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What Alexandria Ocasio-Cortez Could Learn From How Israel Copes With Earthquakes

Lesson 1: No matter how urgent the threat of climate change, even bigger government is not the one and only solution

David Rosenberg
David Rosenberg
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Alexandria Ocasio-Cortez
Alexandria Ocasio-Cortez Credit: \ JOSHUA ROBERTS/ REUTERS
David Rosenberg
David Rosenberg

As environmental disasters go, the threat of a major earthquake striking Israel is small change compared to the threat of global climate change.

Fortunately for Israel, there are no earthquake deniers to frustrate efforts to cope with the problem. Better still, preparing for the inevitable tremor requires far fewer resources than reversing global warming. Apart from upgrading emergency services and discouraging fracking, the main challenge is to make sure that buildings are earthquake-resistant.

That should be easy to do – except that it isn’t. And that should be a lesson for advocates of a Green New Deal, the idea that governments must engineer a transition from fossil fuels to clean, renewable energy to rescue the planet from the effects of climate change.

The evidence of how difficult it is to do that kind of policy engineering came this week with an announcement by Israel’s National Planning Administration that it will be ending its Tama 38 program, the main policy tool the government has used to earthquake-proof residential buildings. After nearly 15 years, officials came to the conclusion that Tama 38 wasn’t achieving what it was supposed to.

By comparison with the Green New Deal’s ambitious agenda – which not only calls for a massive environmental undertaking but also universal health care, guaranteed jobs and a laundry list of other initiatives favored by the left – Tama 38 is a modest affair. It also has had the advantage of working with the market, rather than bludgeoning it.

The idea was to motivate contractors and apartment owners to undertake quake-proofing. The process was designed to increase the area of the apartments while making them resilient to quakes; the contractor was entitled to build an extra floor on top of the building and sell the apartments. If that wasn’t enough, there were also tax breaks.

But what government planners missed when they designed the program was how those incentives would play out.

As it turned out, the incentives worked in places like Tel Aviv where land is scarce and prices are high, but the threat of earthquakes is relatively low.

Where the quake danger is greatest, mainly in areas nearest the Jordan Valley, land is abundant and prices are low. There was no business case for adding floors to apartment buildings when you can just put up a new building next door.

The result was that quake-prone places like Tiberias, Safed and Beit She'an saw almost no Tama 38 projects, while central Israel was inundated with them. In fact, Tama 38 became a headache for municipalities because neighborhood populations grew without a commensurate increase in local services or infrastructure.

And herein lies the problem in coping with future environmental threats, even ones like earthquakes where there’s no political controversy. The market has difficulty responding to the threat through its normal mechanism of price incentives, but governments can’t anticipate the impact of big budget, comprehensive solutions they want to impose.

Ask any Israeli and he or she will express concern about the earthquake threat. There’s a long and documented history of them in the region – they happen on a small scale every day, and we’re centuries overdue for another big one. But as anyone in the real estate industry will tell you, the price for a quake-proof home is no higher than for one that is not.

The evidence for climate change is there as well, with record temperatures in France and flooding in the U.S. Midwest. But the market’s ability to grapple with these challenges is less than perfect. High-tech companies can devise energy-saving solutions, but they have to compete these days with oil, whose price has nothing to do with the threat of climate change.

Governments can't take up the cudgel singe-handedly either, as U.S. Congresswoman Alexandria Ocasio-Cortez envisions in her version of the Green New Deal. Dealing with climate change is an excruciatingly complicated business. Even with the best experts in charge and reams of big data to help them make decisions, they're going to make a lot of multibillion-dollar flubs. The consequences of their good intentions, like those in Tama 38, are almost impossible to predict.

A building undergoing quake-proofingCredit: Olivier Fitoussi

Even Franklin Roosevelt’s New Deal, the inspiration for those demanding a massive government drive to address climate change, didn’t turn around the U.S. economy. It was World War II that created jobs and finally brought an end to the Great Depression.

It’s not that government is hopeless (after all, World War II is a testament to the state’s ability to organize the economy), but we should be extremely cautious in asking governments to solve problems.

This is all the more so in the case of climate change. Ocasio-Cortez and other Green New Dealers present their program as a win-win solution where we get a greener planet and at no cost to anyone but a few billionaires forced to pay their fair share of taxes.

To ensure that there are no losers, the plan calls for guaranteed jobs and universal health care. On paper that sounds like a perfect complement to the goal of reversing climate change. Coal miners are retrained to be solar power plant technicians, making sure there's an adequate representation of women and minorities in the program, even if there aren’t many women or minority coal miners.

But it means even more planning, more intervention and more big programs whose consequences no one can foresee. The climate change threat is big and real, but it won’t be solved by going at it with wide-eyed idealism and a sledgehammer.

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