"Going green" is the current political wisdom, and almost every politician in America has tentatively embraced it, including most notably President Obama who has often spoke optimistically about "green shoots" and a "green New Deal". But is going green enough of an answer to a moribund economy stuck in a jobless recovery that every day runs head-on into the wall of China's unfair trade practices? In most ways, the answer is "not sufficiently", and on several fronts "going green" has yet to work out as promised.
First of all, everyone needs to be much more realistic about the potential associated with "going green", starting with observing that America's current green economy identifies only 750,000 green jobs in the country today. This is but 750,000 jobs out of a total U.S. workforce of 154 million, of which fully 30 million American workers are today effectively unemployed.
Looking ahead, according to the Global Climate Network, the deployment of all new green energy technologies, such as wind and solar power, has the potential to create worldwide only 20 million new jobs by 2030. And since this figure comes from the Global Climate Network, which has a strong interest in emphasizing the potential of green jobs, even this figure may be overstated.
Because the global economic downturn has hit the aging developed world far harder than fast-growing emerging markets, it is no surprise that these countries -- the U.S., Germany and the Scandinavian countries most notably -- have been focusing attention on the job-creating potential of green technology. Yet we know that China, which President Obama identified in his inaugural address as already the "renewable energy superpower", is on a pell-mell course to capture way more than its share of these jobs. And with only 20 million new green jobs being created globally over the next 20 years, when one country captures more than its 'share' of them, they are gone forever.
So it is that with our own need to quickly create 22 million jobs in order to get our economy back near full employment, green jobs are nowhere near the solution for our overall economy that the administration and many in Congress are positing.
This said, there are five things that the administration and Congress should be doing to ensure that the U.S. gets at least its fair share of the new global green jobs, initiatives that run hand-in hand with the steps needed to turn around our overall U.S. economy. For investments in green technologies are little different than the needed investments in traditional infrastructure -- they're all part of a tapestry of reestablishing the global competitiveness of the United States, getting our workforce back to near full employment with fair wages and benefits, and dramatically reducing our massive trade deficit which is every day stealing the future of our children.
The building of new airports and high-speed rail, the construction of a national 'smart' electric transmission grid, deploying broadband to all parts of the country, and developing wind and solar alternatives to carbon-emitting power sources are simply parts of that tapestry.
The five initiatives needed to put America's train on the green economy track are:
Let's take these in order.
First, as the non-partisan GAO and the inspector general of the Department of Energy continue to note, the U.S. government manifests a stunning inability to invest quickly and efficiently in anything green or otherwise. We are confounded by our utter failure to declare a "national economic emergency" in order to streamline the permitting and approval processes, especially the EISs, that most new infrastructure projects must navigate in order to go forward. By contrast, the other major developed countries - and China - are far better both at bringing government and the private sector together to advance the green economy.
Second, our unwillingness to date to establish a National Infrastructure Bank (or NIB) is a major obstacle. Long before this Great Recession began, we knew that thoughtful investments in all types of infrastructure, including things green, were one of the top two ways to create lots of jobs and help restore America's global competitiveness, provided the spending was coupled with buy-domestic requirements. (The other way is employment programs for the roughly 5 million unemployed out-of-school youth.) The specifics of this are simple: each $1 billion spent on infrastructure creates on average 25,000 new jobs, and when the investments are for high-tech, energy efficient green things, then the new-jobs figure is on the order of 45,000 per $1 billion spent. An NIB would immediately increase many-fold, and at much lower costs, the infrastructure investment capacities of our federal, state and local governments. It would also make such investments less dependent on annual appropriations; and give these needed investments beneficial access to the private capital markets, large fiduciary investors, and foreign central banks.
Third, there is now clear evidence that 90% of China's domination in high-tech manufactured goods vis-à-vis the U.S. is due not to its relatively low labor costs but rather to its subsidies related to plant sitings, financing, taxes and currency and to its extremely low environmental standards. Only responsible trade agreement enforcement on our part can turn imbalances of this sort around.
Fourth, we need to adopt our own buy-domestic requirements related to all federal government procurement. This will be a vital stimulus to our domestic efforts to participate in the 'green' economy, not to mention the salutary effects it will have on our economy in general. Our program should generally mirror the buy-domestic programs of our major trading partners and last as long. Foolishly, America is almost alone among the major nations in not having such a program.
As an adjunct to this Make It In America initiative, we must also immediately go after China's "Indigenous Innovation Production Accreditation Program", which limits all Chinese central and provincial government procurement to companies that have "indigenous" -- or Chinese -- "innovation". Embedded in this Program are China's two so-called 'trade advantages', namely, (i) its regulations to block non-Chinese firms from selling their products to Chinese government agencies and (ii) its rules that force Western companies to give up technological secrets in exchange for access to China's markets, which it uses every day to further advance its position as the globe's "renewable energy superpower."
