I'm I the only one to be really disappointed with AOC this year? I used to think she got a bad rap, and was an effective advocate for progressive causes that reach people others couldn't. But she has really doubled-down on picking bad faith arguments with centrist or centre-left Democrats this year - the misleadling arguments over the $2000 stimulus checks, odd battles on Cabinet picks, and now clearly engaging in ludicrous arguments over the Fed. She sadly seems to be someone who will only ever parrot what the most left-wing activists are saying...which isn't a strategy to achieve very much IMO
The simple answer to the last question seems to be that a large fraction of Squad-adjacent self-styled progressives really enjoy fighting, and the actual making of progress is a distant second.
The climate left has long embraced dubious strategies to keep hydrocarbons in the ground. They opposed the Keystone XL pipeline on the theory Canada would stop extracting shale oil if it wasn’t built. This was rubbish. Canada is not about to give up its biggest source of foreign exchange and become an agrarian backwater. It is so dependent on oil that the value of the Canadian dollar correlates strongly with the price of crude oil. Shale oil is still being extracted but is being transported by rail cars, which release more carbon per ton mile than pipelines. A dubious victory.
If I were a climate warrior, I would focus on goring fat cats. The 1% consume far more carbon per capita than normal people and they make great villains. Ban the manufacture of all private aircraft and recreational boats with more than 200 horsepower. Slap stiff taxes on existing private planes and recreational boats. If climate is important enough for working stiffs to drive a Prius, rich blokes can give up their yachts and take up sailing! Most importantly, price home energy progressively. A family’s first 1000 kilowatt hours in a month should be cheap, the next 1000 should be more expensive, and anyone who wants to air condition a 6,000 square foot home in Texas or Florida should pay German energy prices. Put a surtax on gas guzzling vehicles priced over $50k. Use all the money to build nuclear power plants. Embracing nuclear power is symbolically and critical because it would signal that climate is important enough to trump other climate concerns and to kick granola chomping hippies and technophobes to the curb.
I might buy an electric car when I no longer hear private planes circling my town for shits and giggles.
The climate left clearly does not believe persuasion is part of its goals, which is deeply tragic given that persuasion is probably the single most important thing activist groups do. Gay marriage activists didn't start the fight by just harassing left-wing politicians until they agreed to be pro-gay marriage, they also launched this massive, far-reaching cultural project that transformed the views of your average American over the course of a few short decades.
If the climate left wants to be useful, they need to start thinking about how they can more or less propagandize Americans into giving a shit about the climate -- and into being willing to make sacrifices for it. I think this is doable. A lot of Americans are desperate for our country to take on some great challenge and have another history-making achievement. They just need to be convinced that climate is that battle. All you need to do is convince the majority of left-of-center people that they need to be willing to accept some personal disruption to save the planet, and you do that through cultural messaging telling them this is their chance to be heroes and to make their mark on history.
I see Sunrise Movement's new position is the useless, non-starter "Abolish the Senate". No doubt they're holding "Abolish the USA" back in response to a similar trivial non-issue. If Sunrise was actually a GOP false flag operation, it would be hard to distinguish from their current motivations.
I think the AOC quote highlights something important about what's going on here. I think it's not really that people believe the Fed is an important or particularly effective tool to fight the battles at the forefront of the progressive movement right now (against climate change, racism, etc.). However, the objective of people like AOC isn't really to identify the institutions that would be best suited for the task. People on the far left want to consolidate political power by ensuring that progressive priorities are the central organizing principle of EVERY important institution. In this instance, progressives' idea is that failing to effectively manage inflation is fine as long as we have another institution on our side against the greatest threats to American society.
This isn't because progressives are particularly evil-- it's natural for any political movement to try something like this if it has the chance. Evangelical Christians, for instance, want creationism taught in schools and want the Supreme Court to make laws that adhere to their religious principles. I'm sure they'd also prefer it if the corporations were run in accordance with the teachings of Jerry Falwell. But now that the left seems to have disproportionate power in many (but not all) institutions, thinking about how progressive ideology will shape the priorities of those institutions is going to be more important than thinking about how they're influenced by hardcore Christians.
