Opinion: Daily Journal

From the Green New Deal to Venezuela: A million percent inflation and all

 (CJ photo by Don Carrington)
(CJ photo by Don Carrington)

As the specifics — and many of the absurd objectives — of Rep. Alexandria Ocasio-Cortez’s Green New Deal have come to light, the common refrain from Democrats who support it is that the plan is “aspirational.” In other words, they believe that the world Ocasio-Cortez envisions is somehow ideal. It is the world we all aspire to live in. But is it?

Let’s be clear. The world that so many Democrats are proclaiming as “aspirational” can only be achieved and maintained by the use or threat of force, i.e. violence. The goals outlined — the elimination of air travel, the building of a nationwide high-speed rail system, the rebuilding or “retrofitting” of all structures, the elimination of cows and presumably beef and cheese from our diets, to name just a few of its goals — could not possibly be realized without explicit and implicit threats of force. In reality, the plan is to coercively transform society by creating a Green New Deal state.

This has been the starting point of every totalitarian regime of the past 100 years. And, in fact, there are no examples of governments that have started with this premise and tried to carry out their plans that have not ended in totalitarianism.  It makes no difference whether they arose from violent takeover, as was the case in Russia or Cuba, or from some form of democratic process, as has been the case with Nicaragua and Venezuela.

The fact is that when a complete transformation of people and their lifestyles, from their morals and religious beliefs to their eating habits and travel plans, are the goal, no one can be allowed to say no to the state. No homeowner would be allowed to say, “No, I don’t want the government to rebuild my house. I like it the way it is.” No farmer would be allowed to say, “No thanks, I want to continue to raise my dairy cows or beef cattle.” No landowner would be allowed to say, “No, I don’t want my property taken to make room for a new high-speed rail line.” No airline company would be allowed to say, “I think we want to stay in business and continue serving those travelers who prefer flight to rail.”

Such resisters would all have to be thwarted, and it won’t be through logical persuasion or simple cajoling. It will be by the use of fines, prison, or worse. If anyone doubts this, just ask yourself how Ocasia-Cortez would answer if asked if she would be willing to forgo the use of jails, fines, or guns in achieving the goals of the Green New Deal. I think the answer is self-evident. To achieve and maintain the “aspirational” goals of the GND would require an overwhelming threat and, if necessary, use of force on the part of the GND state.

So how would this lead to 1 million percent inflation or worse? The answer lies in AOC would pay for her societal makeover. The price tag for the GND is estimated to be, at the low end, $56 trillion over 10 years, or $5.6 trillion per year. To get an idea how much this really is, the entire annual federal budget is now about $4.4 trillion, and almost $1 trillion of that is added debt.

Widely publicized has been AOC’s call for a 70 percent or 80 percent tax on the wealthiest Americans. But this wouldn’t be a drop in the ocean in terms of raising the kind of money the GND would require. What has gotten less coverage is her call for increased federal debt, to be underwritten by the Federal Reserve. The bottom line is the plan would be funded by massively inflating the money supply. The money to pay for the GND will be “created out of thin air” or, actually, ledger entries at the U.S. Treasury. Ocasio-Cortez would flood the economy with newly minted greenbacks. It might be a cliché to say that inflation is too much money chasing too few goods and services, but it is true nonetheless.

OAC’s funding scheme hits the price-level from both sides of this equation. She calls for massive new debt financing paid for by equally massive increases in the money supply. At the same time, she plans to punish those who produce valuable goods and services by imposing exorbitant new taxes and onerous regulations, dramatically slowing real economic growth.

The combination will be a disaster of Venezuelan proportions. As the output of basic consumer goods and services shrink and the money supply grows, inflation will necessarily skyrocket and, given price controls, which will be inevitable, shortages will develop. This means the tax base will shrink, adding pressure to expand the growth of the money supply even further to pay for the GND programs. This will produce additional increases in the price-level and more shortages. The resulting spiral downward should be obvious. It is exactly how Venezuela ended up where it is today, in extreme poverty, a currency that is all but worthless, protesters in the streets and the use of even more force. But surely the reduction in temperatures by an amount that AOC and her supporters never specify will make it all worthwhile.