 This is Rob Johnson, president of the Institute for New Economic Thinking. I'm here today with Bob Pollan from the University of Massachusetts at Amherst and the co-founder and co-director of the Political Economy Research Institute, PERI. We're here to talk about anything he wants to talk about, but particularly his brilliant work related to climate in his recent co-authored book with Noam Chomsky and how this new administration in this world is going to embrace the challenges that they frame in their writing. Bob, thanks for joining me today. Great being on. Thank you, Rob. So right now we're in this turmoil. The notion in March of last year was that the pandemic was a surprise, a transient surprise. It seems to be much more resilient. We've gone through a presidential election. We have a new administration and this ominous specter of climate change and, how would I say, the displacement of just about everything including life on earth stands out on the horizon. What do you see? What gives you heartburn? What are you cheering for? What do you wish you were seeing in this context? That's a lot, but so right. Since the pandemic hit basically in mid-March, you know, we can look at the standard statistics on employment that I find like more illuminating. Just look at the number of people that have applied for unemployment insurance. Since March to now, I just actually calculated it last night, it's 47% of the labor force. In sometime between now and, I mean last March and now, roughly half of the people that work in the United States have applied, have gone, have become unemployed. So in terms of the severity of the downturn, it's equivalent or not more so than the 1930s. We've got to get out of it. Sure, we will, when people get inoculated, hopefully we'll be able to reopen. But we do need the booster because people have been left behind, businesses have failed, state and local governments are broke. And so, you know, in March, we passed the first stimulus program that was 10% of GDP, the CARES program. We need more. In December, they passed the COVID-19, that was 900 billion, about 4% of GDP. And now Biden is talking about another 1.9% of GDP, about 9%. All of that is needed in order to just lift the economy back off. Otherwise, we're going to be stuck in a very, very slow halting recovery. So that's a short term. Over, you know, in terms of a sustainable growth path to return to, obviously we have to deal with climate change in a dramatic way that has not happened. The proposal that Biden had when he was the candidate to build back better was reasonably good. There were things about it that I thought were okay. The number one thing that I thought was okay was the scale of spending. He's proposing 2 trillion over four years is more or less in line with what I think is a reasonable number. The other parts that I thought were okay was that he does give attention to the quality of job creation, not only numbers of jobs, the quality of jobs. And he does talk about the transition from workers and communities in the fossil fuel dependent area. So those are all good things. They're things I don't like about it, but those are the basics. And, you know, these are things that I think have to pass in the next few weeks. Because after that, you know, then you lose your political momentum. I had a remarkable experience in January of 2019, where a bunch of people came to the Swedish consulate from Sweden and they said, Mr. Johnson, you have to at INET recognize that the growth model of Europe is now the growth model, the American growth model is failing. So I continued to listen. And they said in the old days, they said deregulate everything, make the supply side flexible, you can reallocate resources to be more efficient and you're off to the races. And they said now with Donald Trump as president and all this anxiety and the displacement coming from automation and machine learning and globalization, the American people are terrified. And out of their despondency, they're becoming politically resistant to anything. And we need to grow and we need to transform our energy systems. And the whole world depends on the United States. And while the European model used to be called sclerotic, we in Sweden, this was their quote, we don't protect jobs, we protect people. We transform pensions, they stay with you. We keep you and your children in school. You have your health care. Everything works provided you'll play along with relearning to be productive in the next or another sector. And that's the new growth model. If you don't protect people, people will resist change. And when I've read your work on climate, a substantial portion of the mystery of why we're not evolving has had to do with that human resistance, particularly within a country where people are terrified because they won't get adjustment assistance. So those things change. No, no, I mean, I've actually, I've been doing this work for different groups in Appalachia, just actually finishing this project now. And that, you know, the number one issue is you've got to tell us the story that's real. And if you talk about something equivalent to trade adjustment assistance or other transition programs, they call it burial insurance. They said, you know, we've been mistreated. We don't believe you. It's not going to be anything good. And so a lot of the research that I've been doing, in fact, we're putting out this one for West Virginia next week, is to say, look, here's what it really takes. The number of jobs that are