 I think we understand, those of us here today understand, that not all versions of capitalism are equal. And in what are often called the Scandinavian model, or the welfare state, or I usually call it the social democratic model, although that name doesn't resonate in the United States because we never had any political party that was called a social democratic political party. But I think in the European context, it's certainly accurate to think of it as the social democratic model. In that version of capitalism, financial institutions can be competently regulated, investment priorities can be guided by some degree of political planning, environmental health and safety regulations can be enforced, workers can be represented by unions who can bargain successfully for better wages, people's health, education and retirement needs can be provided for through adequately funded public programs. On the other hand, what now are called neoliberal versions of capitalism, giant corporations and rapacious financial institutions in particular, reign supreme, unregulated markets compel socially irrational uses of our productive resources. Instead of providing education for children in healthcare for all, we build what I call McMansions in suburban sprawl and think that we should put three cars in every garage. Economic crises in the new neoliberal capitalist world are more frequent and severe. The environment is put under increasing duress, starved of resources, public services deteriorate, and the distribution of income and wealth becomes ever more unequal. So from my perspective, and I suspect from the perspective of most people in this room, anyone who cannot see that social democratic capitalism is preferable to neoliberal capitalism is simply not paying attention. I also think that all of us in this room should be very clear about whether or not the argument, but we can't afford that anymore, makes any economic sense whatsoever. One of the things that is commonly said these days is, well all that stuff that we fondly remember is liking, that was all nice, but we can't afford it anymore. Hard choices have to be made. Regrettably, the responsible thing to do is to cut back on those programs. It's regrettable, but to do anything else would be irresponsible. And I've lived in Portland, Oregon now for five years. It's a region of the United States in the far northwest, Oregon, Washington state. It's a region that was predominantly settled by Scandinavian immigrants. And I've come to understand what a strong sense of social responsibility seems to be part of a Scandinavian approach to life, one that is very, very admirable. So I think this sort of notion that we can't afford it anymore, and it would be irresponsible not to cut back on these programs, is one that resonates, particularly amongst people who believe in engaging in socially responsible behavior. But actually nothing could be more silly, and nothing could be more obviously untrue. Does anybody think that the Scandinavian economies are less productive today than they were 20, 30 years ago? No. Well then we can afford everything that we could afford 20 or 30 years ago today. And more. It's really good econ 101. Unfortunately, there's a very bad version of econ 101 that fails to make this point when people walk into an economics class for the first time. Well, what's really happened is that over the past 30 years, productivity has increased, sometimes some years more, some years less. So the truth is we can actually afford more of everything than we could 30 years ago. So we certainly can afford, we can certainly afford the welfare state today if we could afford the welfare state 30 years ago. If you step back, it has to be that priorities have changed. It's basically a choice. Do you want more McMansions and fancier cars and wealthy garages, or do you want good public education? Do you want good health care for all? It's a choice. It's not that we can't afford what was affordable before. I think that's something else that sometimes it's hard to remember, but it's important for people like us in this room to remember that. So was it important to fight for the welfare state? Were the gains that we won when we did that worth winning? Did they make our world and our lives a better and a safer place? Yes, yes, and yes. I think that's important for us to remember. I also believe that there's a lesson that we should learn from the history of what happens when you fight for reforms, the history of what happened in the 20th century. And really Scandinavia is the place where these fights for reforms were most successful and where I think it's easiest to see some lessons to be learned. And one of the lessons I draw is that while fighting for progressive reforms makes sense as long as capitalism persists, and anybody who thinks, anybody who thinks, but I actually would prefer a very different economic system altogether, I really would like to see system change. Anybody who wants system change but doesn't understand how important it is to fight for successful reforms in the here and now is basically destined to remain a tiny, unimportant sect that will never get any place. But I think that stopping short of replacing the fundamental institutions of capitalism, a private enterprise system dominated by large corporations, and a coordinating system that's essentially a market system driven by competition and greed. I think stopping short of replacing those fundamental institutions in the 21st century, the century we are embarked on, which I think is what social democratic political parties at some point decided to do in the 20th century, in what the great American social democratic leader Michael Harrington called the great social democratic compromise. That at some point in the 20th century social democratic parties made a compromise, which was we will accept the defining institutions of capitalism in exchange for being recognized as legitimate players in the political systems, in capitalist political systems, will be allowed to fight for reforms, will