Two points. Inflation is a sustained general increase in prices. My view, and the view of the Fed, is that there are sectoral imbalances leading to rapid price increases in particular portions of the economy. This is why the Fed is sanguine about the current inflationary environment. They have adopted a Bunker Hill approach, don't shoot until you can clearly see the target.
As for whether fossil fuel investment is risky, tell anyone who put money into the coal industry fifteen years ago that coal wasn't risky. Then duck! Coal, of course, lost in economic terms because natural gas became a less expensive way to generate electricity. The improvements in wind and solar have resulted in both being cheaper than natural gas. The support for vehicle electrification in the infrastructure should start to reduce the demand for petroleum products soon. I see lots of risks in the fossil fuel sector.
There is one climate step that is within the Fed's domain, although it is shared with other regulatory bodies. This is the rules regarding loan authorization.
The climate warrior focus on quasi-religious choices for technology is a failing strategy. The old BAT approach of the EPA was replaced by today's "bubble" approach because having politicians and bureaucrats in DC select the technology for every business in the US was costing 10 times what it cost to have the decision making dispersed across thousands of local private decision makers making their own personal decisions. You see this today in climate with the immensely more cost effective Energy Star approaches vs political technology selection.
Cost effectiveness and dispersed personal decision making will be needed to hit the climate goals.
One barrier to this is the collateral requirements that banks must meet. When a landlord wants to upgrade their HVAC system with a $100K smart control system they cannot get a collateralized loan. The collateral value of the smart control system is small. It's just a PC. The bank cannot consider the projected cost savings directly towards the loan evaluation.
All too often the bank cannot make this loan, or must charge a huge interest rate, because there a strict limits on non-collateral loans.
These and similar limits serve a real purpose. Non-collateral loans, and loans with grossly inadequate collateral, are a favorite for fraud and contributed significantly to the 2008 financial crisis. Loans for energy saving got caught in the regulations to clean up the mess.
Carefully considered revision of regulation of loans for energy saving devices, replacement production processes, etc., is an appropriate reform.
Sadly, AOC and the progressive wing want to continue the practice of politically chosen favorite technologies. They just want the banks to be their agents in enforcing politically chosen technologies.
I think Jay Powell has done a great job. He is one of only three excellent personnel actions by Trump (in addition, firing that bastard Comey and hiring Scott Gottlieb). He has helped us weather some tough economic times.
Biden should thank him profusely, pat him on the back, and appoint a new Fed Chair, probably Brainard.
This has nothing to with "credibility" or finreg or climate. It has to do with the credibility of the Democratic party and how it values its most capable members. As the party of government, the Democrats have seemed awfully gun shy about entrusting the most important posts in government to actual loyal Democrats. We worry about "credibility" in national security so our Presidents appoint Chuck Hagel and Bob Gates as SecDef to reassure the world that our security will be safe in trustworthy Republican hands. We worry about "credibility" on managing the economy so our Presidents reappoint Alan Greenspan and Ben Bernanke to reassure the world that the economy will be safe in trustworthy Republican hands.
Bah. Republicans don't do that, and nor should we.
I wanted to read the linked rationalist article, but apparently, that's private according to Substack. I believe someone named madasario had the same problem earlier.
I'm a little confused as to what the stress test scenario where just fossil fuel investments go to zero is supposed to be. If climate change destroys the economy doesn't pretty much everything go down? How's a bank supposed to pass a "the modern economy is over" stress test? It seems that the scenario in which specifically fossil fuel investments collapse and everything else is fine is actually the "we do something about climate change" scenario. You'd essentially be asking banks to hedge against the risk that you accomplish your political program. Which seems... weird? Idk, I guess if you got a Fed chair in there that did all these aggressive stress tests that would be signal to the market that the climate agenda might actually succeed and maybe that lowers their willingness to invest in fossil fuels? Hardly seems likely to be a game changer.