Fifth, the administration and Congress need to tell us soon how far they believe new energy legislation should go in addressing (i) capping emissions of heat-trapping gasses from specific sources, (ii) cutting down on drilling, (iii) establishing either a cap-and-trade system or an alternative, and (iv) mandating the use of renewable fuels. Without certainty soon as to what will be in our nation's eventual Energy Bill, and as to the green economy incentives which it must contain, the U.S. will inevitably watch most of those 20 million new globe-wide green jobs end up overseas and not on our shores. The extent and vibrancy of any nation's green economy flow out of energy reform -- a green economy will never be meaningful otherwise.
Going green is pretty obviously not going to create millions of new jobs in its own right. The real upside will be if going green becomes, in large part, the impetus we need to reorder the overall U.S. economy to include our finally having both an all-of-government manufacturing & industrial policy and 'fair trade' instead of the largely-unfair 'free trade' system we have now.
Back in the '80s, Robert Reich penned a provocative essay entitled "Who is US?" Reich asked then, "Is 'US' American companies making things in America, or is 'US' multinational corporations based in the U.S. but with much/most of their business and production abroad?" This particular question is as important today as it was then, but now we must also ask several others:
Is US the only major developed country without a comprehensive national clean energy economic development policy that ensures the creation of a new generation of high-quality green jobs?
Is US the only country which will largely lose out on the green jobs associated with domestically manufactured renewable energy components and leave itself only with the jobs from renewable energy construction, installation, operation and maintenance?
Is US the only country that doesn't offer incentives to persuade clean energy companies to set up facilities at home?
Is US the only major developed country without a local content -- "Make It In America" - requirement?
For me, an American government that is truly concerned about US - with "US" being the citizens of this country - will forcefully undertake the kinds of green and overall jobs initiatives that will further the near and long-term well-being of the American people. Let's hope the Obama administration acknowledges this soon, goes beyond its current rhetoric, and, along with Congress, proceeds to energetically implement this agenda over the next two years.
Leo Hindery, Jr. is Chairman of the US Economy/Smart Globalization Initiative at the New America Foundation and a member of the Council on Foreign Relations. Currently an investor in media companies, he is the former CEO of Tele-Communications, Inc. (TCI), Liberty Media and their successor AT&T Broadband. He also serves on the Board of the Huffington Post Investigative Fund.
Follow Leo Hindery, Jr. on Twitter: www.twitter.com/leohindery
A kind dose of historical perspective related to the incredible increase in the Global standard of living, reduced disease AND reduced Global conflict due to the courage of the United States (albeit with setbacks and a reminder that we are with imperfections) should impart some sobriety.
1987 - $864.6bn (US population was approximately 240m, so that's $3600 per person)
2007 - $1709.8bn (US population was approximately 301m, so that's $5680 per person)
That's a FIFTY EIGHT PERCENT INCREASE IN THE PER PERSON VALUE ADDED OUTPUT EVEN AFTER ADJUSTMENT FOR INFLATION AND TAKING AWAY THE VALUE OF INPUTS (INCLUDING IMPORTED INPUTS)
Total spending in the US in 2008 was around $15,000,000,000,000. About $338bn of that was on products from China.
That's 2.25%, or a lousy two pennies in the dollar.
Barely even worth thinking about.
- Environment and various other regulations that should only take 3-6 months to approve or restrict a project are unnecessarily taking years
- We need to protect our market from competitors that use subsidies and trade distorting practices
- If we're going to subsidize energy projects they should have the maximum benefit on the domestic labor market meaning components should be sourced domestically
- We desperately need an industrial policy!
This taxes revenue: if profits are 8% or $80,000,000.00 (current forcast), taxed from the "Top Line" of overall revenue the Fed's take is $24,840,000 (31.05% of profits). Taxes on profits of over seas competitors are around 12-18%. The company is private and most profits are reinvested in R&D, bringing new medical devices to market, sales and manufacturing; our competitors have a big advantage in re-investment and therefore put us at a competitive disadvantage in the long term. Short term this means the company has shelved plans to hire an additional 380 workers this year at it's current facility and has shelved plans to build 2 new manufacturing facilities in the midwest and 2 in the west (around 300 new jobs at each site). The long term impact is trimming positions (high skilled manufacturing/engineering and sales) and dramatically improving productivity with fewer American workers to increase our profitability to make up for the Fed's share.
Members of that family can then reflect their real wealth and financial security with the net positive accumulation of grain, gold, cattle, jewels, land, buildings, factories, commodities and/or other marketable products for reserve use in times of emergency and/or also to raise the standard of living for the members of that family.
