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European Green Deal, Energy Transition and Greenflation Paradox under Austrian Economics Analysis

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  • Martin García-Vaquero

    (Department of Business Administration and Analytics, European University of Madrid, c/Tajo, s/n, 28670 Villaviciosa de Odón, Spain
    Department of Business Administration, University Francisco de Vitoria, 28223 Pozuelo de Alarcón, Spain)

  • Frank Daumann

    (Faculty of Social and Behavioural Sciences, Friedrich Schiller University Jena, Seidelstrasse 20, D-07749 Jena, Germany)

  • Antonio Sánchez-Bayón

    (Department of Applied Economics, Economics and Business School, Rey Juan Carlos University, 28033 Madrid, Spain)

Abstract

Greenflation or inflation for green energy transition in Europe becomes a structural problem of new scarcity and poverty, under Austrian Economics analysis. The current European public agenda on the Green Deal and its fiscal and monetary policies are closer to coercive central planning, against the markets, economic calculus, and Mises’ theorem. In this paper, attention is paid to the green financial bubble and the European greenflation paradox: in order to achieve greater future social welfare, due to a looming climate risk, present wellbeing and wealth is being reduced, causing a real and ongoing risk of social impoverishment (to promote the SGD 13 on climate action, it is violated by SGD 1–3 on poverty and hunger and 7–12 on affordable energy, economic growth, sustainable communities, and production). According to the European Union data, the relations are explained between green transition and public policies (emissions, tax, debt, credit boom, etc.), GDP variations (real–nominal), and the increase of inflation and poverty. As many emissions are reduced, there is a decrease of GDP (once deflated) and GDP per capita, evidencing social deflation, which in turn means more widespread poverty and a reduction of the middle-class. Also, there is a risk of a green-bubble, as in the Great Recession of 2008 (but this time supported by the European Union) and possible stagflation (close to the 1970s). To analyze this problem generated by mainstream economics (econometric and normative interventionism), this research offers theoretical and methodological frameworks of mainline economics (positive explanations based on principles and empirical illustrations for complex social phenomena), especially the Austrian Economics and the New-Institutional Schools (Law and Economics, Public Choice, and Comparative Constitutional Economics).

Suggested Citation

  • Martin García-Vaquero & Frank Daumann & Antonio Sánchez-Bayón, 2024. "European Green Deal, Energy Transition and Greenflation Paradox under Austrian Economics Analysis," Energies, MDPI, vol. 17(15), pages 1-16, July.
    • Handle: RePEc:gam:jeners:v:17:y:2024:i:15:p:3783-:d:1447325
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    References listed on IDEAS

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    1. Krzysztof Piotr Pawłowski & Gabriela Sołtysiak, 2024. "The Potential Impact of the European Green Deal on Farm Production in Poland," Sustainability, MDPI, vol. 16(24), pages 1-23, December.

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