August 26, 2019 Reading Time: 8 minutes

“Nowhere has our public discourse failed us more egregiously than on the environment and climate change,” I wrote last year while reviewing the first sketches of a proposed Green New Deal. It’s since become a buzzword, but until now it remained only vaguely defined.

Now Senator and Democratic presidential candidate Bernie Sanders has significantly upped the ante. Sanders’ Green New Deal proposal is very specific, earmarking $16 trillion over 10 years to initiatives from “reaching 100 percent renewable energy for electricity and transportation by 2030” to reauthorizing the New Deal-era Civilian Conservation Corps to “coming together in a truly inclusive movement that prioritizes young people, workers, indigenous peoples, communities of color, and other historically marginalized groups.”

The opening to the Sanders campaign’s new page on the Green New Deal encapsulates the candidate’s view of the issue:

The climate crisis is not only the single greatest challenge facing our country; it is also our single greatest opportunity to build a more just and equitable future, but we must act immediately.

Sanders and I wouldn’t disagree that his plan represents a sea change in the way our government, society, and economy interact. The plan is gigantic. I want to fill page after page with factoids about how big it is, but just a few will suffice:

  • The proposal’s total cost is $16 trillion, over 20 times the cost of the New Deal (in today’s dollars, just under $700 billion).

  • If the proposal succeeded in creating 20 million jobs, it would raise the percentage of the workforce employed by the government to around a third, double what it is now.

  • Remember that goal of 100 percent renewables by 2030? We’re only at 15 percent now, meaning almost the entire U.S. energy system would be overhauled.

I rarely post my articles on my personal Facebook page. I’d say most of my friends are somewhere on the left, and I haven’t yet learned how to not get sucked into multi-day social media debates. This one goes out to them, because setting aside all the proxy wars fought about climate change, Bernie Sanders’ proposed Green New Deal is a really, really bad idea.

The Four Fallacies

I approach climate change from the presumption that it is real, that a significant portion is caused by humankind, and that it’s potentially a very big problem. I don’t doubt the intentions of Senator Sanders or especially supporters of his proposal. And I’m not funded by anyone with a net worth even a penny over $1 billion. I’m just an economist living in the woods.

So, in the harsh, occasionally scathing criticism that follows, I want everyone to remember it’s not because of any of the things above. But then how do I reach conclusions so different than Sanders? I think Sanders’ view of the problem is based on four major fallacies, incorrect assumptions so hardwired that he doesn’t even know he’s making them.

What are the four fallacies?

  1. Climate change is a binary (0/1) variable.

  2. Climate change is primarily the fault of a few people rather than a complex, emergent phenomenon. 

  3. Planning from the top down is a good way to solve climate change.

  4. Planning from the top down is the only means to solve climate change. 

A plan like Sanders’ Green New Deal will not successfully achieve the goals it lays out, and is likely to cause significant damage to the economy. I’m not so naive as to think this article will change minds, but if it gets a few people to stop and question their assumptions in the midst of a public debate with more bad blood than ever, I’ll take it.

Fallacy 1: Climate change is a binary (0/1) variable

In his proposal Sanders writes:

The UN Intergovernmental Panel on Climate Change released a report last year issued a dire warning to the world: we have no time left to come together as a global force and aggressively reduce our carbon pollution emissions. It also made a strong case for limiting warming at or below 1.5 degrees Celsius if we hope to continue to have a habitable planet. 

The October 2018 report Sanders references is a massive document, but even a quick read of the boldface statements in the Summary for Policymakers is eye-opening. For example:

Climate-related risks for natural and human systems are higher for global warming of 1.5°C than at present, but lower than at 2°C (high confidence). These risks depend on the magnitude and rate of warming, geographic location, levels of development and vulnerability, and on the choices and implementation of adaptation and mitigation options (high confidence).

The Intergovernmental Panel on Climate Change scientists frame climate change as a deeply complex issue nested in the way we live in which more efforts at mitigation now will reduce the incidence and risk of a host of adverse weather and environmental events. The table below was my best attempt last fall to summarize how the authors view the changing consequences as global warming increases.

Sanders mischaracterizes the scientists’ findings, framing the issue as a choice between massively overhauling society and doing nothing, with the latter posing a serious risk of human extinction (“habitable planet” leaves a bit more wiggle room than extinction, but I don’t know another way to read it).

This sword-of-Damocles view of climate change, common in today’s discussions, will not get us anywhere. In addition to not being true, it takes people who are open to taking significant action and forces them to choose sides. It helps fuel the denialist movement and has likely prevented many smaller actions, both government and individual, that would have left us in a better spot than where we find ourselves. 

Fallacy 2: Climate change is the fault of a few people

Climate change is an emergent phenomenon, not one caused by a small group of people.

Sanders sees climate change as a problem primarily caused by a small group of people. Their motivation is greed and a Sanders presidency will be different because he will fight those people.

Or, as stated in Sanders’ Green New Deal proposal:

We cannot accomplish any of these goals without taking on the fossil fuel billionaires whose greed lies at the very heart of the climate crisis. These executives have spent hundreds of millions of dollars protecting their profits at the expense of our future, and they will do whatever it takes to squeeze every last penny out of the Earth. 