be allowed to run for elections, and if elected will be out, will be allowed to serve, will actually be allowed to form governments. Now at the time, I don't think it was obvious whether or not this compromise was a wise and a good one. But we now have some history and some hindsight, and I think there is, I think we now have some evidence that suggests that that compromise may be somewhat more dangerous than the people who made it understood it to be. So here are the three reasons, very, very briefly, for why I think most of what I'm going to talk about today is going to be about the kinds of reforms that we have to fight for going forward. But I want to before do that, say at some point I think we need to not make a mistake that was made in the past. We need to not lose sight of the fact that our reforms lead in a certain direction, and it's a mistake to think that you can stand still. But I think here are the very three practical reasons that we should not make that compromise that was once made in the past. Well the first reason is that while social democratic capitalism is less unfair, less insecure, less inefficient, and treads less heavily on the environment than neoliberal capitalism, social democratic capitalism cannot truly provide full economic justice and democracy. It cannot tap the economic creativity and potentials of the entire population. It cannot fully and adequately protect the environment that's seriously at risk. In short, social democratic capitalism isn't good enough, we can and must do much better. And if that weren't true, then I wouldn't, then there would be no argument, there would be no point. And some of us believe more fervently that that is true, and some are quite reasonably skeptical. That's fine. But that's my first reason for thinking that why should we ever agree to stop short? The second one's more practical. As long as productive resources are privately owned and decisions are guided by market forces, as they continue to be for the most part under social democratic capitalism. Those fighting for reforms to make the system more secure, equitable, efficient, and sustainable are destined to swim upstream against the destructive currents unleashed by the private enterprise market system. Why should we accept this handicap? Those of us who are fighting for those things, why should we accept this handicap? Why should we concede our opponents more money and a louder media megaphone in every struggle we have to wage? The third reason is, and this is I think what we, this is the lesson that I think we've discovered from the history of the past 30 years. As long as the defining institutions of capitalism are left in place, any gains that we make, any victories are always at risk of being rolled back. The history of the last 30 years is a painful object lesson. During the middle third of the 20th century reformers made headway in many of the advanced capitalist economies and scanned the navy more than anywhere else. And to be honest, many of us born in the aftermath of the Great Depression, many of us of my generation came to view this kind of progress as inevitable. We usually experienced it as frustratingly slow, incomplete. But our vision was, that's the direction in which things are moving. We can sort of count and rely on that. Well the last 30 years basically demonstrates that that's not something you can take for granted. During the last 30 years, giant corporations launched a free market ideological counter attack rolling back one successful reform after another. Today in Greece, Portugal, Spain, Ireland, Italy, the UK, Canada and the US prudent regulations have been abandoned. Social safety nets are being torn asunder. Why? Well, the simple answer and the truthful answer is because the top 1%, as Occupy points out, the top 1% has the chutzpah. To use a crisis, their neoliberal policies helped create to continue to prosper at the expense of the bottom 99% in one advanced capitalist country after another. Even in Scandinavia, social democracy fell victim to the global neoliberal onslaught as third way forces acted as a kind of Trojan horse inside Scandinavian social democratic political parties. In short, my third reason for saying we need to seriously, seriously consider whether we want to continue to make what Michael Harrington called the grand social democratic compromise is a wise choice. My third reason comes down to this. Failing to disarm a defeated enemy is not in the field manuals that good generals follow. And that's what leaving the private enterprise market system and giant corporations in place amounts to. Now, say a little bit about, oh, you've been looking at, we're not up to that yet. It's kind of a nice picture though. In the chapter on social democracy in my book, Economic Justice and Democracy, I spent a great deal of time evaluating the writings of two very insightful social democrats who I have a tremendous respect for. Michael Harrington was the leading social democrat in the United States during the second half of the 20th century. He was best known for his book, The Other America, published in 1962 which documented the existence of widespread poverty in the richest country on earth and was given credit for motivating Lyndon Johnson's war on poverty in the mid-60s. But Harrington wrote for his fellow activists about the successes and failures of social democracy shortly before his death, his untimely death in 1989, I believe. In the next left, The History of the Future, which he published in 1986 and Socialism Past and Future, which he published in 89, Harrington talks of a failure to define an alternative to capitalism coping with a fractured working class and what he called the pitfalls of gradualism. In my chapter, I argued that while much of his analysis was insightful, and I agreed with, that there was more to the demise of social democracy than Harrington was willing or able to own up to. In particular, I argued that Harrington himself was a prime example of a social democratic leader who failed to define what it is we