So The Green New Deal’s $93 Trillion Is A Lie – What’s The True Cost?

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That the Green New Deal won’t cost $93 trillion is obvious enough – no one’s going to pass a bill or series of them that will cost that much. It’s still a useful number though because it does indeed insist, by simply existing, that people start to say how much it will cost. And the problem here for proponents of the Green New Deal is that it will cost more than other methods of attempting to solve the same problem.

This is not, by the way, some way out there claim. It’s standard and settled climate change science. It’s expressly stated in the Stern Review of the subject, the very one used as proof that we should be doing something. It’s there in Bill Nordhaus’ work on the subject that gained him, in large part, his Nobel. And it’s part and parcel of what near every economist says on the subject too.

So, this claim of $93 trillion, maybe it’s not quite right, maybe it’s even that lie which becomes a political talking point:

The bogus number at the center of the GOP’s Green New Deal attacks
Republicans’ estimates that the climate plan would cost $93 trillion are based on a think tank study that doesn’t endorse that total.

OK, so, how much will it cost?

Republicans claim the Green New Deal would cost $93 trillion — a number that would dwarf the economic output of every nation on Earth. The figure is bogus.

Super, what’s the right one?

Green New Deal supporters acknowledge that their preferred polices won’t be free, but they say Republicans are acting in bad faith by trying to paint the resolution with a specific brush so early and refusing to acknowledge that unchecked climate change poses its own economic risks. For instance, a United Nations report last fall estimated a global cost of as much as $69 trillion from even a modest rise in global temperatures.

Yes, we know all that. Emissions have costs to them, we’d like to avoid those costs.

“We all knew this vacuum was here, but you can’t put a price on it until you have a piece of legislation that you can score,” said Greg Carlock, Green New Deal research director with the progressive think tank Data for Progress. He said the AAF study “was an attempt to fill that vacuum, but it does it in a mean-spirited way.”

Super, so we need some other way of estimating those costs. Which we do have. In the standard economics of such matters.

The economy is complex. Say we wish to reduce emissions from transport. How should we do that? There are many things we can do after all. Abolish the motor car say. Build an integrated public transport system. Electrify all cars. People might move to live closer to work. Maybe work from home. Just drive smaller engined cars. What mixture of all of these achieves our task best?

We don’t know. Or at least we don’t know while maximising human utility which is our aim in having an economy at least. Given we don’t know we can’t therefore plan. We most certainly can’t say that if we go build this or that then we’ve solved the problem at least cost.

What we can do instead is provide the incentive for people to try out all of these things. And we’ll end up with some mixture of all of them which will be our lowest cost approach to solving this problem. This is why the standard economics of climate change says don’t plan stuff, just stick on a carbon tax and see behaviour change.

This is made very clear in that Stern Review. Yup, the one that says we should do something. It says that we should have that carbon tax. It also says that we shouldn’t use the more inefficient method of trying to plan it all. Because planning is going to be more expensive. Leading to one of two outcomes. Either we make ourselves poorer than we need to to solve this problem. Or that we solve less of the problem because of the expense of doing so.

Sure, the $93 trillion cost of the Green New Deal is an incorrect number. But it still has a value, which is that it concentrates minds on how much it will cost. The answer being that for any level of climate change mitigation the Green New Deal will cost more than a carbon tax. And why would we want to do it the expensive way?