going to be created through transitioning to the green economy are far outstrip the job losses that you will experience annually in West Virginia. But number one, we do have to do the investments in West Virginia in the green economy. And number two, we've got to be able to move the people and communities in a reasonable way. So the transition, it can't be, you know, just handout. Here's $10,000 and, you know, go join this training program. We have to do these things. We have to guarantee their pensions. We have to guarantee that they get another job. We have to guarantee that the pay at the new job is at least as good as the old job. And yeah, retraining is necessary, relocating is necessary. And it has to be real. So a lot of what we've done is budget out these things. So even for West Virginia, you know, where you have a high proportion of fossil fuel workers, even for West Virginia to do all of those things, you know, the overall budget to give everybody another job at good pay, relocate if need be, retrain if need be. It's like one tenth of one percent of the state's GDP. It's peanut. But you have to do it. You have to be serious about because I, you know, I give these talks and I hear this, oh, fine professor, that all looks good on paper. And you know what, you're going to keep your job. When the coal mines shut down, you still have your job. You're fine. But we're not because everything you're saying isn't going to happen. It would be great if it did happen, but it's not going to because the environmentalists and left people that don't care about us. They hate us. And I try to fight against that. So that's kind of the dynamic. And it's true that let's say, let's say you don't even give a damn about these, you know, people in Appalachia, people committed to their communities in the coal regions or fracking. But let's say we really want to push a climate stabilization project. We, we will not succeed politically unless we get these people on board. That's right. Yeah. Well, you're doing, you're singing the music to my ears. I'm a boy that grew up in Detroit. And I watched the country after the Voting Rights Act and the Civil Rights Act divorce the community where I lived. America divorced Detroit and they blame the victims. And there was no adjustment assistance. And you know, you were talking about all the different dimensions, but even what I will call the non-traded local goods, things like movie theaters and restaurants, they're not part of that change in the auto industry when the Japanese skills came to the blossom and the dollar was overvalued and all of that other stuff. But those people who have skills need to redeploy their restaurant to follow the migration of people. And that's another dimension of what happened. Detroit just collapsed, as everybody now knows. Detroit is a very good, what I'll call canary in the coal mine example for what not to do in transformation if you want to have a coherent society. And the cynicism there reminds me when I was a freshman at MIT, I walked into my first economics class and they started talking about equilibrium. And I wasn't trying to be a smart ass. I raised my hand and said, are you just assuming a happy ending? And the professor looked at me. So I was on the side of your West Virginians in that particular moment. Well, look, I mean, they, you know, even the people that hired me, you know, West Virginia budget, whatever it's called, budget policy, Ohio Valley research, there's three, three, four groups. And I just sent them the study last week. And even, you know, this one guy in particular, he said, well, I'm a hillbilly from West Virginia. And, you know, nobody's going to go for this because what you have to prove is if we were to build up coal, it's still going to be fewer jobs. And I said, well, that is not really the issue. We've got to contract coal, but we have to have the transition has to be real. It has to be robust. It has to be respectful. And I said, you know, in Germany is doing it has been for decades in the rural valley of Germany. Is a beautiful example of a good transition. And they are right there in the rural valley. They are building out these really innovative things like using the open coal pit. And running, running hydro plants running water down the pit when there's an excess supply, they run the water back up. And they're generating electricity. And then they have batteries, gigantic batteries right there in the pit. And the batteries then charge something like 400,000 home. So that, you know, why can't we just copy these things? And but it has to be real, it can't, it can't be how we say it a couple of professors, we have a conference, and then nothing happened. That's what that's what they think. And they have very good reason to think that's what is likely outcome. So we've got a fight to make this real. And luckily, you know, there are a lot of the groups have realized this. And in fact, I was just on a call with this so-called Green New Deal coalition on exactly this point. Even the people on the left think the government is captured by money politics and won't serve them because it's not designed to serve them. No, well, that's true. You know, so there's, yeah. But we got, we got an exciting thing going on right now, which is even those powerful people have to breathe 20 years from now in their children and their grandchildren. So we do have a common purpose. Certainly, Biden was not my top candidate for the Democrats. In fact, he may have been my last candidate, but there