really want and are trying to achieve, what it is we're moving for concretely. And in a sense tried to have his cake and eat it too with regard to do we want markets, do we want planning, what are we doing about all of that? And while Harrington defined the grand social democratic compromise accurately enough, I argued that he underestimated the potential negative consequences of making that compromise. I also took a look of the author who I believe has written most in greatest depth with greatest understanding and most persuasively about the demise of the welfare state. In Sweden in particular is an author named Magnus Reiner. In his book he called it Capitalist Restructuring Globalization in the Third Way, Lessons from the Swedish Model. It was published in 2002. And I drew rather extensively on that book which I found very compelling in my chapter on social democracy. I think he provided a brilliant, detailed evaluation of a lot of the things that led to the decline of the welfare state in Sweden in the 80s and the 90s. And while he acknowledged the role of external constraints imposed by an increasingly neoliberal global economy, Reiner argues that the Swedish Social Democratic Party might still have mounted a successful offensive had it not fallen victim to what he called Third Way thinking that was increasingly influential inside the party. What Reiner calls an expansion of economic democracy would have begun with the implementation of the MITRE plan that some within the party wish to push forward. A plan that would have greatly expanded the opportunities for workers and enterprises to participate in all sorts of new and additional decisions, enterprise decisions. And of course the adoption of the Wagerner funds that would have given workers more ownership in the firms where they worked. Now this was rather interesting because I hadn't heard anybody talking about the Wagerner funds for quite a while. And in Stockholm at one of the events that I attended it was billed as a debate between me and somebody from, I can't remember exactly the name, it's the Swedish equivalent of our American Enterprise Institute. And one of the things that the chief economist of this institute said he mentioned the fact that well you know it's a really good thing that we managed to prevent that Wagerner fund idea in Sweden. Because you know if that had gone through by now all the enterprises in Sweden would be practically entirely owned by their own workers. But yes that is exactly what would have happened if that plan had gone through. But really I think what happened was sometimes you think we've won this much, this is pretty good, we'll just opt for staying here. Some within the party in Sweden wanted to go farther. I think one of the lessons from history is you can't stay still. It's unlikely that if you stop moving forward in terms of economic systems and institutions, if you stop moving forward in the direction of building an economic system that is increasingly an economics of equitable cooperation, then at some point you are very likely to move back in the direction of an economics of competition in greed. I think the big picture is well are we going to continue to rely on an economic system that basically is a system of competition in greed, or are we going to continue to fight for a different kind of an economy that's the economics of equitable cooperation. And in some sense I don't think there's, when you're in the middle, it's not stable. And in large part what happened was a certain point was reached, no forward movement went forward. And then some people and some institutions, some people, institutions and forces that never really believed that equitable cooperation works very well. Went ahead and mounted an offensive and took things back in the other direction. Okay, this brings me to where we are now and what kinds of things seem to make sense. And for the remainder of my time I'm going to probably, I'm going to talk about something that I call a green new deal. But before I do that I want to say that something else is going to have to happen if anything is going to change for the better. One of the amazing things that's happened over the past 30 years, there's really two amazing things. When the economic historians write the history of this period in the global economy, when they do that 30 years from now, they're going to write about two things that simply stood out and were absolutely, you know, the key features and changes in the global economy in the last 30 years. And the first one is going to be that it's the period of the most rapid rise of inequality of income and wealth in the history of human economies really. So we had this incredible increase in inequality. That's the real underlying basis for the increase in stability. And the other thing we had was we had financial deregulation that led to a point where the financial industry, which in a reasonably functioning capitalist economy serves a particular purpose improving the ability of the real economy that we all rely on to function somewhat more smoothly and somewhat better. So in capitalism the financial industry is supposed to be the tail and the real economy is the dog. And obviously one of the things that's happened over the past 30 years is the tail is wagging the dog. And increasingly the tail doesn't care how much the dog is suffering. So unless global, unless the financial industry is really brought under control, it is wildly out of control. We passed a regulatory reform bill in the United States about a year and a half after Obama's election. It's thousands of pages long. It was largely written by lobbyists from the financial industry. It's very long. It's almost impossible to understand. But good financial economists who understand the necessity of regulating the financial industry, what they will tell you is there's not a single dangerous speculative activity that the large Wall Street banks were engaged in before the crash of 2008 that they can't still do. And as a matter of fact we have fewer larger banks