According to the Green New Deal Group, the global economy is facing a ‘triple crunch’ - a combined result of a credit-fuelled financial crisis, accelerating climate change, and soaring energy prices. To help prevent this crunch the group are proposing a Green New Deal.
Combining stabilisation in the short term with longer-term restructuring of the financial, taxation and energy systems, the Green New Deal is a transformational programme that also proposes to tackle unemployment and the decline in demand caused by the recession. Entailing various policies and innovative funding mechanisms, the Deal is aimed at reducing emissions contributing to climate change, which will allow us to cope better with the coming energy shortages caused by peak oil.
The Green New Deal is international in its outlook, but requires action at local, national, regional and global levels. The programme of action outlined below demonstrates the holistic nature of the deal whilst focusing first on the specific needs of the UK:
•Implementing a bold new vision for a low-carbon system of energy where ‘every building becomes a power station’. The energy efficiency of tens of millions of properties will be maximised along with the widespread use of renewable to generate electricity. According to the Green New Deal this action will require a £50 billion-plus per year cash programme to be implanted as widely and rapidly as possible.
•Creating a ‘carbon army’ to provide the human resources for a vast environmental reconstruction programme. Hundreds of thousands of high and lower-skilled ‘green-collar’ jobs shall be created as part of a wider refocusing of the economy from financial services and retail to an ‘engine of environmental transformation’.
•Re-evaluating the cost of fossil fuel prices to ensure they are high enough to tackle their cost to the environment and provide an economic incentive to drive efficiency and bring alternatives to the market as well as bringing in revenue for the Green New Deal and ensuring protection of those vulnerable to higher prices via carbon taxes/trading.
•Developing a package of smart investments to finance the development of efficient energy infrastructure and reduce demand for energy, particularly among low-income groups, for example by improving home insulation.
•Re-regulating the domestic financial system to ensure that the creation of money at low rates of interest is consistent with democratic aims, financial stability, social justice and environmental sustainability. Proposals for financial renewal involve the reduction of the Bank of England’s interest rate to help those borrowing to build a new energy and transport infrastructure, with changes in debt-management policy to enable reductions in interest rates across all government borrowing instruments. Running parallel, the Green New Deal also proposes much tighter controls on lending and on the generation of credit to prevent inflation.
•Dismantling discredited financial institutions, a forced demerger of large banking and finance groups, splitting retail banking from both corporate finance (merchant banking) and from securities dealing, with a view to split demerged units into smaller banks: “we need institutions that are small enough to fail without creating problems for depositors and the wider public” (Green New Deal group).
•New regulations and restrictions on the international finance sector to transform national economies and the global economy. Finance will have to deal prudently with people’s savings and in order to provide regular capital for productive and sustainable investment. Restoration of policy autonomy to democratic government implies the re-introduction of capital controls. This is vital if central banks and governments are to determine and control one of the most important levers of the economy – interest rates, say the Green Deal Group.
•Subjecting all derivative products and other exotic instruments to official inspection, with only those approved permitted to be traded. This action again serves the ultimate goal of downsizing of the financial sector in relation to the rest of the economy.
•Finally, minimising corporate tax evasion by clamping down on tax havens and corporate financial reporting. International accounting rules should be changed to eliminate transfer mispricing by requiring corporations to report on a country-by-country basis. These measures will provide much-needed sources of public finance at a time when economic contraction is reducing conventional tax receipts.
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