4 minute read
The economy needs a Green New Deal
Eddy yErEtnov
COVID-19 initiated an economic crisis some economists say is comparable to that of the Great Depression. To recover, we need a modern New Deal, something many call the Green New Deal.
Advertisement
Our Current Situation:
The job market that graduating students will be entering isn’t in good shape.
According to the Bureau of Labor Statistics, in April of 2020, the U.S. hit an all-time high in unemployment at 14.7%.
Contrary to what President Donald Trump may claim, we are not in a V-shaped recovery (which means that the economy is recovering at the same rate it declined). While the unemployment rate has steadily shrunk since the all-time low, it recoiled more so due to corporate bailouts and lower interest rates rather than a real V-shaped recovery. Now that the Federal Reserve (Fed) can no longer lower interest rates since they are already at 0, the Fed has little remaining tools to create any improvement.
With high unemployment comes a decrease in consumer spending and a reduction in profit; the use of corporate socialism, government support of large corporations, in bailing out the rich will come back to bite both the wealthy and working class.
Economic Depression:
Some believe that after a COVID-19 vaccine arrives, we can “go back to normal” and forget the pandemic ever existed.
There are two problems with such a theory.
First, the distribution of a vaccine will be a long and complicated task that could take well into 2021 to reach the number of people needed for herd immunity.
“I can foresee that even with a really good vaccine, mask-wearing will continue well into the third or fourth quarter of 2021,” Dr. Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases, said.
Second, the concept of cash flow rings true here. Those who were unemployed won’t be automatically reimbursed for their lost money; this means that there lowers job opportunities, especially for will be limited consumer spending even workers without experience due to job if we defeat COVID-19 — the problem scarcity. with less consumer spending is fewer The Jobs Guarantee program embedcustomers for businesses, which in turn ded in the Green New Deal will drop the leads to smaller profits, which require unemployment rate to historic lows and layoffs. Once workers are fired, they create a base of consumers spending all will not be able to afford spending in of the money printed by the government. the economy, which leads to a rinse and These new consumers will get our econrepeat of this vicious cycle. omy moving again.
Learning from our history: Goldman Sachs’ analysts predict that
So, what is the solution to this con- the Fed will begin increasing its interest tinuing downturn? rates two years earlier under a Dem-
We find a solution by learning about ocrat-controlled government (which our history and the legacy of former would likely be more prone to increase President Franklin Roosevelt. FDR spending) than a Republican one. Rising inherited the worst economic crisis in interest rates occur to control inflation American history from former Presi- and are a sign of a recovering economy, a dent Herbert Hoover. By implementing signal that increases consumer confia radical New Deal, FDR and Congress dence. increased consumer confidence and cash It’s about time we think about the flow by increasing spending, defeating Green New Deal as an economic advanthe Great Depression. tage rather than something that would
The New Deal held two parts; it in- be a burden. creased worker protections and spending in the economy through public works projects. OVERVIEW
The increased protections like social The Green New Deal is a non-binding security assured consumers that they resolution which would affirm the were in recovery and prompted those saving in fear to spend more and stimulate the economy. This consumer confiUnited States of America’s commitment to combat climate change and create a more sustainable future. dence is something we can recreate now by defeating the COVID-19 pandemic GOALS and ensuring healthcare as a fundamen- - A transition to 100% clean energy tal human right. - Guarenteeing health care to all Public works are where we enter the realm of the Green New Deal. Just as Americans - Investment in public transportation - Providing quality education to all they were in the past, public works will Americans be vital in restoring our economy. The - Updating infrastructure government is the only entity that can - A jobs guarantee program print money. While printing money seems to be counterintuitive by creat- THE COST OF INACTION ing inflation, it is, in fact, the opposite. Modern Monetary Theory dictates that inflation does not hurt the economy as long as gross domestic product growth 7.4 million less jobs in a Trump vs. Biden administration due to higher spending and stimulus outpaces inflation. This money can be spent on modernizing our grid and cre- HOW WE PAY FOR IT ating a sustainable future for generations to come. Using the Modern Monetary Theory, no
Moving forward: tax increases are needed to pay for the Many Carlmont students will be entering the workforce under the next Green New Deal as it is paid for through strategic defecit. presidential term. High unemployment Eddy Yeretnov