that are therefore even bigger and can't be allowed to fail them before. And they have just learned that no matter how risky, how much risk they engage in, that if anything goes wrong they will be bailed out with no conditions attached whatsoever. So if you simply ask yourself, wait a minute, we just had the greatest financial crisis in 80 years. And we passed a financial reform bill. Well, didn't we learn a little bit of our lesson and is now the financial sector somewhat more regulated in a prudent way than before? The answer amazingly is they're actually more dangerous now than they were before the crisis. Something has to be done about that. Here in Europe, unless the European Central Bank, the European Commission figure out some way to stop the bond markets and the credit markets from behaving in the way they are, it's really impossible to see how it is you're going to solve problems, the problems of the Greek economy and the Greek debt, Portuguese economy, Portuguese debt, Spanish economy, Spanish debt, Irish debt. So I'm not going to speak about financial reform. I'm just going to say without it, it's very difficult. I think it's naive to believe that there really is any way forward. There is any way to solve the major problems that we face and to accomplish the things that we have to. We actually have two great crises. We have the worst economic crisis in 80 years, basically caused by neoliberal policies, and we aren't able to solve them because literally all the dominant political parties are still wedded to those policies. But we also have an environmental crisis that objectively is actually far more frightening and dangerous. The possibility of climate change, of cataclysmic climate change, is literally the greatest ecological crisis that humanity has ever faced. And I think many of us know that. Many of us in this room know that. And the situation is that nothing effective is being done about either crisis in any powerful part of the world. If you're watching the presidential campaign in the United States, it's simply not an issue that's ever even discussed. It's not part of the campaign. Neither political party is talking about doing anything about it. So those are the two crises. These are two immense crises. I mean, we live in a very, very scary time. The bad news is absolutely nothing is being done about them. The good news is, if you're looking for any good news at all, is that there's actually one solution that solves both problems. And it's pretty straightforward and it's pretty common sense. The problem is there's not a major political party out there that's campaigning for the solution to these problems. Our problem in the United States is even more acute. It's almost impossible to grow a third party in the U.S. political system, particularly now that financial reform has been declared. Election finance reform has been declared unconstitutional by the U.S. Supreme Court. So that now any person, any wealthy person can give as much money to any candidacy that they want. They can do it secretly because their privacy has to be respected according to the U.S. Constitution. You can't even know where political candidates' money came from. And of course the thing that you will find most surprising is that people, that includes corporations. Because according to the Supreme Court, corporations are people. So they have all the rights that people are guaranteed by the U.S. Constitution. So in terms of where we are and what we can do, moving forward politically in the United States faces obstacles that you fortunately don't hear in Europe. Unfortunately for us, we're about to find out just how badly money is polluting politics in the United States. We're going to see just how badly it turns out in 2012. And unfortunately in the United States it's almost impossible to build a political party outside one of the two traditional parties. And the two traditional parties are more firmly committed to non-solutions to both of our serious problems than ever before. In Europe I think your political possibilities are greater. I look at Greece and in a four-year time period the two dominant political parties in Greece, Pesach Center Left, New Democracy Center Right, up until four years ago they had 80% of the vote. Now they both have presided over, you know, these extreme austerity policies. In the United States and New Democracy they are responsible for the irresponsible government behavior and the kind of borrowing that was excessive when Greece joined the Eurozone and discovered that they could borrow at lower interest rates than they've been able to in the past. So the center right party borrowed irresponsibly. Crisis comes along. They administer austerity. They get voted out. Center Left Party, Pesach comes in. They administer austerity. They get voted out. But in Greece the percentage of the vote that they were getting four years ago, which was roughly 40% each, 80% of the electorate, dropped down to 32% in the June election this year. And a little tiny coalition of radical left parties that were clearly saying what is true and right, which is this debt is unpayable. This is crazy. The austerity plan that's being administered is unfair, it's inhumane, and it's actually counterproductive. We're in worse debt now after doing all this than we were in the beginning. We won't accept that. We won't do it. And their percentage of the vote went in a four-year time period from under 3% in May up to 17-something percent and 29% just five weeks later. And they were only 2% away, 2% points away from being able to form a government. And I know, I visited Greece. I know people in, I know people in the, in Syriza. And I truly believe that they would not have simply done what the social democratic parties have done when they're elected, which is to basically say, hey, this austerity, unfortunately, it's regrettable. We regret it. We feel your pain, but we're going to administer it. The center-right parties, they do something slightly different. They say, we believe in this. We don't regret it, and