Clearly the economy is a mess. Without retooling our entire banking system, the most agreed upon method for reviving it is via massive government spending to stimulate job growth, pump up consumer demand, and thaw the nation’s credit–essentially turning our downward spiral back towards its former upward orientation.
But, putting money in areas of the economy that would otherwise fail on their own seems not only against the very tenets of free market capitalism but also just plain stupid. A perfect example is aid to our failing auto industry. Why should it be encouraged to continue the inept business model we’ve seen from it over the past decades? While it is certainly the government’s place to ensure the economy as a whole doesn’t tank, it should not focus on propping up the failed strategies of yesteryear, just because they “can’t be allowed to fail.” Progress requires some creative destruction: a reallocation of our resources. We should not fear change; we should embrace it.
Enter: climate change. Our environmental problems are unique in that they are the result of market failures: the cost of doing business as usual. The reason it is so difficult to let the free market fix our unsustainable practices on its own is that such costs are incurred by neither business nor consumer. Rather, we export the negative environmental impact of our activities to the poor in developing nations, to the plants and animals in natural habitats around the planet, and to future generations, whose ability to live in this world will be greatly impaired if we continue with our current lifestyles. As self-interest is the motivator of all free market action, few firms are actually motivated to increase their operating costs in order to lessen this impact only for the sake of someone or something else. It simply isn’t profitable.
Look at petroleum, for example. While every oil company knows that use of its product ultimately hurts our children and grandchildren (less available energy, more polluted air, increased global warming), each gladly sacrifices long-term benefits for short-term gain. If all of this sounds eerily similar to the financial crisis, that’s because it is.
As Glenn Prickett, senior vice president of Conservation International says, “We’re living beyond our ecological means and overdrawing our natural assets.” Remove the italicized words, and he’s just described Wall Street’s strategy for the last ten years. The difference, as Prickett astutely points out, is that “Mother Nature doesn’t do bailouts.”
Herein lies the reason we must rely on government intervention to shift demand away from this destructive economy to its sustainable alternative in order to stymie an ecological crash similar to the one our economy is experiencing right now. We need to fix the old economy by creating a green economy based on renewable resources, closed-loop design, clean energy, zero waste, and sustainable development. Current massive stimulus spending is an ample opportunity for our beleaguered president to kill two birds with one stone.
We need to stimulate a “green collar economy” as civil-rights activist and Obama advisor Van Jones would say–one in which the unemployment gap is closed by employing both skilled and unskilled workers to fix our environmental problems. For instance, a local, organic food economy requires significantly more manpower than our current fossil fuel-based agribusiness system. Elsewhere, we need people to not only design and engineer fancy solar panels, electromagnetic wave power collectors, and the like but also to build and install them. Clearly the sustainability movement is as much a movement of ethics and philosophy as it is a movement of innovators and hard workers; it is a movement of true American values.
Consider two examples of how federal stimulus could both spur the greening of America while simultaneously fixing its economy.
The first example would be for the government to put solar panels on as many schools in the United States where they make sense (by this, I mean that some locations just aren’t conducive to solar panels at all). This would create an upsurge of green jobs as well as clean, renewable energy production. Best of all, alleviating school districts of the initial burden of astronomical upfront costs would translate into immediate savings, which would directly augment educational programs’ budgets. The San Mateo Union High School District alone spends about $1.2 million per year on electricity. Solar panels would put most of this money back into cash-strapped classroom programs, such as the seven-period day.
The second example of stimulating the economy with green (pun intended) is to initiate a “cash for clunkers” program, a phrase coined by Alan Blinder in a New York Times column last year in describing a program that I have altered slightly here. Essentially, the government would target low-income owners of gas-guzzling, highly polluting cars and give them a sizable cash rebate to trade them in in order to purchase an American-made hybrid, electric, or fuel-cell vehicle. This would reduce our collective fuel consumption, improve air quality, lessen our automotive greenhouse gas emissions, and give a huge shot in the arm to the part of the American auto industry that we want to see developed most. Boeing did this on its own a few years back by developing the hugely energy-efficient Dreamliner, a plane that has now rocketed the company past its foreign competitors by selling itself out until 2018 while saving airlines copious fuel and money.
There are countless other creative methods for building a green economy while reversing this economic downturn. The point is that both of these monumental problems could collectively be a great blessing in a really good disguise. Just as the Great Depression launched decades of prosperity–albeit unsustainable–, our recession must beget an era of sustainability: a catharsis of the old ways and a birth of the new. Indeed, the lining in the clouds of this recession is not silver; it is most definitely green.
Jason -- well thought out and written. One secondary benefit of the programs you suggest might be an increase in the economies of scale in production of solar panels and energy-efficient cars. This would help to lower unit costs and eventually the price to consumers.
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