If you thought Ryan's fiscal policy was bad, wait til you see his monetary policy

"Sound money", raising interest rates and Ayn Rand: he's got it all.

Now that Paul Ryan is coming under the sort of scrutiny which a member of the House of Representatives never gets – even a rising star saying all the right things – his reputation as a serious man with serious thoughts is falling apart.

Take the re-examination of his proposal, in 2008, to redefine the mandate of the Federal Reserve. Not problematic in itself; lots of people want to redefine the mandates of central banks. The most popular demand is insisting they switch from targeting low inflation to targeting nominal growth.

But Ryan wanted to change the Fed's mandate from its current dual requirement, to aim for low inflation and full employment, to one which only requires low inflation. He already clearly disapproves of fiscal stimulus, but it appears that he disapproves of monetary stimulus as well.

And in 2010, his explanation to Ezra Klein of how he would use monetary policy to help the economy was bizarre and plain wrong:

There’s a lot of capital parked out there, and we need to coax it out into the markets. I think literally that if we raised the federal funds rate by a point, it would help push money into the economy, as right now, the safest play is to stay with the federal money and federal paper.

As Mark Thoma puts it:

Basically, they are telling us that if a recession hits and they have their way, nothing will be done. Not a thing. No fiscal policy response (except perhaps austerity to make it worse), and no monetary response (except, if Ryan has his way, interest rate increases based upon a misunderstanding of how the economy works that would also make things worse).

Brad Plumer explains how the real heart of Ryan's monetary policy "isn’t quite a return to the long-abandoned gold standard, but it’s a roughly similar concept": anchoring the value of the dollar to a basket of commodities.

This is wingnut thinking, which Plumer argues can all be traced back to Ryan's love of Ayn Rand's terrible novel Atlas Shrugged:

In the passages that Ryan has highlighted, Rand’s characters lament that statists have destroyed all “objective standards” for currency by abandoning the gold standard and boosting the supply of paper money in order to assist the “looters and moochers.”

None of this is new; the writing was on the wall four years ago. But whereas proposing complicated-sounding economic measures is enough to get you a reputation of sorts in the House of Representative, it oughtn't be enough to maintain that reputation once you hit the big leagues. But Paul Krugman argues that the real reason for the Ryan pick is his uncanny ability to do just that:

Whence comes the Ryan reputation? As I said in my last post, it’s because many commentators want to tell a story about US politics that makes them feel and look good — a story in which both parties are equally at fault in our national stalemate, and in which said commentators stand above the fray. This story requires that there be good, honest, technically savvy conservative politicians, so that you can point to these politicians and say how much you admire them, even if you disagree with some of their ideas; after all, unless you lavish praise on some conservatives, you don’t come across as nobly even-handed.

And yet, implausibly, the Romney/Ryan ticket could, in the very short-term, be the best economic choice America has. Joe Weisenthal makes the case:

The biggest threat to the U.S. economy is the fiscal cliff. As Morgan Stanley's Adam Parker explained in a note today, there's a very plausible scenario where 5 percent of GDP is lopped off, and corporate profits get absolutely shredded. And this assumes that the debt ceiling is passed without creating a gigantic shock to the economy.

The best scenario for avoiding a fiscal cliff mess is to see Mitt Romney elected. As we argued back in early April, the surest way to get Republicans on board with ongoing deficits is for them to be the party in power again.

History seems to be pretty clear on one issue: Parties out of power favor austerity. Parties in power favor stimulus.

Weisenthal goes on to quote Josh Barro trying to guess Ryan's role in Romney's economic plan:

Conservatives are never fully going to trust Romney. If he comes to them with, say, economist Glenn Hubbard’s proposal to throw about a hundred billion taxpayer dollars at restructuring underwater home mortgages, they’re likely to resist.

But what if Vice President Paul Ryan makes the pitch? Won’t House Republicans be much more likely to conclude that mortgage bailouts actually are conservative?

I’m not suggesting that Ryan is going to throw conservatism entirely under the bus. Romney surely wants to do some things that Republicans in Congress will love and others they will be resistant to—only part of his economic plan is secret. So both sides of Ryan’s skill set will come into play.