we don't feel your pain. But what's happened in one European country after another, one of the southern European countries after another is whichever party you vote for, the actual policies turn out to be exactly the same. And people discovered that in Greece, and they stopped voting for the two traditional parties in an amazingly short time period and started voting in the case of Greece for a party that had good answers and sensible answers and was going to actually do something about the crisis and move forward. So in general, the political situation is very unfavorable. The dominant political parties, for the most part, are not doing anything about the problem, either problem. But there is a solution, and that solution is what I'm going to call, I'm going to call it a Green New Deal. And now we're ready for this slide. Replacing fossil fuels with renewables, transforming not only transportation but industry and agriculture as well to be much more energy efficient, and rebuilding our entire built infrastructure to conserve energy is going to be an immense historic undertaking. But it's what's needed if we're to avoid unacceptable climate change. It's basically the greatest technological reboot in human economic history. And the truth of the matter is what the climate scientists are telling us and telling us truthfully and every time they update and revise their advice based on new evidence, they tell us the problem is even more imminent and severe than we told you last time. That's what we're being told, and that's the only thing that is going to prevent this incredible human tragedy. Now you know that the Great Recession has put more people out of work, you know, than any time in the last 80 years. Right now one in six, one in seven Americans is either unemployed or underemployed significantly. The students I teach at Portland State University have no prospects for jobs when they come out. In Europe the Eurozone hit the highest unemployment rate that it's had since its inception at some point in the middle of the summer. And of course in places like Spain and Greece unemployment rates well over 20 percent and the unemployment rate amongst youth is over 50 percent. So we have an incredible unemployment problem and we, wow, it's easy to see how we're going to solve these two problems. This is the only way we're going to solve these two problems. If we don't put over the next couple of decades hundreds of millions of people to work building solar panels, installing solar panels, retrofitting buildings so that they are 80 percent more energy efficient than they were in the past, we're not going to prevent climate change and possibly cataclysm a climate change. How else are we going to put all these people back to work by making sure that that's what happens? So the solution is not difficult to see and I would say that no matter what other reforms that we are fighting for and no matter what else we sort of, whatever strategies and things that we're thinking about that we're in a situation where we basically have to put together a coalition of forces that will force upon the world's governments something like this Green New Deal. We basically have to move from, I mean, we should start thinking of our economies as what's at the top of that chart. We live in fossil fuel of stand in the United States, here in Europe. The advanced economies are basically fossil fuel of stand. That's what our energy system looks like. That's what our power system looks like. That's what our transportation system looks like. That's what our agriculture industry and infrastructure looks like. Think of ourselves as fossil fuel of stand. How do we get to be that way? That's not easy to understand either. We lived in a market economy for the past two, three hundred years and the single most important price in the market economy was terribly wrong. The single most important price in this market economy we now can see with hindsight was what is the price on emitting a ton of greenhouse gas into the atmosphere? And the price has been zero for three hundred years. That's why our economy looks like fossil fuel of stand. Now unfortunately the price is still zero and it's going to stay zero until somebody does something about it. But that's why we look the way we do and that's the way we are. Well, what the climate scientists are telling us is if we don't make a transition to renew conservice stand where we have energy efficient appliances, we retrofit buildings, we have a whole different energy system where our transportation system is totally different from the one that we have. If our agriculture is not totally different from the one that we have, if we don't move to renew conservice stand as quickly as possible we're in trouble. That's what I mean by we need to pull off the greatest technological reboot in economic history and we need to pull it off as fast as we can. And the way you do that is by putting millions and millions of people to work building all that stuff. Doing the reboot. The obstacle is political. It's not that there isn't a solution. What about growth versus the environment? Notice how that issue totally disappears in a Green New Deal. Here's what's happened historically. Whenever economic growth slows, the labor movement quite understandably clamors for stimulus to put people back to work. Quite understandably and quite reasonably. Whenever the economy grows more rapidly, the environmental movement complains also understandably that more production puts more strain on the environment and it's unsustainable. And they're completely right. But it depends on what we're producing. If we're building more McMansions for the 1%, if we're putting more cars in every garage, then getting jobs by increasing production does put unsustainable pressure on the environment. But if we create more jobs for laid off construction workers retrofitting buildings and houses so they become more energy efficient, if we create more teaching jobs to train the new generation to transform and operate a decentralized electric