The first question that will arise when Green Party Candidates put forward the Green New Deal is -how will it be financed?
The finance will come from a multiplicity of sources. These points are abstracted from the GND document, with additional points 1 and 12.
1. Green Wage Subsidy
This will allow people receiving benefits to continue to receive them when they find work with the GND. Their new employers will top up the benefit to the going rate for the job. This means that the benefits are transformed from a dead dole, barely adequate to live on, to a subsidy for the GND wage costs.
2. Corporation Tax reforms.
Close the many loopholes that enable Corporations to avoid paying tax.
3. Higher rate income tax
Applied to the high earners.
4. Private savers can be given incentives to invest
5. Banks can be given incentives to invest
6. Insurance brokers can be given incentives to invest. (They will be motivated, since global warming will stress their services to the limit).
7. Carbon Taxes will be hypothecated to the GND.
8. Windfall taxes on energy companies
9. Carbon Trading Quotas
10. Local Authority bonds
11. Pension funds seek long term security, which the GND will offer.
12. Investment of new money, issued directly by Government as low interest loans, zero-interest loans, or direct grants, in energy infrastructure.
Advocacy of point 12
Investment
Investment means putting money into a venture in the expectation that if successful, there will be a payback in the future. Insulation is an excellent example of this, with a 2-3 year payback. Since Government shares with banks the prerogative of being able to create money, Government can safely issue the money needed to bring this about, provided that rules are obeyed regarding keeping a safe balance between the amount of money in the system and the available goods and services.
+++Loss of confidence in present currency
The reason for this controversial source of supply is that by the time the GND is on the table for serious discussion in Parliament, we may well find ourselves in a situation of deep recession or depression, with stagflation and possibly severe inflation. In the latter case, we may have to scrap the current currency, and design a new currency.
This new currency should be based, not on gold, (as up to 1971) nor on greed (1971-2009) but on GreenValues. The Happy Planet Index provides an example of how GV can be derived.
HPI = Life satisfaction x Life expectancy x ß
Ecological Footprint + α
(For details of how alpha and beta are calculated, see the appendix in the full Happy Planet Index report)
Imagine that the UK Government was presiding over a situation where economic activity has ground to a halt, with unemployment at 35%, ever rising fossil energy prices, and a currency becoming more worthless by the day. On the other hand, it has resources, both human (inventiveness, knowledge, ability to do work) and physical (wind, wave, tide, sunlight). How to connect these two? A new currency can be issued, backed by those resources. If the HPI rises, (which it will do as a result of the GND) the value of the new£ will rise.
This is the rationale for the new currency, which can be issued by Government. There will be an outcry against it from the bankers, using the association between Government issues money and hyperinflation. However, governments have issued money ever since Roman times up to the time that the banks took to themselves a near monopoly on money creation in the 1970s, and hyperinflation is an occasional event, usually associated with extreme political situations such as civil war.
Provided there are checks against over-issue of money, just as there are at present, hyperinflation will not be an issue.
Irrationality of borrowing from banks
The Green Party has a clear policy of opposition against PFI.
Since Government has been bailing out failed financial institutions at great cost and risk to the taxpayer, there is no logic in Government being obliged to go to these same financiers to request them to make a loan, in the manner of classical Keynesianism. In the present circumstances, the Government’s position as the banker’s banker has become clear. It is therefore open for the Government (through the BoE as its agent) to create the loan itself, backed by the assets that lie in the Government’s domain – the natural and human resources mentioned above.
