Green New Deal

Contextual Citation

"A welfare-oriented Green Deal needs to focus on resource and energy productivity, not raising labour productivity. This is not public policy interference in naturally given technology trends. The current economic policy is by far not neutral. It favours labour productivity. Taxes are primarily raised on labour, making this factor expensive and forcing the firms to increase labour productivity. Emissions are not as highly taxed; if we calculate the subsidies for fossil energy, net taxes on fossil energy might be near zero or negative.

Thus, current policy biases the technology into labour saving." (https://www.nakedcapitalism.com/2020/01/a-european-green-deal-will-not-work-without-refocusing-productivity.html)

Discussion

Europe Should Take the Lead

Karl Aiginger:

"Europe must take the lead. This is an obligation arising from history and past errors, but also a chance to become a technology leader in a dynamic technology field. The positive message — not so well known but empirically proven — is that the leader will enjoy net benefits through an ambitious strategy due to fewer costs, lower tangible and human damage, and ability to shape the next technology according to its own preferences. The reluctant follower — who always demands that others take the lead — faces higher costs for patents, licenses, and imported machines. Repairs are costly and acting in a state of emergency requires strong public intervention.

Stern and Porter have argued and presented some evidence for the first-mover advantage in sustainability (Porter 1990, Porter and van der Linde 1995, Stern 2007, European Commission 2010). As additional evidence, in Aiginger (2016 and 2019) I show that the countries leading in environmental policy in Europe – such as Denmark, Sweden, and Switzerland – are also leading in income and well-being rankings.

In my 2019 paper, I carve out five principles for the European lead:

• Emissions must be priced; subsidies for fossil energy must be curbed.
• Globalisation must be reshaped based on higher social and ecological standards enabled by international trade and investment agreements that are different from today’s.
• Eliminating emissions by 90% and achieving climate neutrality requires new technology and energy sources, as well as boosting energy efficiency.

*A new strategy requires the greening of finance, new funds, products, and labelling.
*Behavioural changes are necessary, which require changes in education and training."

(https://www.nakedcapitalism.com/2020/01/a-european-green-deal-will-not-work-without-refocusing-productivity.html)