grid that welcomes electricity from hundreds of millions of rooftops and substitute local resources for distant central generators, wherever that is possible. If we put laid off coal miners to work assembling wind turbines and installing solar panels on rooftops, then the new jobs are producing things we desperately need to save the environment. They're not producing more what ecological economists call throughput intensive consumption goods that destroy the environment. In the Green New Deal, there is no conflict of interest between jobs and the environment. As a matter of fact, I don't think the labor movement is going to get the jobs that it wants and needs to fight for and win for its constituents and its members without winning this. And I don't think the environmental movement is going to be able to prevent climate change without this. Can we afford it? Won't it be too expensive? First of all, we cannot afford not to launch a Green New Deal. Let's just be very plain about what really makes sense. Reasonable estimates of predictable damage from even mild climate change, not to speak of taking into account in a sensible statistical analysis what would be the results of cataclysmic climate change even if it is not highly probable. If you do a proper analysis of what it is that would be the damage caused by mild climate change and include the damage that would be caused by cataclysmic climate change even if the risk of that is one or two percent. If you do a reasonable analysis of that and you compare it to the cost of moving quickly in a transition like this now, only a handful of mainstream economists who have mismodeled both costs and benefits and done a very, very bad risk analysis. Only they do not understand that a Green New Deal is incredibly cost effective. What's not cost effective is failing to act in time to prevent this from happening. Second thing is, as any competent economist knows, the opportunity cost of putting idle productive resources to work is zero. If we had full employment right now, there would be opportunity costs associated with producing more solar panels and wind turbines and rebuilding a decentralized efficient electrical grid. There would be. If we had full employment, there would be an opportunity cost. We'd have to give up whatever McMansion's cars and environmentally damaging goods and services those resources could have produced. If we had not switched them over to more socially useful activities preventing climate change. In other words, if our economies were running on all cylinders, setting off on the road to renew Conservice Stand would amount to substituting more socially useful production for less socially useful production. And the less socially useful production we lost would be the opportunity cost of the March to Renew Conservice Stand. But in case you hadn't noticed, our economies are not running on all cylinders. And the famous computable general equilibrium climate models interpreted by mainstream economists to estimate high costs of avoiding climate change assume the economy is already at full employment. When the truth is that our second great crisis is precisely that we have more and more idle hands we desperately need to put to work. Nothing is more efficient than putting idle hands to work producing socially useful goods and services. And given the ecological crisis humanity face, there's no more socially useful work than transforming fossil fuels stand into Renew Conservice Stand. A few words about what's going to be necessary to make this happen. Let me see if the next slide is one that's useful here. We basically need both an international green new deal and a domestic new deal. And I'm going to briefly say some things about both. We are not going to solve climate change. We are not going to adequately respond to climate change unless there's an international treaty that imposes mandatory emissions reductions on countries. It's simply not going to happen. Now we were on the slow painful road to do that. We started in Rio in 1992. The international community recognizes climate change is a problem. The international community recognizes that it's a global problem that can't be solved by individual countries. It has to be solved by some sort of process in which all countries are going to participate. In Rio there was also an agreement that regrettably because not all countries were equally responsible for having caused the problem. And not all countries were equally capable as in wealthy to contribute to solving the problem. That this problem was going to have to be solved in a way that basically acknowledged that there's a serious issue of equity and fairness here. That the countries that bore greater responsibility and had greater capability would have to bear a greater part of the burden of solving the problem. What was not agreed to, what they could not get agreement on in 1992 at the Earth Summit in Rio was an agreement for some mandatory reductions that countries would accept. Instead at Rio everybody left saying we will all voluntarily sort of say how much we're going to try to reduce our emissions. Five years later, 1997 Kyoto, everybody came together again and there was one thing that was painfully obvious. Not a single country had reduced emissions. Much less come any place close to their voluntary pledges about what they were going to do. So in Kyoto they said we're going to have to bite the bullet and there's two difficult bullets that have to be bitten in international climate policy. These are not easy things. The first one is we actually have to agree to mandatory reductions otherwise it isn't going to happen. Now if you mutually agree to mandatory reductions it's actually a good deal. England. If England reduces emissions they pay 100% of the cost of their own emissions reductions. What about the benefits of their emissions reductions? How much of that do they get? They pay 100% of the cost of their own reductions. How much of the benefits of their reductions does England get? Less than 1% actually because they're