are some positive signs. I mean, I just, I have to say, I've moved by just reading this morning, the Treasury Secretary yelling, just saying, we need a big stimulus because people are hurting. I mean, when was the last time we had a Treasury Secretary say such a thing? And she's insisting and she's saying, sure, there's inflation fears, but they are far outstrip by the fears of what people's lives getting ruined, having been decimated. Yeah, 50% roughly of the labor force has applied for unemployment insurance. And, you know, in California, I was just looking at 60%. So, you know, we've got to build the foundation, rebuild it, the stimulus program that Biden has pretty good. And then we have to do the clean energy transformation. And, you know, again, I think he's it's pretty good. And actually, budget-wise, his allocation is higher than what they're talking about in Europe. Europe, they have all the lingo, but I've looked at it, at least what they're talking about is, you know, like a half a percent of GDP a year, at least so far, which won't get you very far. You have a lot of interregional tension within the EU, which is sort of partially developed structure that inhibits what I'll call a unified and trusting thrust from emerging. Yeah, so at least Biden is, you know, more like two percent of GDP, which is around the range where I think that we can make some real progress. Well, in some of your past writings, you have, in recent writings, you've identified sources of resistance. And I remember a wonderful piece you wrote in The Nation several years ago, made three, I mean, we might call three principle nodes of resistance, one, which we might call the plutocracy of concentrated ownership in the fossil fuel business, and that they will play the games of political economy, money and super PACs and all that stuff to preserve their assets that probably have nothing like the value that they would have had yesterday or in a steady state. The second I recall was a fear of the communities where it's concentrated workers in the fossil fuel industry, like West Virginia, and the transition that you've talked about. And then there was a third, which was the equivalent of, I remember being in school in the OPEC years, where there was the equivalent of a supply shock as you take down the fossil fuel supply, not because it's displaced competitively, because we can't afford to burn at that rate. You might induce a slump with a supply shock, and we have to react to that. I know you've had very, very beautiful responses to each of these three, but why don't we, the total listeners, talk about, particularly that third one, how do you deal with that supply shock? Do you bring on the renewables faster, which creates jobs in the transition? What's the recipe for breaking this log jam? So if we follow the intergovernmental panel on climate change, the IPCC, which is the most important organization, at least disseminating the scientific research, they said that we have to reduce emissions by 45% as the 2030 and be at zero by 2050. So if we do that, I think it's totally realistic to invest what, we're not shutting down the fossil fuels to zero tomorrow. We're going to shut it down over 30 years, and with a big half of it, let's say roughly in 10 years. But even that, the cheapest way to replace fossil fuel energy is through energy efficiency investment. And it's the easiest. It's very low tech. I mean, 40% of all energy consumption is buildings. And just to make buildings more efficient is not that hard. You can get to 30 to 40% increased efficiency pretty cheaply according to the engineering literature. So start with that, you know, and then also the building out solar and wind, especially solar, I mean, solar's come down and cost 80% in eight years. And this is even, I've been tracking even the energy department, the US Energy Department, under Trump has documented it. You're not allowed to write, you weren't allowed to write a memo under Trump in the Energy Department and mentioned the word climate change. But they themselves put out these comparative statistics showing that solar is cheaper than coal now, and she way cheaper than nuclear now. So we can be building it up incrementally and increasing efficiency, such that we can hit a 50% production in nine years. I mean, I've modeled it. I'm not the only one. My models are, you know, different than, for example, this work of these two guys, I've worked with this group, zero emissions, Z cap action plan with Jeff Stax, leader of that. And they have these two energy modelers, dim Williams and Ryan Jones. And for the first time, I worked with their model, they asked me just to estimate the job impact of their model. So their model is different than mine. They're specialists in different ways. But the result actually was pretty close to mine. So that was affirming. Can we hit a 50% reduction in nine years? Yes. Will it be, you know, exorbitantly expensive? No, but it is two to 3% of GDP. It's not, you know, 32% of GDP. So it can be done. Technically, the technology is there. The money needs to go there. And but then there's the politics. So then sure, there's the resistance of the fossil fuel plutocrats, as you said, and then there's the resistance of the workers and communities that are dependent. We have to address both. Well, I think the it's a very interesting thing to hear you talk so enthusiastically about greater efficiency and renewables, because many of the people even left economists have said, we have to go to what they