Stephanie Kelton says Australia could absolutely benefit from a program similar to the Green New Deal
Australias unprecedented bushfires are a wake-up call to the world about the importance of tackling climate change, Bernie Sanders economic adviser said, and the country should consider implementing a green new deal to transition to a low carbon economy.
Stephanie Kelton said Australia could benefit from an ambitious program of spending, similar to the one proposed by Sanders and others that aims to transform the US economy and help keep global heating below 1.5C.
She told the Guardian that Australias longstanding bipartisan commitment to running a budget surplus where possible was economically illiterate, and governments should concentrate on getting the economy running properly rather than what number falls out of the box at the end of each fiscal year.
As tragic as the situation is here, it does seem to be serving as a real wake-up call for people living in all other parts of the world I mean, the world is watching, she said.
People are really starting to come to terms with the realities of climate change as a result of seeing these images and the devastation here.
I dont know if it will provide that breakthrough moment that is necessary for galvanising the world around a shared commitment to dealing on an ambitious scale with the threat of climate change, but it feels like it has the potential to unleash that.
Kelton is in Australia to speak at a conference on the Green New Deal and other economic issues in Adelaide on the weekend that is supported by the Australian Fabians, and will also be meeting with businesspeople at private events organised by accounting firms.
The idea of a Green New Deal has been championed by New York congresswoman Alexandria Ocasio-Cortez, who has pushed the idea within the Democratic Party.
In the version that forms part of Sanders presidential pitch, it would involve the US government spending US$16.3tn on decarbonising the economy, including by moving to renewable energy, upgrading public transport and funding a just transition for workers who lose their jobs in the resources industry as a result of the changes.
The deal is an ambitious response to the imminent threat of climate change on a scale that is commensurate with the threat that we are facing, Kelton said.
To do something like this in 10 years time requires a mobilisation that is sort of parallel to what we did in world war two.
She said the economy would look very different after a Green New Deal.
Were building a care economy, were caring for our community, were caring for people and were caring for the planet, she said.
You can imagine millions and millions of people being put to work doing jobs that are associated with building a cleaner, safer, more secure and more prosperous economy.
She said a lot of people thought there was a tension between jobs and growth or taking care of the planet.
What the Green New Deal says is that we dont have to pick one.
People have more secure jobs, higher paying, better paying, more prosperous economies more savings, more wealth.
Kelton said Australia could absolutely benefit from a similar program.
This is definitely not conceptually a program that couldnt work in any country, she said.
She mocked the idea it was too hard.
Imagine if we had said that after the bombing of Pearl Harbor oh, I dont know if we can fight back against the Nazi invasion and the threat. I dont know, it seems awfully hard.
She said that the US pulled off the original New Deal under president Franklin D Roosevelt in the early 1930s, when the country was about as poor as it had ever looked, with unemployment running at about 25%.
What did FDR do? He came in, he advanced an alphabet soup of programs he just created employment for millions and millions of people.
When youre under threat and the alternative is just to let it burn? Somehow we muster to solve big problems when our lives are at stake and they are.
Kelton is also one of the leading proponents of modern monetary theory, a controversial economic school of thought that holds that governments should simply print more money to finance spending needed to revive the listless global economy as long as doing so does not cause inflation to soar.
This contrasts with conventional economic thinking, which generally holds governments need to finance spending in excess of their incomes by borrowing money.
She has little time for the Australian political scenes obsession with running a budget surplus.
I dont want to be disrespectful, but its economically illiterate, she said.
It is the wrong way for a government to behave in other words, prioritising a budget outcome as if the numbers that get churned out of the budget box each year are what matter.
I always say that governments that behave this way are willing to force their economies to balance their budgets and what I would do is the opposite of that I would use my budget, allow my budget to balance the broader economy.
I dont care what number falls out of the box at the end of each fiscal year as long as it delivers good macroeconomic conditions.
So if I have full employment, if my inflation rate remains low, I am indifferent to the budget outcome.