My inbox continues to flood with readers debating the meaning of socialism, and decrying its use as a political dog whistle. So today, I have decided to abandon the semantic debate, and focus on substance instead. I read the 14-page House resolution calling for a “Green New Deal”—which I recommend as a seminal document for all CEO Daily readers—and the accompanying FAQ put out by AOC. (I hate to use the acronym, but it saves space.) Some clear takeaways:
—This is far more than an environmental manifesto. In addition to “clean and renewable energy,” it calls for jobs for everyone, living wages, parental leave, racial and gender justice, health care for all, strengthened labor law, vastly increased infrastructure investment, justice for indigenous people, a radical rethinking of monetary policy, and a new approach to antitrust policy. In other words, it reaches deeply into every corner of the economy.
—It shows little to no regard for market forces or economic limits. For instance, it calls for reducing emissons “as much as technologically feasible,” without any suggestion that the benefits at some point should be weighed against the cost.
—It assumes that promoting environmental goals and promoting the interests of disadvantaged populations somehow always go hand in hand, when, as any West Virginia coal miner can tell you, they don’t.
—It calls for a “government-led mobilization” on a par with World War II and the New Deal.
Why government-led? For the last half century, leaders of both political parties have shown some well-deserved humility about the ability of government to take the lead in directing economic activity. Instead, they have struggled to devise incentives and structures that shape and nudge, but don’t displace, private sector activity, and that respect the resilience and wisdom of the market place.
But the Green New Deal marks a sharp break. “Merely incentivizing private behavior doesn’t work,” the FAQ declares. “We are not saying that there isn’t a role for private sector investments; we are just saying that the level of investment required will need every actor to pitch in and the government is best placed to be the prime driver.” (Emphasis mine.)
Really? The semanticists can debate whether that is or isn’t the same as “controlling the means of production.” And voters ultimately will decide whether it’s a vision that they can or can’t endorse. But it’s no surprise to me that, for the moment, Republicans are rejoicing. If Democrats keep moving in this direction, they will likely lose the middle. And they will certainly lose business.
More news below.
Here comes another government shutdown, maybe. Talks broke down on the weekend over immigration enforcement issues, rather than President Trump’s wall. The Democrats want limits on ICE detentions; the Republicans don’t. Unless major progress is made by midnight Friday, when the stopgap spending bill expires, it’s back to a shutdown—with the IRS likely being hit just as it’s processing millions of people’s tax returns. Washington Post
IMF Backs Fed
The International Monetary Fund agrees with the Federal Reserve’s decision to stop raising interest rates for now. The IMF’s new top economist, Gita Gopinath, said the pause would “provide a lot of support to the economy.” Citing growth problems in the Eurozone and China, which led the Fed to watch out for “cross-currents,” Gopinath said: “We endorse the Fed view of having a data-driven approach.” Financial Times
The first global scientific review into plummeting insect numbers points to a “catastrophic collapse of nature’s ecosystems,” caused by pesticide-focused agricultural methods, climate change and urbanization. Scientists say that, according to current rates of annual loss, we would lose a quarter of insects in the next decade and have none left in a century. Which means mass starvation of animals of all sorts, including us. Guardian
Minnesota Senator Amy Klobuchar is throwing her moderate hat in the 2020 ring, entering a Democratic field that already includes the likes of Elizabeth Warren and Kamala Harris. Klobuchar is trying to emphasize her history of bipartisan legislative efforts on issues such as military sexual assault and fraud against senior citizens. Fortune
Around the Water Cooler
More than half of the world’s AI “unicorns”—startups with at least a billion-dollar valuation—are Chinese, according new research from CB Insights. Top of the list is SenseTime, a facial recognition company with a $4.5 billion valuation that also took the most equity funding of any AI startup, at $1.6 billion. South China Morning Post
The news that China’s Tencent would be investing $150 million in Reddit has created a big backlash on the online discussion platform, where people are not very keen on the sort of censorship that takes place in China. Reddit is itself blocked in China. Users have been protesting the Tencent funding by posting pictures of the Tiananmen Square “tank man” and Winnie the Pooh (a popular Xi Jinping reference.) BBC
Tesla Model 3 owners are facing unusually long waits to get their cars serviced—an example of the basic car-industry stuff that the upstart is still getting up to speed on. CEO Elon Musk recently said the company’s number one priority is to get servicing right. Wall Street Journal
The Swiss franc suffered a little flash crash this morning, thanks to a Japanese holiday causing thin liquidity. The franc recovered quickly from its sudden dip of almost 1%, which echoed last month’s swoon of the Australian dollar against the yen. Bloomberg