In the end, even when a scenario is presented in which Ryan is actually good for the economy, it all comes back to his surface appeal. The man looks competent; he looks like a conservative, like someone who can be trusted, who has thought through his opinions, and hasn't based economic policy on a 55-year-old sci-fi novel.

He isn't, of course. But when's that ever stopped anyone?

Paul Ryan meets a baby. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty
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The rise of the green mayor – Sadiq Khan and the politics of clean energy

At an event at Tate Modern, Sadiq Khan pledged to clean up London's act.

On Thursday night, deep in the bowls of Tate Modern’s turbine hall, London Mayor Sadiq Khan renewed his promise to make the capital a world leader in clean energy and air. Yet his focus was as much on people as power plants – in particular, the need for local authorities to lead where central governments will not.

Khan was there to introduce the screening of a new documentary, From the Ashes, about the demise of the American coal industry. As he noted, Britain continues to battle against the legacy of fossil fuels: “In London today we burn very little coal but we are facing new air pollution challenges brought about for different reasons." 

At a time when the world's leaders are struggling to keep international agreements on climate change afloat, what can mayors do? Khan has pledged to buy only hybrid and zero-emissions buses from next year, and is working towards London becoming a zero carbon city.

Khan has, of course, also gained heroic status for being a bête noire of climate-change-denier-in-chief Donald Trump. On the US president's withdrawal from the Paris Agreement, Khan quipped: “If only he had withdrawn from Twitter.” He had more favourable things to say about the former mayor of New York and climate change activist Michael Bloomberg, who Khan said hailed from “the second greatest city in the world.”

Yet behind his humour was a serious point. Local authorities are having to pick up where both countries' central governments are leaving a void – in improving our air and supporting renewable technology and jobs. Most concerning of all, perhaps, is the way that interest groups representing business are slashing away at the regulations which protect public health, and claiming it as a virtue.

In the UK, documents leaked to Greenpeace’s energy desk show that a government-backed initiative considered proposals for reducing EU rules on fire-safety on the very day of the Grenfell Tower fire. The director of this Red Tape Initiative, Nick Tyrone, told the Guardian that these proposals were rejected. Yet government attempts to water down other EU regulations, such as the energy efficiency directive, still stand.

In America, this blame-game is even more highly charged. Republicans have sworn to replace what they describe as Obama’s “war on coal” with a war on regulation. “I am taking historic steps to lift the restrictions on American energy, to reverse government intrusion, and to cancel job-killing regulations,” Trump announced in March. While he has vowed “to promote clean air and clear water,” he has almost simultaneously signed an order to unravel the Clean Water Rule.

This rhetoric is hurting the very people it claims to protect: miners. From the Ashes shows the many ways that the industry harms wider public health, from water contamination, to air pollution. It also makes a strong case that the American coal industry is in terminal decline, regardless of possibile interventions from government or carbon capture.

Charities like Bloomberg can only do so much to pick up the pieces. The foundation, which helped fund the film, now not only helps support job training programs in coal communities after the Trump administration pulled their funding, but in recent weeks it also promised $15m to UN efforts to tackle climate change – again to help cover Trump's withdrawal from Paris Agreement. “I'm a bit worried about how many cards we're going to have to keep adding to the end of the film”, joked Antha Williams, a Bloomberg representative at the screening, with gallows humour.

Hope also lies with local governments and mayors. The publication of the mayor’s own environment strategy is coming “soon”. Speaking in panel discussion after the film, his deputy mayor for environment and energy, Shirley Rodrigues, described the move to a cleaner future as "an inevitable transition".

Confronting the troubled legacies of our fossil fuel past will not be easy. "We have our own experiences here of our coal mining communities being devastated by the closure of their mines," said Khan. But clean air begins with clean politics; maintaining old ways at the price of health is not one any government must pay. 

'From The Ashes' will premiere on National Geograhpic in the United Kingdom at 9pm on Tuesday, June 27th.

India Bourke is an environment writer and editorial assistant at the New Statesman.

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