And such are the likely real margins inside many economies that nothing like the Green New Deal could be done by simply using government injection of funds without there being a superficial demand for additional tax payable, and quite possibly in significant amount if inflation was to be avoided. There are spare resources in the economy, but not that many.
We will lose what we would have had if we’d not had the Green New Deal.
The first relates to the necessary reallocation of resources to create the capacity for something as radical as the Green New Deal, because let’s not pretend that this will happen with all existing activity within the economy coexisting beside it.
Yep, there’s an opportunity cost to the Green New Deal. It’s expensive that is.
My proposal that pension fund and ISA savings be used to finance the Green New Deal should be seen within this context. Let us not pretend that these do not change aggregate demand within the economy. First of all, by providing tax subsidised savings mechanisms they do distort demand by diverting financial resources: this in itself has an impact upon the real economy. And, secondly, any argument that they merely create stocks of notional financial assets with no real impact is far too limited a perspective. The fact is that massive amounts of resource are actually reallocated by this savings process this process and this has a very real current impact upon resource allocation within society, both in consumption and investment terms, and both have real consequence.
But Snippa’s entire rant is that mere savings don’t have any impact upon that real economy.
So, what I have done is link the need for change in aggregate demand to the tax reform that has promoted current resource misallocation and have
Which is exactly how real economists have said we should tackle climate change. A carbon tax.