That previously created wealth accumulated before the de-industrialization of the USA and was previously available to be taxed to create funds for "pork barrel projects", "green projects", "infrastructure projects" and additional "social services", and now our government borrows money for those expenses.
The golden goose that laid those golden eggs, won WWII, and created the abundant lifestyle that US citizens enjoyed for a couple of decades after WWII has been killed and eaten.
Once again you are very correct about our misuse of wealth, but I would like to modify your statement about reserves. The key to wealth is simple, it is productivity improvements. Ricardo has written a great book called the theory of rents, if you get a chance read it. Malthus also was around at the same time, and he felt that producitivty improvement would not outpace population growth, so society would be come poorer over time. The key item in the US is we always had a shortage of labor, forceing companies to use capital in place of labor. While the Roman Empire always had to much labor, hence the reason the Roman empire did not have productivity improvements in Italy, but did have as they took their technology to the new areas they took over. But in the long run Italy productivity never improved, and they ran out of places to take over.
You also recognize the existing fantasy that politicians like to use as a prop for their spiel- and you too must take care not to rely on the "if only" parts of the plan- that being the protection of our entire economy for the sake of one small segment.
I wish us all well in this, and thanks for a clear description of the problem(s) that go with the ideal.
I wish everyone who wants to use the "green economy" as an oil replacement, or as a substitute for energy policy, or as a means to end unemployment would read your blog.
Thanks again,
GAB
Next we have to end job and wage killing H-1b work visa regulations.
And we must secure our nations borders with no amnesty for illegals. We can't protect our environment otherwise.
If environmentalist were smart these are the main issues they would be focused on.
you're a funny guy!
stimulus bill to make room for delivering money to public authorities to leverage present rental,
mortgage and utility revenue bonds. The new stimulus bill seems to reward the refinancing of old
debt by exempting such bond schemes from the alternative minimum tax. Otherwise, why was
refunding such debt mentioned in the stimulus bill?
Monetizing the debt is usually subject to fears of inflation. However, given the present deflationary
economy, this need not be a concern. Bailing out public authorities that have utility, housing and
other revenue bonds is not the solution. Ideological fears of socialism and “private capitalism” are
used as “political footballs” by propagandists to mask what is happening. Like a modern P.T.
Barnum, the country is being sold a bill of goods by these pundits. The United States is not a
capitalist country nor is it a socialist country. The country welcomes private enterprise within a
governmental framework of social benefit programs.The problem with socialism is that
concentrated power in public authorities destroys accountability.
You can’t stimulate the economy refinancing present debt. This simply recycles money to public
authorities which are not accountable to the electorate. When values decline the solution is to
replace local debt with new money secured by new asset construction. The local municipalities
must take over the functions of the authorities and refinance such operations for new construction
through a federal bank like the Reconstruction Finance Corporation of the 30's.
Oakland police union cadets are paid $65K to start.
I believe that those citizens should raise their taxes every so often to pay for these bloated union salaries and benefits, or maybe the citizens should vote to disband the city government to escape their union contract obligations to their city bureaucrats.
2009 American Recovery Act Section 1503 - Modification of Alternative Minimum Tax Limitation on Tax-Exempt Bonds Amendments to Code Section 56(g)(4)(B) and 57(a)(5)(C) -
The Recovery Act provides amendments such that interest on private activity bonds that are issued in 2009 and 2010 are not taken into account for purposes of calculating a corporation’s AMT liability.
A refunding bond is treated as issued on the date that the refunded bond was issued, and in the case of multiple refundings, on the date the original bond was issued; however, this issue date rule does not apply to bonds issued during 2004 through 2008.
As a result of this rule, tax-exempt interest on a refunding bond issued after 2010 will be exempt from AMT if the bond it refunds is issued in 2009 or 2010.
Further, this rule allows AMT relief for bonds issued after 2003 that are refunded in 2009 and 2010.
We also need to organize those in human services jobs. People need more people caring. Yes, it matters that GDP grows. But it also matters that people grow, whether it is growing up safely and strongly or growing old serenely. It is not clear to me that leadership used to dealing with crafts and trades knows how to deal with human services.
Let's see a proposal to pay students to stay in school. Let's see more support for family members able to care for those in their family who require extra care. A society that is rich only in $$$ and not in loving kindness will waste its wealth. Make love, not war.
The jobs for science and engineering graduates are being eliminated from the USA and relocated overseas.
This situation needs to change for the benefit of the US economy.
I believe that most students today want to study business and/or economics in order to become one of the wealthy Wall Street (master criminal) business tycoons.