>>>some of it has been the surprising (to me, at least) decision to stick with Trump’s tariffs<<<
Can't say I'm too surprised. Although this would help the supply side of the economy, the administration, I'd guess, thinks the pro-China optic are bad.
But this is (yet another) area where I think they're erring excessively on the side of caution. I hate to sound too critical, because on a few areas — swinging for the fences on the two big legislative proposals now before Congress, say, or the hard-assed shut down of America's Afghanistan War — they've been anything but timid.
But there are quite a number of areas where I fear this White House is too worried about Republican attacks: vaccine mandates, vaccine passports, prosecutions for sedition and Trumpian corruption, student loan forgiveness, etc. And yes, China tariffs. They do politics for a living and I don't. So maybe I'll be proven wrong. But I do believe they could be a bit bolder on one or two of these things (Even the evictions moratorium extension was a cave-in to the party's left, not a proactive measure).
Biden should appoint someone as Fed Chair that best understands monetary policy because you can't predict events and how that might change the monetary policy environment. So obviously he should appoint a market monetarist. Scott Sumner would be best, but claims he wouldn't take the job, so that leaves David Beckworth. In a lot of ways Beckworth is similar to Powell (both right of center but principled and non-partisan) except that he is an actual monetary economist and has better theoretical underpinnings for his views. If Biden really needs to appointment someone that is more Democratic Party affiliated then I would propose Christina Romer or Jason Furman, who have absorbed a lot of the MM perspective.
Full employment is the most important thing the Fed can do to fight climate change
I'm I the only one to be really disappointed with AOC this year? I used to think she got a bad rap, and was an effective advocate for progressive causes that reach people others couldn't. But she has really doubled-down on picking bad faith arguments with centrist or centre-left Democrats this year - the misleadling arguments over the $2000 stimulus checks, odd battles on Cabinet picks, and now clearly engaging in ludicrous arguments over the Fed. She sadly seems to be someone who will only ever parrot what the most left-wing activists are saying...which isn't a strategy to achieve very much IMO
The simple answer to the last question seems to be that a large fraction of Squad-adjacent self-styled progressives really enjoy fighting, and the actual making of progress is a distant second.
The climate left has long embraced dubious strategies to keep hydrocarbons in the ground. They opposed the Keystone XL pipeline on the theory Canada would stop extracting shale oil if it wasn’t built. This was rubbish. Canada is not about to give up its biggest source of foreign exchange and become an agrarian backwater. It is so dependent on oil that the value of the Canadian dollar correlates strongly with the price of crude oil. Shale oil is still being extracted but is being transported by rail cars, which release more carbon per ton mile than pipelines. A dubious victory.
If I were a climate warrior, I would focus on goring fat cats. The 1% consume far more carbon per capita than normal people and they make great villains. Ban the manufacture of all private aircraft and recreational boats with more than 200 horsepower. Slap stiff taxes on existing private planes and recreational boats. If climate is important enough for working stiffs to drive a Prius, rich blokes can give up their yachts and take up sailing! Most importantly, price home energy progressively. A family’s first 1000 kilowatt hours in a month should be cheap, the next 1000 should be more expensive, and anyone who wants to air condition a 6,000 square foot home in Texas or Florida should pay German energy prices. Put a surtax on gas guzzling vehicles priced over $50k. Use all the money to build nuclear power plants. Embracing nuclear power is symbolically and critical because it would signal that climate is important enough to trump other climate concerns and to kick granola chomping hippies and technophobes to the curb.
I might buy an electric car when I no longer hear private planes circling my town for shits and giggles.
The climate left clearly does not believe persuasion is part of its goals, which is deeply tragic given that persuasion is probably the single most important thing activist groups do. Gay marriage activists didn't start the fight by just harassing left-wing politicians until they agreed to be pro-gay marriage, they also launched this massive, far-reaching cultural project that transformed the views of your average American over the course of a few short decades.
