We Can Waste Another Crisis, or We Can Transform the Economy
The coronavirus has the global economy teetering on the edge. It's a perfect time to pour massive amounts of money into green public investment, both to shore up the economy and to put us on a path toward a low-carbon future.
Last summer, when we were writing A Planet to Win: Why We Need a Green New Deal, a global pandemic was far from our minds. But we knew something bad was coming. Back then, we put it this way:
At the time of writing (Summer 2019), the Trumpian nightmare feels ghoulishly routine. But change comes in volcanic bursts, and the magma beneath us is boiling. A global economic slump looms; climate disasters are unfolding faster than ever. Ecological and economic crises are sure to coincide and mutually reinforce. At the time of writing, North Americans are struggling to make their car loan payments, and student debt is obliterating the bank accounts of millions of millennials. There are billions of dollars in real estate value in housing markets that are literally about to go underwater — forever — in places like Miami Beach. Oil majors, some of the world’s biggest companies, are valued based on their reserves — which contain roughly five times as much carbon as we can burn without destroying civilization. The Bank of England is warning all who will listen about these “stranded assets.” In 2008, we saw what a few million bad mortgages could do to a hyperfinancialized, overleveraged, and interconnected global economy. Worse is coming.
Well, worse is here.
The coronavirus pandemic has infected over 130,000 people worldwide and killed nearly 5,000, and is now wreaking havoc on the global economy. Supply chains have been disrupted, entire nations are essentially in lockdown, spending on services is plummeting as people stay home to avoid infection, and the drop in demand for oil as travel grinds to a halt has triggered a price war that’s spurred an even steeper decline in oil prices. As industries from restaurants to airlines start to lose revenue, they’ll start to cut back on staff, leaving people without work or income, and exacerbating the problem of demand.
In response to these events, and anticipating that things will get even worse, stocks have dropped sharply in recent days, sending the Dow Jones into bear market territory. The market panic has driven money into the safest investment there is: US treasury bonds. Yields are currently at record lows, meaning that the government can borrow money very cheaply.
This is, in short, a perfect time to pour a huge amount of money into green public investment. We’ll need to help working people adjust to the economic effects of the coronavirus crisis under any circumstances: instead of bailing out suddenly unprofitable fracking operators, we should be expanding unemployment protections and access to healthcare for those who need them. But we also have an ideal opportunity to make the inevitable stimulus package one that sets us on a low-carbon path forward. You don’t get the chance to reset the economy every day — or even every five years. This is our shot. We need to get it right.
But to do that, we’ll have to learn from past mistakes. In particular, we’ll have to do a lot better than the Obama-Biden administration did when faced with the last global economic crisis.
When Barack Obama entered office in January 2009 amid the biggest financial crisis since the Great Depression, and almost equally dire climate news — Hurricane Katrina had hit just four years earlier, and the climate science was already crystal clear — he had incredible power to act. But in the early months of his administration, Obama chose to restore the system that had caused the crisis rather than transform it. We know he bailed out the banks instead of nationalizing them, even as 9.3 million households lost their homes. But he also squandered the chance to build new public banks to channel green investment for decades to come, sustaining progress and linking climate investments to clear benefits for most Americans.
The Obama administration did pour $90 billion into clean energy measures through the 2009 stimulus package — the American Recovery and Reinvestment Act (ARRA). It included clean energy research and development, subsidized wind and solar build-out, and allocated billions for high-speed rail (most of which wasn’t built). Thanks to Fox News, the bankruptcy of stimulus-funded Solyndra grew infamous, while few knew that the same stimulus established Tesla with billions of public dollars. The ARRA really was good for wind, solar, and batteries. Centrists still defend Obama’s green stimulus, insisting it was better than it gets credits for. What they never consider is that he didn’t try to make green investment viscerally popular, by tying his clean industrial policy to a transformative government jobs program and housing rescue.
On the contrary, Obama’s team fastidiously avoided anything that smacked of socialism. In the eyes of top advisers like Larry Summers and Timothy Geithner, this meant no major public interventions into the economy. (Recall that in late 2008 and 2009, the federal government and treasury had poured trillions of public money into rescuing Wall Street and real estate, effectively putting them in charge.)
