to work. The scale of the work to be done, the granularity of the decisionmaking process (which house should be dealt with in which manner?) isn’t suited to central direction from Washington to 329 million people.
The very idea itself is an import from Europe. more specifically, from my native Britain. It’s an idea that doesn’t travel well. U.S. building standards and practices are entirely different from Britain’s, yet the same demands are being made in both places. That’s not quite how it works, is it?
But much more than theory or haggling over technical details, we have excellent empirical evidence that a Green New Deal just does not work. It’s been tried, twice, on different sides of the world and it didn’t work either time.
The first time it was Australia. The global recession hits, so as a nice bit of Keynesian pump-priming they figured: Why not insulate the houses of the nation and thereby protect, or even limit, climate change? This plan from the central government meant that every bodger, crook, and incompetent got grants and tax money to ruin houses. They even had a Royal Commission to tell us all what a disaster it was. It is not a usual belief that either Britain or the U.S. have fewer chancers than Australia.
Despite this report, the British government decided to do the same thing. A central plan, with targets, disbursing rivers of tax money, to insulate the houses of the nation. This was then done so badly that there are fears that as many as a million houses have been ruined, and certainly thousands have been turned into entirely useful mushroom farms and not useful dwellings.
Now Ocasio-Cortez and others are demanding the U.S. makes the same mistake. The problem is that we know it just doesn’t work. But, you know, progressives.
Let us assume that we really do need to do something about climate change, and insulation of housing would help. We cannot use central government’s plans and subsidies to do it, that we now know. We have to run with the grain, the attention to detail and local knowledge, of market systems. We can indeed change the incentives people face — this is why economists keep telling us to have a carbon tax — and get the job done.
But it has to be a change in incentives, not instructions from the federal government, to get that job done.
Tim Worstall (@worstall) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is a senior fellow at the Adam Smith Institute. You can read all his pieces at The Continental Telegraph.