If the climate left wants to be useful, they need to start thinking about how they can more or less propagandize Americans into giving a shit about the climate -- and into being willing to make sacrifices for it. I think this is doable. A lot of Americans are desperate for our country to take on some great challenge and have another history-making achievement. They just need to be convinced that climate is that battle. All you need to do is convince the majority of left-of-center people that they need to be willing to accept some personal disruption to save the planet, and you do that through cultural messaging telling them this is their chance to be heroes and to make their mark on history.
I see Sunrise Movement's new position is the useless, non-starter "Abolish the Senate". No doubt they're holding "Abolish the USA" back in response to a similar trivial non-issue. If Sunrise was actually a GOP false flag operation, it would be hard to distinguish from their current motivations.
"“re-imagine a Federal Reserve focused on eliminating climate risk ....”"
"re-imagine a FBI focused on eliminating climate risk ...."
"re-imagine an Office of the Comptroller of the Currency focused on eliminating climate risk ...."
"re-imagine a Social Security Administration focused on eliminating climate risk ....”
"re-imagine the Center for Medicare and Medicaid Services focused on eliminating climate risk ....”
All make about the same amount of sense. It's like they have a pre written press release of buzzwords.
I think the AOC quote highlights something important about what's going on here. I think it's not really that people believe the Fed is an important or particularly effective tool to fight the battles at the forefront of the progressive movement right now (against climate change, racism, etc.). However, the objective of people like AOC isn't really to identify the institutions that would be best suited for the task. People on the far left want to consolidate political power by ensuring that progressive priorities are the central organizing principle of EVERY important institution. In this instance, progressives' idea is that failing to effectively manage inflation is fine as long as we have another institution on our side against the greatest threats to American society.
This isn't because progressives are particularly evil-- it's natural for any political movement to try something like this if it has the chance. Evangelical Christians, for instance, want creationism taught in schools and want the Supreme Court to make laws that adhere to their religious principles. I'm sure they'd also prefer it if the corporations were run in accordance with the teachings of Jerry Falwell. But now that the left seems to have disproportionate power in many (but not all) institutions, thinking about how progressive ideology will shape the priorities of those institutions is going to be more important than thinking about how they're influenced by hardcore Christians.
The median voter has doubled the size of their car in the past 10 years, they don't give a single shit about climate change.
Two points. Inflation is a sustained general increase in prices. My view, and the view of the Fed, is that there are sectoral imbalances leading to rapid price increases in particular portions of the economy. This is why the Fed is sanguine about the current inflationary environment. They have adopted a Bunker Hill approach, don't shoot until you can clearly see the target.
As for whether fossil fuel investment is risky, tell anyone who put money into the coal industry fifteen years ago that coal wasn't risky. Then duck! Coal, of course, lost in economic terms because natural gas became a less expensive way to generate electricity. The improvements in wind and solar have resulted in both being cheaper than natural gas. The support for vehicle electrification in the infrastructure should start to reduce the demand for petroleum products soon. I see lots of risks in the fossil fuel sector.
There is one climate step that is within the Fed's domain, although it is shared with other regulatory bodies. This is the rules regarding loan authorization.
The climate warrior focus on quasi-religious choices for technology is a failing strategy. The old BAT approach of the EPA was replaced by today's "bubble" approach because having politicians and bureaucrats in DC select the technology for every business in the US was costing 10 times what it cost to have the decision making dispersed across thousands of local private decision makers making their own personal decisions. You see this today in climate with the immensely more cost effective Energy Star approaches vs political technology selection.
Cost effectiveness and dispersed personal decision making will be needed to hit the climate goals.
One barrier to this is the collateral requirements that banks must meet. When a landlord wants to upgrade their HVAC system with a $100K smart control system they cannot get a collateralized loan. The collateral value of the smart control system is small. It's just a PC. The bank cannot consider the projected cost savings directly towards the loan evaluation.