used to call degrowth. In other words, we're not going to change the microstructure of use and production of energy in relation to carbon burning fast enough. So we got to just go into a permanent slump. Well, I would stay in the state of despair in our political economy. That's tantamount to an authoritarian catalyst to an authoritarian government. It's a disaster. I mean, I've written about it. I've been in a debate with these people for years. I like them. They mean well. I know they mean well. I wrote a piece of New Left Review a couple of years ago that's had like hundreds of responses, including calling me a racist and an imperialist and on and on. But basically, the simple logic just doesn't work. The only economist that I know of that actually modeled degrowth in a sympathetic way is Peter Victor at University of York. And he's a good economist and he shows it. He's Canadian. He shows it for Canada. And he says, okay, here's how we can get emissions down by, I think it was 80% in 30 years in Canada. And then if you actually go inside the model, yeah, you can get there. But then GDP also goes down by 80%. I don't think so. I don't think we're going to get anybody supporting 80% GDP contraction. On top of that, I mean, if you don't change the energy system, but you just degrow, what happens? I mean, the math is like thick grade math. If you keep the same energy system and you contract the economy by 10%, you contract emissions by 10%. It's proportional. So we don't even get degrowth. 10% GDP contraction is a depression. And we don't even get close to zero emissions economy. So the only way is to transition the system through renewables and efficiency. And I just want to say in defense of, you know, there's a lot of these people get into the rhetoric, but this guy, Peter Victor and the other leading economist in this is named Tim Jack. They had a piece, for example, in Zion a year ago. And if you get past the rhetoric, they're basically saying the same thing that I'm saying. Okay, there's minor differences, but they're really, really not saying degrowth delivers, you know, climate stabilization. They're really saying we need something akin to this green investment project. It's unfortunate that other people get all caught up in this rhetoric. And they think that saying you're for degrowth means you're against capitalism. If you're saying you're for a green transition with the energy system growing, that means you're, you know, a capitalist. And it's just kind of silly stuff, frankly. Well, there's also a lot of discussion about how to finance the green new deal. We have a lot of debates related to the notion of MMT, modern monetary theory and so forth. And I laugh because I remember MMT kind of emanating in Republican supply side discussions during the Reagan years when I worked on the Senate Budget Committee and I, the guru was Warren Mosler. So it wasn't really, it wasn't really a far left notion at that time. It was the supply side growth can be financed without inflation. And it was a MMT like precursor. But that aside, we see a lot of people resistant to that kind of funding. And people often use the fear of inflation when they're using the kind of yin and yang of central bank policy. But I've often asked friends, I kind of try to stand them up a little bit and I say, okay, so we can have 2% inflation and die or 4% inflation and transform the energy system so we go on living. Why is it better to die and keep the inflation rate lower? I don't understand how we're formulating our trade-offs. And I think it's in part the mindset of a society where almost everything is modeled as a private good where the scope and scale of this challenge is a public good of enormous proportion and implication. And we just got to shift gears. But how do you see it? How do you see what central banks ought to be studying doing to play a role? That's a great question. So yeah, I've also had debates with MMT. I mean, there's certainly positive features to MMT. But I actually don't think they're very original. But I mean, it's debt monetization. Can the central bank buy up government bonds and retire them? Of course. Central bank does it all the time. The question is, can every central bank do it? Under what conditions and to what extent? So in the financing like in the book with Noam Chomsky, I talked about a global financing and about what I forget exactly, but I proposed something on the a third of the overall financing should be essentially the Fed and the European Central Bank buying green bonds all over the world, not just in the US and Europe, but everywhere. So that's the MMT. I don't want to call it the MMT. That's the debt monetization part. But the other things that I suggest, simple things like cutting military spending, cutting military spending by even 5%, that'll get you 15% of the way that you need for financing a global green new deal. Another is we talked before about Jim Boyce and a carbon tax with redistribution. So if you introduce a carbon tax and then I calculated in the book with Chomsky, I said redistribute 75% of the revenue back to people, equal shares. And I think I calculated every person on earth gets an equal share. Everybody gets $60. Well, in the US $60 doesn't mean too much, but in Kenya, a four-person family getting $240, that's going to be 10%, 15% of their income. So that will be another source and you still have 25% of the money that can go into investing in the green economy. And then the fourth thing is to eliminate fossil fuel subsidies. So