Billionaires and corporate executives do bad things. Sometimes they have bad intentions. But climate change is an emergent phenomenon, primarily the product of billions if not trillions of decisions made every day by everyone in an increasingly complex global network. From Americans’ decisions about what kind of car to buy to urbanization in the developing world, causes of climate change are all around us and frequently not separable.

Sanders proposes a top-down solution to what he envisions as a top-down problem. His analogy to the Second World War speaks volumes:

The scope of the challenge ahead of us shares similarities with the crisis faced by President Franklin Delano Roosevelt in the 1940s. Battling a world war on two fronts — both in the East and the West — the United States came together, and within three short years restructured the entire economy in order to win the war and defeat fascism.

The challenge posed by climate change is nothing like winning a war, which is about focusing a nation’s efforts into one or a few points of conflict. Instead, one has to focus on thousands or millions of “fronts” in addressing climate change, and as I’ll argue below federal governments just aren’t good at that, especially in an increasingly networked and technological society.

A far more apt comparison for Sanders’ formulation of climate change is to the U.S. government’s War on Drugs. Drugs are another emergent phenomenon, embedded in poverty, mental health, and global politics. And large-scale government action has proven futile if not counterproductive.

Fallacy 3: We Can Control the Environment and Economy From The Top Down

Attempting to control a complex system from the top down is not effective and is likely to do considerable economic damage.

Why can’t we solve climate change from the top down?

I want to think about your self-awareness — the volume of information you’ve learned about yourself, what products you like, what you consider fulfilling, how you might perform or react in different situations. Now imagine going out and trying to find a job, or a good investment, without the use of that self-awareness or similar awareness of the person with whom you’re doing business.

Supporters of Sanders’ proposals might say they have no intention for this model to take over the economy but in one fell swoop are seizing control of 8 percent of GDP and about 16 percent of the U.S. workforce.

The analogy is not to suggest that Sanders is after socializing the entire labor market, but rather how easy good or decent outcomes collapse under the weight of information. You couldn’t possibly even write down most of your intuition about yourself to pass up the chain of command to an economic planner.

When economic decisions are centrally made, as they ultimately are in the Green New Deal, planners must throw out an incalculably large store of information. That’s why we’re usually better off letting people make their own decisions. It’s why we need markets and why socialist economies are known for odd and vexing shortages of goods.

Sanders’ proposal takes a considerable chunk of society’s resources out of people’s hands and leaves them at the White House door. When Sanders writes, “We will spend $1.52 trillion on renewable energy and $852 billion to build energy storage capacity,” how on earth does he know how to spend it?

That brings us to one more shortcoming of top-down responses to bottom-up problems. They rely on several smart people in a room whose intelligence may be formidable but is put to shame by the most creative force we know, evolution. We need thousands of small private firms, informed or incentivized by the price mechanism, to develop technology to both mitigate and address the impacts of climate change.

Fallacy 4: Nation-states are our only hope to address climate change

This may leave you saying, “Okay, Gulker, then what are we supposed to do?” I’m not going to pretend that’s an easy question, and I wish there were more people focused on it. A climate policy that relies more heavily on the evolution inherent in markets as a bottom-up force for change can’t really be presented as a “plan” like what we’ve gotten from Sanders.

To get there, though, we must free ourselves from the flawed idea that only nation-states are big, powerful, and well-informed enough to have a meaningful impact on global issues. Virtually everyone on any side of the climate issue makes this final mistake. Take the money and time spent lobbying, campaigning, and waiting for the government to catch up to one’s view on climate change. Invest in a prominent technology with a GoFundMe instead. 

A plan like Sanders’ proposal may actually suck some of that creative energy out of the market by making massive, centrally planned investments in technologies picked by the best and brightest to win.

Sounds like a drop in the bucket, but think about if hundreds of millions of people did that. Nobody would oppose or care enough to stop someone’s volunteerism, and economic and cultural change would happen if more people were simply demanding firms they do business with follow certain rules.

More than any other takeaway, we do not face a choice between the Sanders’ proposal reshuffling our economic deck (I’ve argued for the worse), and certain doom. It might not give environmentalists everything they want, but think if we’d deployed this decentralized strategy 20 years ago, how much better a spot we’d be in. 

Climate change is but one example of how our society and technology have evolved faster than our governance institutions. And that is something we ignore at our own peril.

Max Gulker

Max Gulker

Max Gulker is a former Senior Research Fellow at the American Institute for Economic Research. He is currently a Senior Fellow with the Reason Foundation. At AIER his research focused on two main areas: policy and technology. On the policy side, Gulker looked at how issues like poverty and access to education can be addressed with voluntary, decentralized approaches that don’t interfere with free markets. On technology, Gulker was interested in emerging fields like blockchain and cryptocurrencies, competitive issues raised by tech giants such as Facebook and Google, and the sharing economy.

Gulker frequently appears at conferences, on podcasts, and on television. Gulker holds a PhD in economics from Stanford University and a BA in economics from the University of Michigan. Prior to AIER, Max spent time in the private sector, consulting with large technology and financial firms on antitrust and other litigation. Follow @maxg_econ.

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