Can we afford the Green New Deal?

摘要

The cost of the Green New Deal is usually estimated in financial terms, adding the projected costs of the various programs which leads to the conclusion that large tax hikes would be needed to pay for it. In this paper, we apply the methodology developed by J. M. Keynes in How to Pay for the War to offer a better approach for evaluating the affordability of the GND. We argue that the cost of the GND must be measured in terms of real resources, not financial costs. Affordability cannot be determined by adding up the financial costs and weighing them against prospective tax increases. What is required instead is a careful accounting of the resources the GND will require, weighing those against resources it will release plus what is already in excess supply. Only then can we determine whether a reduction of aggregate demand is needed, and consequently, whether we need counter-inflationary measures, such as tax hikes. While we acknowledge the major uncertainties involved in estimating real resource costs, we argue that our approach to affordability is much more relevant than the mainstream one.