less than 1% of humanity roughly speaking. On the other hand, so that's the logic that England faces in every country faces when they're thinking about voluntarily reducing their emissions. China is the most populous country on earth right? And they're roughly 20% of the population. Even for China if they reduce voluntarily they pay 100% of the cost of that reduction and they only get 20% of the benefit. That's why it doesn't happen. That's why it doesn't work. Economic theory recognizes a certain problem called a certain perverse incentive called the free rider problem in the case of public goods. That's all it is. It's ECON 102. So theory predicts and evidence from the 5 years from Rio up to Kyoto certainly confirms that's just not a way to get the job done. But notice the difference now. Let's go back to England. England reduces. Suppose it reduces its emissions by 5.5% which is what Kyoto required England to do. They are going to pay for 100% of that. But what do they get in exchange? Not just the benefits of the reduction of their own 5% reduction. In exchange they get the benefit of a 5.5% reduction on the part of every advanced economy on the planet. That's a game changer. So it's not impossible to have a treaty that works that's effective. And Kyoto put us on that track. And that is one of the great tragedies of what happened in Copenhagen. And in my president and in this case I'm talking about Obama not Bush bears a major responsibility for having basically taken the world away off of a track that was starting to make sense in getting somewhere and launching us back 20 years in diplomatic history to where we now are vaguely talking about voluntary commitments if we even agreed to discuss the issue. The other thing they did in Kyoto that was a major accomplishment was they took this vague language of differential responsibility and capability that needed to be taken into account in sort of deciding what sort of burdens different countries would have to bear in solving this problem. And they implemented it in a very concrete way. In 1997 the advanced economies were responsible for about 80% of the excessive accumulation in the atmosphere. And the advanced economies basically had 80% of the wherewithal in the global economy that you could say that's the kind of stuff we need to sort of solve problems. So I said this is a rough cut but at least here in Kyoto what we're going to say is it's only the advanced economies that have mandatory reductions. We're not going to require the less developed economies to commit to mandatory reductions at least for now between now 1997 and 2012. So that was Kyoto. I would argue that on both of the difficult points we had made incredible progress. Now that's not to say there weren't problems and that's where this comes in. Between 97 and 2009 it had become apparent that the Kyoto Treaty although I would argue had the big picture and the essential ingredients of what was necessary right that problems had arisen and they needed to be fixed. The real question is did we need to fix Kyoto or did we need to nix Kyoto? What we did was we nixed it. We basically threw it away. These five changes would have basically fixed every serious problem in Kyoto. What's more there were plenty of people who were present at Kyoto from the environmental movement and from major environmental organizations that knew that this is what had to be done. And a lot of those people were from environmental organizations in Europe in particular because if you look at the world in 2009 who came to Kyoto basically ready to move in this direction to fix it in a certain kind of way. That would make it more effective, more fair and more efficient. The European delegations for the most part were the most socially responsible. And I think within Europe I think the Scandinavian delegations were amongst the most socially responsible that were sort of pushing your delegations to push the international negotiations in this direction. I'm not going to take the time to go through why it is that those things would have really fixed the major problems. But they would have. Organizations like the 350 org and Bill McKibben who were in Copenhagen. They knew that this is the kind of thing that needed to be done. And of course they were more distressed than any of us that exactly the opposite happened. Instead of fixing Kyoto and improving it and making it more effective and more fair and more efficient. Instead what happened was that it literally got torn up. It got scuttled and we're now back to no place. So the first thing that's going to have to happen if we're going to make progress on this is we're not going to make any progress on climate change until citizens and countries literally force their governments to go back to the bargaining table and sit there and bargain until there is an agreement on mutually, mutually agreed to binding reductions that are effective enough to actually address the problem. And when I say that it says well we're so far from that. How is that going to be accomplished? We're farther from that in the United States than any place else. So you don't have to tell me that. But we're not going to make it if we don't do that. So in terms of prioritizing the things that are important certainly that would deserve priority. Here's why this treaty is both important and necessary. Something like this. A price on carbon evens the playing field for renewables, technologies that increase energy efficiency and energy conservation. The zero price on carbon emissions plus generous subsidies for fossil fuel industries have long tilted the playing field strongly in the wrong direction. Making it terribly difficult for our clean industries of the future to compete in the marketplace. An international treaty requiring countries with greatest responsibility and capability to reduce emissions would force their governments to pass domestic legislation that puts a price on carbon or else pay a very high penalty. I just do not believe without that incentive in place that we can successfully