Green New Deal

This is a brilliant explainer. Here's the punchline:

Industrial policy was once central to the rise of today’s wealthiest nations. Yet, after achieving their own development, many downplayed the state’s role, promoting free-market rules abroad. The climate crisis forces a re-evaluation of that legacy. China offers a striking example of what strategic planning can achieve. Long before emerging as a global leader in green technologies, it used industrial policy to build manufacturing capacity, infrastructure and innovation. Through the coordinated efforts of state-owned enterprises, long-term planning, public procurement and technology transfer, China now leads global production of solar panels, wind turbines and electric vehicles. These interventions have helped drive down global costs, making renewables more accessible and helping to accelerate the energy transition worldwide.

This kind of coordination cannot be replicated by merely relying on market inducements like carbon pricing. When climate action is framed primarily as a problem of mobilising finance, the role of the state is reduced to simply enabling private investment rather than leading the transformation. Public institutions are cast not as planners or investors but as guarantors, tasked with making green investments more attractive to private actors. Tools like blended finance and public-private partnerships are promoted as solutions, but their logic reinforces the idea that structural change must be routed through private investors’ incentives. In practice, this limits the scope of public ambition and steers policy toward projects with clear financial returns rather than broader social or ecological value.

Market mechanisms may help reduce emissions at the margins, and may generate some revenue, but they are not designed to coordinate across sectors, manage trade-offs, or drive large-scale transitions. Treating finance as the central constraint sidelines the essential questions of what gets built, by whom and in whose interest. The belief that markets alone can deliver the necessary scale and direction has not only delayed progress but also distorted priorities—placing finance at the centre while allowing questions of production, capacity, and coordination to fade into the background.

As the United States retreats from managing the international order, returning under Trump to a more transactional and coercive approach to foreign policy—ditching the Paris Agreement, undermining multilateralism, and waging tariff wars under the banner of economic nationalism—it also exposes the fragility of the existing system. The version of globalization built on US financial dominance, free capital flows and market liberalization is beginning to crack under the weight of its own contradictions.

If this chaos has an upside, it is that it presents an opportunity to build an alternative—and radically more just—financial architecture, and to confront the economic orthodoxies that needlessly constrain what is considered possible.

We already have the financial wherewithal needed to afford whatever is technologically possible. We do not need to go hat-in-hand to rich folks to get them to pay for it. We do not have to beggar our grandkids to pay for it. We do not have to borrow from China to pay for it. We do not have to get the Fed to “print money” to pay for it. All we need to do is to remove the self-imposed constraints, the myths, and the misplaced morality; then budget for it, approve the budget, and spend. No new spending process is required. Follow the normal procedures that the Fed and Treasury have developed. That is how you pay for it.

As the great J. Fagg Foster (1981) said, “Whatever is technologically possible is financially feasible.” There is really no other reason to have a financial system. If you know how to build houses but your financial system cannot find a way to make them affordable, then you must replace that system with one that will.

It is possible that we will need to constrain domestic consumption in order to release resources for the GND effort in a noninflationary manner. The problem is not that we cannot financially afford the GND—government can always bid resources away from private use by paying higher prices—but spending on the GND will generate private income that can support higher bids in competition with the government for scarce resources. This is the real reason that tax hikes might be desirable: to reduce private income and thereby remove competition for resources.