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Feb 15, 2019

Decoding the Green New Deal

The proposal is pretty vague, but that’s not what matters.

I just read the text of the Green New Deal. The goals—net zero emissions, millions of good jobs, infrastructure development, clean air and water, justice for the repressed and more—are both laudable and necessary. But the policies as proposed, like so many well-intentioned efforts before, are kind of hilariously vague and general when compared to the scale and urgency of the challenges confronting us.

The Resolved paragraph, which is where policy recommendations go after the preambles explaining why policy is needed, begins with “it is the sense of the House of Representatives that it is the duty of the Federal Government to create a Green New Deal.” It goes on with a lot of aspirational but unspecific stuff like sub-paragraph (N) which states the government should be “promoting the international exchange of technology, expertise, products, funding and services, with the aim of making the United States the international leader on climate action, and to help other countries achieve a Green New Deal.”

So the Green New Deal proposal mostly proposes the setting up of a Green New Deal. But that’s OK. Most people will never delve into the weeds of the actual text. What folks will perceive is that the government, and maybe even the mainstream, now understand that the threats to our economy and wellbeing are real. In terms of shifting the zeitgeist, that’s what matters.

As economists and asset managers modeling the forward trajectory of the economy, we at Green Alpha view this as a key and welcome catalyst to the megatrends now clearly underway, namely: massive, economy-wide, tech-enabled productivity gains, electricity from indefinite renewables like wind and solar, the sourcing of manufacturing materials nearly exclusively from waste-to-value as opposed to from primary geological sources and far more equitable ownership of these new means of production. These things are growing primarily because they are more economically competitive than the legacy (often fossil fuels-powered) ways of doing business that came before. But policy and public opinion can and do accelerate economic change.

The Green New Deal, whatever its actual policy particulars thus far, sends a signal to the stalwarts of the legacy economy that the world is becoming aware of the risk they represent. To those inclined to remain invested in the status quo, the message is clear: It is time to start thinking through how to contemporize.

Kudos to Alexandria Ocasio-Cortez for finally getting climate action on the grown-up’s table. It’s way past time, and this aspirational document is a fantastic start.

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