From Manhattan Contrarians
Francis Menton
Perhaps few readers are old enough to remember China's “Great Leap Forward.” You have to be my age (73 years old – born in 1950), or close to it, to remember it from what you read about GLF at the time. The term “Great Leap Forward” refers to Mao Zedong's second five-year plan launched in 1958, which aimed to push China's economy from backwardness to modernization. This was not just any old centrally planned project, but a completely new approach designed by really smart people to correct the mistakes and failures the Soviet Union had encountered on the road to communism. This time, they were going to get central planning right.
Yesterday, the Biden administration launched a major new climate initiative, and its design bears some striking similarities to the Great Leap Forward. Since most readers probably don't know how the Great Leap Forward was conducted, I'll save that for the end of the article.
The Biden administration's new measures are billed as “community-driven solutions to reduce climate pollution across the United States.” EPA's press release is here. Nick Pope reported on the new initiative in this Daily Caller article, which was subsequently republished on Watts Up With That.
This new measure is just a small part of the vast economic waste caused by the pseudonymous Inflation Reduction Act, which provided trillions of dollars in subsidies for uneconomic projects. But the “community-driven” slogan here is reminiscent of the Great Leap Forward. The basic idea is that the new investments and technologies that transform our energy economy will come from the federal government's selection and subsidies of various projects by state and local governments (also known as “communities”). Information from the EPA:
Today, July 22nd. . . The U.S. Environmental Protection Agency announced the selection of recipients of more than $4.3 billion in climate pollution reduction grants to implement community-driven solutions to address the climate crisis. . . . The grants will fund projects that support the deployment of technologies and programs to reduce greenhouse gases and other harmful pollution nationwide. . . . Together, these selected projects will implement ambitious climate pollution reduction measures designed by state, tribal and local governments that will achieve significant cumulative greenhouse gas emissions reductions by 2030 and beyond.
Enough with the outdated thinking that the way to build an efficient and reliable energy system is through profit-driven businesses competing against each other to find the most cost-effective solutions. The new idea is that local governments (aka “communities”) manage the economy with substantial funding guidance and support from the federal government. Here are quotes from John Podesta, the Biden administration’s “climate czar”:
“President Biden’s Climate Pollution Reduction Grants put local governments in the driver’s seat to develop climate solutions that work for their communities.”
Pope gave some examples of the types of projects that will receive funding:
The projects include the construction of electric vehicle (EV) charging stations, funding to help local governments accelerate green energy site selection and plans to increase the adoption of heat pumps.
What all these projects have in common is that they are not economical and will never be adopted by people of their own choosing with their own money. Therefore, enforcement must come through federal funds and local government mandates.
Compare this vision to China’s Great Leap Forward. A brief history of the GLF can be found at the Asian Studies Association. The basic idea is that communes, each with about 5,500 households, will be formed to become the main economic units, and then dictate from the top what businesses to develop:
sports hole [Mao’s] The peculiar faith of China's pastoral masses – now no longer bound by a skeptical intelligentsia – to overcome any obstacles to a communist utopia through solidarity, physical labor and sheer force of will. In the final stage of collectivization, communes were formed – each with about 5,500 households. . . .
In the classic central planning approach, the choice of business to engage in is based on utopian ideological visions rather than economic realities. The popular idea at the time was that a strong modern economy produced large amounts of steel, and therefore producing large amounts of steel was proof of success. Thus, the most famous example of GLF's economic development folly is that every household has to build its own furnace to make steel:
One of the most infamous innovations of the Great Leap Forward involved the Industrial Revolution in the countryside, where farmers built millions of furnaces in their backyards and then divided their time between tending crops and smelting steel.
This quickly led to numerous unintended consequences. example:
Collecting fuel to fuel all these furnaces has led to the disappearance of at least 10% of China's forests. . . . Everyone contributed iron tools, including tools, utensils, pans, doorknobs, shovels, window frames and other everyday items, instead of mining the ore to be smelted, while children scoured the ground for iron nails and other scraps. . . . [T]His campaign essentially turned utilitarian items into useless hunks of pig iron that could only be used to clog rail yards. . . .
The economy collapsed as labor was diverted from productive to unproductive uses. It only took about a year:
After the 1959 harvest, hunger became a widespread problem. . . As rural grain reserves dwindled, by the summer of 1960 farmers began dying in droves. Keep flies away. . . . Estimates of the number of deaths directly related to the famine range from a minimum of 23 million to a maximum of 55 million, but the most commonly cited figure is 30 million.
The good news is that Biden's latest plan costs $4.3 billion — a lot, but still not much more than the rounding error in the federal budget. The entire Inflation Reduction Act – touted as $1.5 trillion, but many estimate more like $2-3 trillion – is not a rounding error. Investing these funds in uneconomic and wealth-destroying projects could have disastrous consequences. I predict we will escape the fate of China in the 1950s, but we won't know for sure until climate madness is defeated.
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