What is the Green New Deal?

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What is the Green New Deal?


The word “green” seems to be everywhere these days.

That is probably because a priority policy goal of the Korean government is the so-called Green New Deal.

The government aims to create 960,000 new jobs by allocating a budget of 50 trillion won ($36.4 billion) over the next four years on green businesses.

As everyone knows by now, the word green is linked to the environment.


But what is the Green New Deal?

The term hearkens back to a sequence of economic and social programs that United States President Franklin Delano Roosevelt initiated in the 1930s when the country was in the middle of the Great Depression.

Roosevelt’s New Deal was aimed at giving work to the unemployed, reforming businesses and financial practices, and reviving the economy.

At the time, the unfettered market dominated economic life in the United States. The government didn’t intervene in the market and thus there was no social safety net as we know it for poor people.

But as the number of people going hungry increased during this anguished period, the Roosevelt administration came up with the New Deal, which was a series of initiatives and programs that would fundamentally change the situation.

One of the New Deal projects was to construct dams on the Tennessee River in order to create jobs.

Large-scale construction projects helped create large numbers of new jobs.

Today the global economy is going through unprecedented upheaval not seen since the Great Depression.

When the economy worsens, people try to save as much money as possible by cutting their personal spending. People don’t have as much spare cash as before, and many are worried about job security, unsure whether or not they are going to have a job by the end of the month. Or they worry that their business will shut down because of dropping sales.

As sales go down, companies reduce production and are reluctant to hire workers. When the situation gets worse, wages fall, and in the worst-case scenario, workers get laid off.

Inevitably, consumption shrinks as incomes disappear and the economy deteriorates even more.

To respond to this situation, the government has to create and implement policy measures for rescuing distressed people and the economy. This is why Korea and other nations like the United States and Japan have decided to adopt “green” New Deal policies.

Fortunately for Korea, the country’s national debt is smaller than that of other countries, leaving considerable room for national spending on the New Deal projects. But a country cannot spend money indefinitely, because pouring the national budget into the market will lower the value of the currency and cause inflation.

That means the government has to maximize profits with a limited budget. The government’s Green New Deal means the administration forecasts that green business sectors will become the new economic growth engine.

In the U.S., President Barack Obama has pledged to invest $150 billion on clean energy sources over the next decade and create 5 million new jobs.

Japan, too, is getting into a similar project, with plans to expand its “green” industries to 100 trillion yen by 2015 and hire 2.2 million people in related fields.

The Korean government’s Green New Deal consists of nine core and 27 related projects. One of them centers on restoring four rivers throughout the country: the Han, Nakdong, Geum and Yeongsan.

In addition, the government plans to build an energy-efficient economic structure, such as energy-saving and resource-recycling projects.

There are also plans to build 2 million solar-powered homes by the end of 2018.

The government plans to increase its investment in low carbon transportation, such as railways and bicycle paths. Bicycle paths spanning 3,114 kilometers (1,934 miles) will be established to promote use of eco-friendly transport.

You might wonder how these so-called green industries can create money. Well, you already know that crude oil costs soared last year and that more recently prices have plunged as the worsening global economy reduced demand.

But there is a good chance that energy prices will rebound when the economy recovers because there is a limited supply of natural fuel sources such as oil and coal.

So, if we can develop more efficient alternative energies such as solar and wind power, and create less expensive cars, heating devices and lighting, we can save money in lower fuel demand as well as reduce pollution.

A country can also make money by selling carbon dioxide emissions credits to countries that have a greater need. The World Bank estimates that global trade volume of carbon dioxide emissions credit will amount to $150 billion next year.

Likewise, in the water sector, Korea is expected to see an annual water shortage of 800 million tons two years from now.

As the country has been seeing droughts in seasons other than summer, it needs to collect water during the monsoon season and store it in dams.

The water shortage problem has intensified over the past 10 years, partly because so few dams have been built during this period.

Another way to generate money is through ecotourism. If people earn more money, they are more likely to visit forests and river areas for recreational activities.

A great way to harness people’s desire to visit rural areas is to plant more trees and create a more eco-friendly environment.

Some argue that the government should be more cautious about implementing green policies. Local governments have warned that overlapping projects and newly established dams and banks could destroy the ecosystem.

Some people are pointing out that only 98,000 of the 960,000 new jobs projected will go to young people. And of these jobs, 90 percent stem from construction and simple manufacturing, which means well-educated young job seekers may not benefit.

In response, the government has said it will announce additional projects in the near future, a move that it hopes will convince naysayers that its Green New Deal is the real deal.

By Kim Sun-ha Staff Reporter/ Seo Ji-eun JoongAng Ilbo [spring@joongang.co.kr]
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