fossil fuel subsidies are massive. The thing, though, is most of it is a form of egalitarian redistribution because it just makes it cheaper for people to buy fossil fuel energy. So instead, you use that to build up the clean energy economy and subsidize that. That basically, those four things pay for the whole project. Now, there's, of course, a lot of refinements, but that's basically it. It's really, analytically, it's really not very hard. And sure, we can do, we should do debt monetization. I don't think we should do it 100%. Make a contribution. Yeah. Well, I think it's very interesting because when I talk to friends of mine from the Wall Street days who are prudent deficit hawk types, they don't mind their bailouts in 2009 and presently, but as they say, we're protecting assets, not people. But some of them maintain a faith in the kind of trickle down idea that if you maintain the value of assets, then the economy won't go over the cliff. But there's also a lot of inefficiencies. And I keep trying to tell my friends who are the deficit hawks, you should be taking on the extraordinary difference between the profitability of the pharmaceutical industry in this country and in other countries and the role of the public sector and the costs to Medicaid and Medicare associated with that. Daniel Ellsberg talks very vividly in his most recent book, The Doomsday Machine, about the need to bring down significantly the stocks of nuclear weapons and not modernize them and devote some of that savings to finance climate change. Then we live less dangerously and safer and longer. Well, so first of all, the Ellsberg book, I love that book. And subsequent to my reading it, Dan is now a fellow at Perry. He told me that. Yeah. Yeah. And actually it was, okay, I might have thought of it myself, but actually it was in discussions with him and his wife, Patricia, that they said, why don't you just finance this through cutting nuclear spending? And so I actually calculated it. So in the book with Noam, I forget exactly how much I said that the cutting military spending would be, I don't know, 15% of the total. But I said we can either cut across the board just all forms of nuclear spending or just cut, you know, 75% of the nuclear projects. And you can leave everything else alone, even though I don't agree with that. But sure, there's no, you know, So far experiment. Yeah, it's good. Yeah. So, no, I think that Ellsberg, Dan and Patricia both are totally on the right track. And there's massive amount, any deficit hawk in principle favor getting rid of wasteful spending. Yeah, on the military. And as you said, also on medical care. So we have, you know, we have this medical healthcare system that we spend 18% of GDP, which is double the other advanced economy. Yeah, and we ranked 38th in the World Health Organization rankings of the quality of the health care experience. Exactly. You're right. So now that's a that's a troubling situation. And I want to say to Elksberg's credit, there is a benefit in addition to the budget savings, which is if the nuclear stocks come way down, the probability or even the possibility of what they call the nuclear winner, which you can read about nature in science magazine, goes to zero. And that's a hypothesis or a scenario, you might say, it's not really a hypothesis. It's a scenario where if the nuclear scale is so high that and there's a conflict about, I think he said something in the neighborhood of 800 million people would die from the explosions. But the fires burning the upper atmosphere and turning us into an ice age would take six and a half billion of the seven billion people to their grave within a year's time. And so he's talking about safety as well as savings to contribute to another form of safety. That's amazing piece of public policy that if we're going to build back better, we better get on our course. And I think that, well, yeah, if we have to promote a book here, his book is just magnificent. Well, let's coming back to the climate issues. We've been talking about budget, we've been talking about financing, we're talking about the technology of change, the adjustment assistance. But there's another looming challenge here. We have watched a disintegration of trust, the despair that's come to the surface in many countries with Brexit, our, what I'll call the otherness of America, the nationalism, we've got to go back to the idea that we're all in this together to use a simple example. India is a very large place in per capita burning of energy, BTUs per person, they burn about one tenth of what the Americans do. So they can look at us and say, we're poorer than you, we need to grow, you guys need to cut back. But we can't really play a kind of musical chairs game, or the clock will run out, and we'll all suffer. How do we get to the place to coordinate global reduction? Because your book, or I think is your book or one of your articles, enunciated that the US and China are the biggest, but together they're 42%. And if you throw in Europe, you're at about 52%. The other 48 matters a lot. Yeah, there needs to be global adjustment assistance, global transformation assistance and coordination on a timetable that's very urgent. How are we going to pull that together? Yeah, so I mean, I've done work in India, and other developing countries, and I had this project with United Nations Industrial Development Corporation on transition and developing countries, and I'm doing another one now with UNTAC, United Nations Trade. So really