No person in his or her right mind would major in science or engineering since the pay scale has eroded so much in the last few decades, the jobs are being eliminated by outsourcing, and the study is so demanding compared to several other less demanding and more rewarding fields of study.
Still, as we choose to pursue green technology for its own reasons, it does make sense to talk about the opportunities it will create. For us in Detroit, it's a new industry that uses a lot of the capital we currently have dormant, so for us the economic impact is a pretty big deal.
Were they ignorant, stupid, dishonest, or some combination.
Do you believe that most of the foreign manufacturers lobbyists spent hundreds of thousands of dollars on wine, food, women, song, vacations, cash, sexual services, corporate jobs for the (unemployable) children/wives/girlfriends of the congressmen and their aids who actually control the members of congress, and campaign contributions to entice (bribe) each of our US congressmen for the past 40 years to create all of these various "FREE TRADE LEGISLATION" and treaties that allowed, caused, and economically required our businesses to take advantage of the lower labor and environmental costs available in various foreign countries?
57,000 American companies declare over US$80 Billion in annual profits from China. Real profits are much higher because of transfer pricing. That is much more profits than the exporters make from the $300 Billion in exports from China to the U.S. (which carry 1-5% profit margins).
What can the US citizens do now!
He had the right message but he was the wrong messenger. He was not attractive, and I sadly believe that a lot of the American people vote based upon looks more than intelligence or policy.
He had a lot of graphs and charts to indicate his points. I remember him saying that "NAFTA will suck the remaining jobs out of the USA".
He might have been the last chance to preserve the US jobs, US industry and the US economy.
We can thank the US congressmen of both political parties that we elected during the past 40 years for creating the laws that created this situation!
If businesses do not take advantage of lower labor costs and lower environmental costs as available in foreign countries, their competition will and they will lose all of their business to their competitors because their product cost and price will be higher than those companies that take advantage of lower foreign labor costs and lower foreign environmental costs .
US consumers demand the lowest possible price for every purchase, and US businesses must take advantage of every cost saving possibility that is legal.
Mass unemployment will foster mass civil unrest, crime, anger, riots, revolution, starvation, etc.
Chaos and total lawlessness will prevail during and long after any US revolution. Only the very meanest and the most evil will survive in this climate. We will have then totally destroyed our civilization. We will live like people in Africa, and we will have to comply with the will of any and every armed person that we encounter.
Will all of the city residents starve after a revolution? Most of the US urban population is not knowledgeable enough to live off of the land anymore. The city dwellers might foray into the country, kill the farmers, and steal the farmer's food to feed their own families.
Food might become more valuable than piles of freshly printed paper US dollars.
If any future US revolution to overthrow the US government occurs (maybe to change the economic situation), where will all of the food, fuel, water, sanitation, medicine, and other necessities to support the population come from after the revolution? These necessities will not exist after the revolutionary hostilities start.
Why should anyone else except the Local State, County and City governents pay for the repair, replacement, extension, and improvements to their own infrastructure systems that (only) they will benefit?
The burden of repaying the borrowed money to construct these things will detract from "America's global competitiveness", not improve competitiveness. Current spending has coupled with buy-domestic requirements, but various creative businessmen have found ways to get around this requirement, and supply foreign made materials label4ed as "Made in America".
These US dollars will probably be spent on imported earth-moving machinery, imported materials (Steel, Cement, Equipment, Pipe & Wire), new imported French manufactured private executive jet airplanes, illegal alien labor, outsourced engineering, outsourced CAD drafting, etc., and the US workers will still be mostly unemployed.
Any Economic Stimulus Spending should also prohibit any imported products and services (even if we no longer manufacture those products) from being purchased with these funds, and also prohibit all outsourcing of the Labor Required.
I agree with everything else you are saying though. Good post.
Can we provide a better life for our children by destroying all industrial employment opportunities for our children?
A coast to coast train could be built with private money, but what if the fare is many times the cost of air fare, and there are no customers!
These are "Pork Barrel Projects" and will have to be paid for with more and more US dollars that are borrowed back from foreigners who were paid with US dollars to manufacture goods by US importers for US citizens to purchase and consume.
President Obama will now need to print and sell more of these freshly printed US Bonds, and other securities faster and faster to industrious foreigners to get their US dollars to pay for the growing US government expenses that are in excess of our federal tax collections, including new Pork Barrel project spending to create temporary employment to make President Obama appear to reduce unemployment.
Most US citizens seem to follow the US government example and just keep borrowing US dollars to live as high on the hog as possible by using credit card debt. US citizens think that we deserve to have everything that we desire, right now, and that we can use US dollars borrowed back from people in foreign industrial nations who worked to earn US dollars to pay for the things that US citizens want today.