Contributed by Jim Hayes
In less than two weeks, Alexandria Ocasio-Cortez proposal for a Green New Deal has gained a great deal of support form the public, and it has generated the ire of the Washington establishment and chiefs of Wall Street.
But what is it?
The Green New Deal takes a leaf out of Franklin Roosevelt’s New Deal, which began a massive period of infrastructure building to provide work and build the economy during the Great Depression of the 1930’s. It was a time of crisis, calling for a bold new approach, sufficient to meet the challenges of the day.
Roosevelt’s package included an Economic Bill of Rights, providing rights for employment, medical care, housing, education and social security. This part of the New Deal was never implemented. Opposition from vested interests was too strong and the onset of World War Two put the final end to it all.
With only a partial application, the New Deal still managed to improve the lives of many and contributed to planting the seeds for future economic growth.
This makes it very relevant to today’s conditions of a new economic decline and the real threat of climate change, which demands a new crisis response
The document Alexandria Ocasio-Cortez presented to Congress, with the backing of Senator Ed Markey, calls for “new national, social, industrial and industrial mobilisation,” linking the Plan to rights for clean water, healthy food, adequate health care and education, to the need to build a sustainable economy.
There are calls for new buildings to have to meet strict maximum energy efficiency and for old buildings to be upgraded, and transport to be overhauled to eliminate greenhouse gases.
Lowering carbon emissions is tied to the need to “guarantee a job with a family sustaining wage, adequate family and medical leave, paid vacations and retirement security for all the people of the United States.”
This is not about handouts to a passive population. In turns on the mobilisation of people as well as resources, creating conditions favourable for greater democratic participation than has ever been the case before. Democratic participation in turn, can become a force to unleash the enthusiasm, involvement and initiative to push it all forward.
Alexandria Ocasio-Cortez’s proposal is not only relevant to the United States.
A Green New Deal approach to meet the challenge of approaching crisis is equally important for Australia. Similar measures deserve to be hot topics of public debate.
Like in The United States, the approach in Australia will be dismissed outright by the usual suspects. They will argue that the cost is far too high. More to the point, they will continue to insist that government should stay out of the economy and let business and the market take on the distribution of resources without hindrance.
This is the stuff of the neoliberal approach. But it is not hard to see that it has not worked. The economy would be doing nicely, and the climate would not be warming if it had.
What about the cost?
In part, this is about government priorities and not cost. High expenditure on military hardware, multi-million handouts to the corporate sector and especially the massive scale of corporate tax evasion could be seriously reduced.
There is also the matter of bringing in a progressive tax system, based on capacity to contribute to the well being of society as a whole.
Alexandria Ocasio-Cortez has proposed that the richest should pay a marginal tax rate of 70 percent of their income. This is hardly going to send these people to the soup kitchen. They will continue to have the means to live like the rest of us can only imagine. But it would contribute substantially to the revenue needed to bring about the necessary change.
Raising the marginal tax rate for the richest has become extraordinarily popular in the United States. There is no reason to believe it would be any different in Australia, where there is a strong sense that the top end is allowed to get everything, while the rest of us get to pay for it.
Without the necessary change, the cost will eventually much higher.
Taxation is NOT revenue, taxes destroy/extinguish mobey from the economy… the taxing of the rich is to reduce inequality but it does not fubd Federal Government soending that is operationally impossible.
Some macroeconomic realities that BOTH the ALP & LNP get very wrong… Australia being a fiat sovereign currency nation is a spend then tax economy… the Federal Government spends money into existence, then taxes it out pf existence… it is operationally impossible for taxation to fund Federal Government spending. IF you doubt this the question I have for you is where do you get the money to pay taxes given IF you or Businessness tried to create money you’d be charged with counterfeiting… and Banks create credit as opposed to currency but they do so under Government licence.
Taxes and government borrowing NEVER finance the spending of a monetary sovereign central government, such as Australia is.
People saying they do, or conventions which are introduced to make it look as though they do, don’t change this simple fact.
People who claim otherwise either don’t understand monetary systems or are being dishonest.
Taxes are there to limit inflation – government debt issuance is there to provide safe financial assets to savers and/or for the purposes of interest rate management. – Professor Bill Mitchell
Taxation: Federal taxes function, first and foremost, to create aggregate demand for the intrinsically worthless currency. (Gold for instance was just a pretty rock until some King in Fuedal times took fancy to it and demanded it for payment of taxes.)
After that, federal spending, “adds” net financial assets to the private sector, and federal taxes “subtract” net financial assets from the private sector.
Tax is a fiscal management tool used to control inflation and stablise the market by taking “money” out of the economy… that is to stop it from overheating.
The other purpose of tax is to be a behaviour modifier… excise on alcohol and cigarettes. To a lesser extent it reduces inequality by reducing the financial assets of the wealthy.
Federal spending and federal taxes are fiscal management tools. Nothing more.
Look for an article by Professor Bill Mitchell titled “Where do we get the funds from to pay our taxes and buy government debt?” And also for his recent book “Reclaiming the State”.
Other references for you are:
Professor Stephanie Kelton
Professor Randal L Wray
Dr Steven Hail
Professor Phil Lawn
Pavlina R. Tcherneva
An article by Beardsley Ruml,
Chairman of the Federal Reserve Bank of New York, published in the January, 1946, issue of a periodical named American Affairs. Called “TAXES FOR REVENUE ARE OBSOLETE”
Dr Steven Hail…. How most people are confused about taxation