As recently as a year ago it was considered heresy to suggest economic growth would not soon resume. Now, however, as The Big Engine That Couldn’t has faltered for several years, it is becoming increasingly clear the economy is running off the tracks. Both investors and the public are beginning to realize the long-revered goal of endless economic growth […]
Recall one version of the peaker story – peak oil as a repository of hope. This is the take in which, despairing of other avenues to rapid, large-scale changes, we look to peak oil to at least save us from the more extreme forms of climate disaster. The idea is that, as we burn our […]
Economist James Hamilton crunched some numbers and found that the current recession can largely be explained by sub-prime mortgages financial derivatives imploding credit markets insolvent banks winged monkeys the surge in oil prices in 2007 and 2008. It’s a result so unexpected that even Hamilton claims not to believe it entirely, but perhaps we shouldn’t […]
Among the weird memes that has grown up around the cap-and-trade debate, one of the most puzzling to me is that C&T is fatally flawed because it is complex. Americans don’t “get it.” They’ll only support a climate policy that is so “simple and transparent” that you can explain it on a napkin. (Like a […]
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A lot of energy is expended on Grist showing that good environmental policy is good economic policy -- to show that green pays. But it is just as important to show the same thing from the other direction. Economic policy will only pay if includes strong environmental features. Let's look at the current responses to our economic crisis from that perspective. We'll start by comparing what we are doing as compared to what we should be doing, and then move on to explaining the difference.
Let's start with the economic stimulus package that was just passed. It is not nearly big enough. It was structured on fighting a smaller unemployment rate than we already face, let alone the rate at which unemployment will peak. Those radical leftists in the World Bank are noticing that the recession is worldwide, which would indicate a deeper recession than Obama's stimulus was intended to fight. Though you would not know it from the corporate media, quite a number of respected economists predicted from the beginning that this was too small a stimulus. Even intelligent conservatives are starting to say we need a second, bigger stimulus.
Where to put the money from a second stimulus? Keeping public transit going, which otherwise loses subsidy revenue during downturns, gives a double return in not only saving jobs and demand that would otherwise collapse, but also reducing oil use, greenhouse gas emissions, and traffic congestion. In general, making up for losses in state and local revenues reduces pro-cyclical job losses that otherwise make a recession worse.
But we have good reason to consider long-term investment in infrastructure as well. Much necessary infrastructure spending is "shovel-ready." For example, suppose we decide to put $450 billion into upgrading our freight rail system to move 85 percent of long-haul trucking miles to rail? We can invest immediately into the planning this will entail. And we can stockpile parts and materials we know this upgrade will require. And we can implement already proposed unfunded short-term projects that will be needed components of such an upgrade: new switch yards, new freight yards, and various other log-jam breaking proposals.
It already seems so long ago, when, like you, we anxious eco-Brits spent a tense few minutes on Jan. 20 deconstructing Obama's inauguration speech.
There was plenty to cheer: "The ways we use energy strengthen our adversaries and threaten our planet." (Well spotted!) "Without a watchful eye, the market can spin out of control." (Bloody good point!) "We will restore science to its rightful place." (Yes! Stuff the creationist nutters!) "The success of our economy always depended not just on the size of our Gross Domestic Product, but on the reach of our prosperity; on our ability to extend opportunity to every willing heart." (Ooh! A coded death knell for growth-driven economics!)
And some food for thought: "Our goods and services no less needed than they were last week or last month or last year." (Hmm. Not much then in the case of GM, Ford, et al?) "We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together." (Not much poetry in suburban light-rail systems, I guess, but can you at least do the roads last?) "We will harness the sun and the winds and the soil to fuel our cars" (and trains!). "We will not apologize for our way of life." (That's fine, but don't let it happen again!)
By the end, our mood was rather chipper. Swept along by the euphoria, we felt the difference in ourselves. Even those who remembered the morning of May 2, 1997, when Tony Blair surfed a similar wave into power in the U.K. -- and the disappointment that seeped in over the ensuing years as he turned into Dubya's best mate and a safe pair of hands for the same old elites -- couldn't quite keep the spring out of our step.
Three weeks on, some observers here have already decided the honeymoon -- if there ever was one -- is over, and President Barack Obama, up to his neck in the proverbial, is going to need an awful lot of substance to go with his undeniable style if he is to avoid becoming America's Tony Blair.
Innovation -- a business model we can believe in.
McKinstry Company is perhaps the most dynamic and interesting company in the Northwest right now. They're earning high-profile attention from President Barack Obama. And even in this economy, they're adding jobs and expanding.
Check it out:
SEATTLE -- Mayor Greg Nickels today presented McKinstry Company with a permit and approved plans for an expansion of its Georgetown facility in south Seattle. The company expects to hire an additional 500 people, a combination of professional and union craftsman, in the next two to three years.
But how can anyone prosper right now?
Well, a big part of the reason for McKinstry's success is that they get it. They get that the current energy economy is broken. They get that we're facing a climate crisis of alarming severity. And they get that a state like Washington shoveled $16 billion out the door in 2008 to pay for fossil-fuel imports.
Consider what David Allen of McKinstry Company said yesterday to the Washington legislature. In testimony before the House Ecology and Parks Committee, he fielded a hostile question about some businesses objecting to the governor's cap-and-invest bill. (Video is here, starting at about 43:15.)
Allen said flatly that McKinstry will be regulated. But he doesn't fear putting a cap on climate pollution.
Allen: "We need to suck it up and get innovative."
As is often the case, The New York Times serves as a good example of the mistaken assumptions underlying conventional wisdom. In his Sunday Magazine cover story, "The Big Fix," Times economic columnist David Leonhardt combines many of the misconceptions surrounding the idea of "green jobs." As I fretted in a previous post, some writers, including Leonhardt, seem to be setting up some sort of cosmic battle between green jobs, cap-and-trade, and economic growth:
Of the $700 billion we spend each year on energy, more than half stays inside this country. It goes to coal companies or utilities here, not to Iran or Russia. If we begin to use less electricity, those utilities will cut jobs. Just as important, the current, relatively low price of energy allows other companies -- manufacturers, retailers, even white-collar enterprises -- to sell all sorts of things at a profit. Raising that cost would raise the cost of almost everything that businesses do. Some projects that would have been profitable to Boeing, Kroger or Microsoft in the current economy no longer will be. Jobs that would otherwise have been created won't be. As Rob Stavins, a leading environmental economist, says, "Green jobs will, to some degree, displace other jobs."
Later in the article, he kinda sorta argues that this might all be necessary in the long-term .. but first, let's deconstruct his arguments.
Cross-posted at the NDN Blog.
As the economic recovery and investment package backed by the administration works its way through Congress, and more evidence about the nature of this recession surfaces, an interesting exercise is to think about how we want to emerge once it is over. In the midst of current economic turmoil, it may seem difficult to imagine the post-recovery world, let alone accurately predict it. Nonetheless, starting with an outcome and working backwards to a policy prescription is far preferable to policy based purely on the passions of the moment. Following are my thoughts on the world I would like to see in 2012 and the resulting implications for current policy.