the one I'm doing with UNTAC right now is exactly on how you finance in the developing economies of transition. Again, the basics, of course, there's a lot of complicated stuff. The basics are really simple. And India can grow just fine with clean energy. They do the transition too. And my co-workers here, Indian co-workers wrote a brilliant paper on let's assume as part of this thing, instead of fossil fuel subsidies, we just give out solar energy for free. And in the rural areas of India, there's basically half the people have no electricity whatsoever. So if you start putting up small-scale solar operations, this is going to be transformative for their lives and just making their lives better. And you've got clean energy. But it has to be subsidized. It's not going to happen if it's not subsidized. So the rich countries, especially the US, we have to subsidize it. Part of it can be through buying these bonds. We can think about different mechanisms, but it's basically India or Kenya, they float green bonds in the US Treasury buys them, or the US gives them to the World Bank or whatever the details are. And it has to be at scale. It has to be 1% of global GDP. That's the part where debt monetization can work just fine. So it's not taking money out of anybody's pocket. It's just creating new activities and new finance. So yeah, that's a project I have right now with Amtaz. Of course, I'm not the only one. But I don't think that the basics are that hard. It's really okay working out details, but really it's working out the politics. And the rich countries just have to acknowledge that yes, these poor low income countries can grow. But as you just said, if they grow and they say, well, you know, we're not rich, you're rich, so we have to grow. But if we're saying that means growing on the basis of fossil fuels, it doesn't matter what happens in rich countries. We'll blow out the carbon budget in seven years. If India, if you just take India, Indonesia, Mexico, Brazil, if they grow on the basis of fossil fuels, it doesn't matter. We will never hit the emission reduction part. I laugh. I mentioned to you my Swedish meeting. After they finished talking about splerosis in Europe, and the United States bogging down because of the fears of large scale transformation related to technology and globalization, they started talking about perhaps the Chinese model has something to offer with more basic science. And Peter Goodman from the New York Times, who I believe is based in London, he wrote a story about this group from Sweden. And it said, we love the robots was the name of the headline of the story, meaning robots improve the production possibility frontier. And as long as you're going to take care of me as a human, we can deploy them and climb the ladder. And the Chinese seem to be whether it's coercive or whether it's like in Sweden, a consensus that that dynamic posture makes sense. I don't know. But I think the American model is being challenged now, because we need to cooperate with each other and facilitate transformation and what I'll call anesthetize or diminish, eliminate the resistance to transformation. Well, yeah, that's, that's obviously true. And yeah, so having a decent welfare state, you know, I saw in the FT, the other day, Danny Rodgers had an interview and he said, well, we got to think beyond the idea of a welfare state. But I mean, the basic idea of giving people social protection is whether you want to call it a welfare state or not. I don't care. But the point is, yeah, that people don't have to fear their livelihoods are going to get destiny. Like you talked about what happened in Detroit, that has to be built into the foundation of a decent society. And when we talk about, you know, mainstream economics, you know, what they call what is called labor market rigidity is that is as a source of unemployment, because people have basically, you know, given too much, so they don't really care about getting a job. So they're unemployed. But labor market, another way of using the term labor market rigidity is just saying social protection foundations, a decent society, you know, you because you're a human being, you basic things will be provided for you. And then, yes, beyond that, we need to build, you know, we need to innovate, we need to transform many things, including the energy system. And but the foundation of a welfare state of a robust welfare state is critical. And I did work like 12 years ago in Sub-Saharan Africa, and even there I was arguing, you know, of course, it's at a different standard, but let's let's get load, let's go there. And let's see how we can construct that. There are all kinds of people that can do things with statistics and mathematics and they're fancy. But a great economist is someone who picks the right problems that matter. And you and your Institute have always done that. Thank you in a way that I watch closely, as I try to understand what I should be doing with my team at INET, you really do. I think 80% of the challenge is asking the right questions. And you guys are really good at that. And your leadership is outstanding. I really appreciate you saying that. I teach a class actually called Applied Econometrics. I have for 20 years. And that's what that's what I say in the first day. I said, I'm not really that good of an econometrician. I don't know. I don't know all the techniques. I know some of the techniques, but I can learn the techniques when I need them. But the key thing is to ask the right questions.