fight for kind of domestic green new deal policies that are going to be necessary. What do we know about domestic policies? I'll be very brief here. Well in the U.S. we know what a good domestic environmental climate change policy would look like and what a bad one would. We had a bad piece of domestic legislation looks like the Waxman, Markley, American Clean Energy and Security Act. And the fact that it didn't pass maybe was a godsend. It was one of those it would make matters. It would improve things no more than it was making matters worse. We also at the same time had a very good piece of domestic legislation. It was called the Cantwell Collins Carbon Limits and Energy for American Renewal Act or the Clear Act. Unfortunately that was the bill that the Democratic leadership of the Senate refused to even bring out of committee and debate. And it was the other bill that was debated and narrowly defeated. What a good piece of domestic legislation looks like is a tax on carbon, a domestic tax on carbon or you can do a cap and trade program. If you do cap and trade it's got to be auction the permits. Do not give them away for free. That is absolutely key. If you do that then you can take care of the other thing that not only is fair but is the only way you're going to get political support for the legislation. With that carbon tax, since the carbon tax is going to fall more heavily on middle and low income people, you have to use that tax to basically compensate them for what it's going to cost them. Or else they will not support it and you will not be able to build political support for it. But you can do that. When you collect the tax you can basically rectify the sort of inequality in the incidence of the tax. And you can do the same thing with cap and trade if you auction the permits off so you have revenues to use to compensate people who shouldn't have been forced to bear the brunt of the policy. If you don't auction those permits off you have no way to lessen the pain of the middle income and low income people that are disproportionately going to be hurt by putting a price on carbon. So we know what it is that's needed. We know what the policy looks like. We know how the policy has to be designed so that it's fair and has a chance of getting reasonable political support. There's another piece of good news. This is a study done by the Political Economy Research Institute, PERI. It's the University of Massachusetts at Amherst. It's a really good economic think tank. It's got a great website. They do fabulous studies. You should become familiar with it. They did a study and said, well, if we increase federal spending by one million dollars on different forms of energy creation or conservation, how many jobs will we get depending on how we do it? And if you look at that chart, there's a very obvious conclusion. If you want the most jobs for your increase in federal spending, for a million dollar increase in federal spending, go green. So it's not only that fiscal stimulus will create jobs, the same amount of fiscal stimulus will create roughly twice as many jobs if the fiscal stimulus is spending on a green new deal. Moving us in the direction of marching from fossil fuel stand to renew conservice stand. Now, back to Scandinavia. The real key to orchestrating a green new deal is to minimize the transition costs. Now, right now, that's easier to solve because of the high level of unemployment. Nonetheless, in the United States right now, there are roughly 3.5 million people employed either directly or indirectly by fossil fuel industries. And this, of course, is going to cost them their jobs. The name of the policy to minimize the transition costs and share them fairly whenever we shift productive priorities is an economic conversion program. I live in a country that has never understood the benefits of economic conversion programs. That's why the workers and the unions in all of our industries fight tooth and nail for high taxes on imports into the country of goods that they produce. Because they know that if they lose their jobs, they are going to suffer the entire burden of the transition costs. The unemployment insurance is very meager. The retraining programs are practically non-existence. There's no benefits for relocation to places where the new jobs are. We don't do that. Well, Scandinavian social democracy, the welfare state, the Scandinavian model. You were the ones that understood the importance of doing that and you did it better than anybody else did. Or at least you used to. Well, that kind of thing is clearly going to be necessary if we want to have the right kind of, if we want to establish the political conditions that are going to allow this to happen. So the truth is that the big problems to be solved are really not economic problems. There's no economic problem here that hasn't been solved. They're political. How can we forge a political alliance powerful enough to basically defeat the fossil fuel lobby and break through national political gridlock on energy policy before it's too late? How can we defeat the financial industry lobby and prioritize bailing out the unemployed instead of Wall Street banks? That's what we have to do. In the end, we can't give up on national policy any more than we can afford to give up on fighting for an effective and fair international climate treaty. We've got to fight for domestic climate policy as well as an international climate treaty. Just as we won't make it without a good international treaty, at some point we will need a big national push for a Green New Deal. Or we won't make the transition in time. My own belief is that the countries who will rule the world by centuries end, if there is an end worth living in, will be those who master the exciting new technologies of renewed conservice stands soonest and best. And anybody who does not relish the prospect of their children or grandchildren living in a country that is an economic has been, should do everything in their power to promote a Green New Deal. Thank you very much.