Obama also chose not to implement left populist policies that would have helped millions struggling to survive, building the appetite for more aggressive action. He fired Van Jones, his “green jobs czar,” to appease the conservative media mere months after taking office. He declined to directly hire millions of workers for needed infrastructure repairs. (In 1934, President Franklin Roosevelt temporarily hired four million workers to relieve devastating unemployment.)
Instead of directly stemming foreclosures through aggressive government action, Obama implemented convoluted and ineffective programs. And he signed onto the Bush administration’s wildly unpopular bank bailout, emphasizing continuity for Wall Street’s benefit. Although he told financial CEOs in early 2009, “My administration is the only thing between you and the pitchforks,” he didn’t even try to restrict bonuses for bank executives saved by bailouts. Frankly, he should have put unemployed people to work in a solar-powered pitchfork factory.
Obama’s team also nixed the idea of a federally built clean energy grid on the grounds that government shouldn’t crowd out private actors. They rejected proposals for federal green banks that would fund low-energy building upgrades, clean energy build-out, and high-voltage transmission wires. Instead of using budget reconciliation maneuvers to push a truly progressive package through the Senate by majority vote, Obama reached across the aisle to get a handful of Republicans to support a compromise stimulus. Nearly a quarter of the $820 billion stimulus went to tax cuts.
As the sociologist Theda Skocpol shows, the administration’s striving for elite compromise also helped doom the 2009 Waxman-Markey climate bill. Grassroots green groups were sidelined, while a handful of NGOs and fossil-fuel executives haggled behind closed doors, wasting what was left of the precious political opening the crisis had created. Although the bill made major concessions to the oil industry and other business interests, it still collapsed in the Senate in 2010.
In his second term, Obama accelerated regulations to make the economy more energy efficient and shut down coal plants. He signed the Paris Agreement, a modest achievement hyped as a major victory. The low-carbon pledges made by signatory countries failed to match the agreement’s stated goal of keeping warming below 2 degrees Celsius. The biggest bottleneck in global climate politics remained the United States.
Fundamentally, the limits of Obama’s climate policies reflected the broader failures of the center-left’s neoliberal turn, premised on the idea that bipartisan consensus could pass reasonable policies to advance the common good — without the common people getting in the way. As historian Adam Tooze observes, “Obama’s administration never built the constituency of Democrats-for-life that was shaped by Roosevelt’s New Deal.”
This failure made it all too easy for Trump to win the Electoral College by promising to bring manufacturing jobs back to the Rust Belt, which had never really recovered from the 2008 crash — or, for that matter, from Bill Clinton’s North American Free Trade Agreement (NAFTA). Four-and-a-half million Obama voters, half of them people of color, stayed home in November 2016. And now Trump is threatening a climate apocalypse.
Can a return to the mild progressivism that Joe Biden is promising really stem the tide of authoritarian oligarchy in the midst of a global economic and health crisis? We don’t think so. We need to use this moment to charge forward with a Green New Deal that offers a program of economic transformation, grounded not in Beltway savvy but the world’s best climate science, with a vision on the scale of an existential threat to human civilization.
Political change is uneven and multifaceted. There are long slogs of workaday organizing, sudden bursts of acceleration when opportunities appear, slow grinds of governance, defeats that send us back to the drawing board, and moments of rupture when everything is up for grabs. Right now, we’re in one of those rare times when sharp, structural change is possible in the heat of the crisis. We’re not in the position we hoped we’d be a few weeks ago. But we can’t let it slip away regardless.
We don’t celebrate or romanticize brutal breakdowns of social, economic, and political stability. But as Naomi Klein showed to such devastating effect in The Shock Doctrine, the Right plans meticulously for them. We should too.
Each win that cuts carbon and improves everyday life lays the groundwork for more. The premise of a radical Green New Deal is that we’re entering a new era for politics — a whole new terrain, material and imaginative, for deciding how to channel our collective energies. The future is coming at us fast, too fast — but we have the chance to shape it. No more crises wasted.