All too often the bank cannot make this loan, or must charge a huge interest rate, because there a strict limits on non-collateral loans.
These and similar limits serve a real purpose. Non-collateral loans, and loans with grossly inadequate collateral, are a favorite for fraud and contributed significantly to the 2008 financial crisis. Loans for energy saving got caught in the regulations to clean up the mess.
Carefully considered revision of regulation of loans for energy saving devices, replacement production processes, etc., is an appropriate reform.
Sadly, AOC and the progressive wing want to continue the practice of politically chosen favorite technologies. They just want the banks to be their agents in enforcing politically chosen technologies.
I think Jay Powell has done a great job. He is one of only three excellent personnel actions by Trump (in addition, firing that bastard Comey and hiring Scott Gottlieb). He has helped us weather some tough economic times.
Biden should thank him profusely, pat him on the back, and appoint a new Fed Chair, probably Brainard.
This has nothing to with "credibility" or finreg or climate. It has to do with the credibility of the Democratic party and how it values its most capable members. As the party of government, the Democrats have seemed awfully gun shy about entrusting the most important posts in government to actual loyal Democrats. We worry about "credibility" in national security so our Presidents appoint Chuck Hagel and Bob Gates as SecDef to reassure the world that our security will be safe in trustworthy Republican hands. We worry about "credibility" on managing the economy so our Presidents reappoint Alan Greenspan and Ben Bernanke to reassure the world that the economy will be safe in trustworthy Republican hands.
Bah. Republicans don't do that, and nor should we.
Nice job, Jay. Step on up, Lael.
I wanted to read the linked rationalist article, but apparently, that's private according to Substack. I believe someone named madasario had the same problem earlier.
I'm a little confused as to what the stress test scenario where just fossil fuel investments go to zero is supposed to be. If climate change destroys the economy doesn't pretty much everything go down? How's a bank supposed to pass a "the modern economy is over" stress test? It seems that the scenario in which specifically fossil fuel investments collapse and everything else is fine is actually the "we do something about climate change" scenario. You'd essentially be asking banks to hedge against the risk that you accomplish your political program. Which seems... weird? Idk, I guess if you got a Fed chair in there that did all these aggressive stress tests that would be signal to the market that the climate agenda might actually succeed and maybe that lowers their willingness to invest in fossil fuels? Hardly seems likely to be a game changer.
>>>some of it has been the surprising (to me, at least) decision to stick with Trump’s tariffs<<<
Can't say I'm too surprised. Although this would help the supply side of the economy, the administration, I'd guess, thinks the pro-China optic are bad.
But this is (yet another) area where I think they're erring excessively on the side of caution. I hate to sound too critical, because on a few areas — swinging for the fences on the two big legislative proposals now before Congress, say, or the hard-assed shut down of America's Afghanistan War — they've been anything but timid.
But there are quite a number of areas where I fear this White House is too worried about Republican attacks: vaccine mandates, vaccine passports, prosecutions for sedition and Trumpian corruption, student loan forgiveness, etc. And yes, China tariffs. They do politics for a living and I don't. So maybe I'll be proven wrong. But I do believe they could be a bit bolder on one or two of these things (Even the evictions moratorium extension was a cave-in to the party's left, not a proactive measure).
Biden should appoint someone as Fed Chair that best understands monetary policy because you can't predict events and how that might change the monetary policy environment. So obviously he should appoint a market monetarist. Scott Sumner would be best, but claims he wouldn't take the job, so that leaves David Beckworth. In a lot of ways Beckworth is similar to Powell (both right of center but principled and non-partisan) except that he is an actual monetary economist and has better theoretical underpinnings for his views. If Biden really needs to appointment someone that is more Democratic Party affiliated then I would propose Christina Romer or Jason Furman, who have absorbed a lot of the MM perspective.
I LOVE your suggested headline!