Why We Need Green Jobs

The recent heavy snowfall in the Washington D.C. area has given rise to some alarmingly naive comments from conservative pundits and Republican senators. America has come to expect the kind of shaky logic being used from Limbaugh, Hannity, and the rest of the conservative media cohort, but it is frankly distressing to hear Senators Jim DeMint (R-SC) and James Inhofe (R-OK) openly dismissing global warming using one instance of heavy snowfall as their backing.

Green jobs were originally a top priority for Obama but have been shelved as unemployment has been slow to recover

With President Obama pledging in his State of the Union address to make job creation his number one priority, these global warming skeptics have found even more reasons for protest. They argue (correctly) that the creation of “green jobs” is more expensive and therefore will result in slower employment recovery. And they’re right. Given a fixed pool of money, it would be to the country’s short term benefit to invest in long established industrial staples like oil, coal-burning power plants, and gas-powered automobiles rather than spending that money installing solar panels, building wind turbines, and subsidizing hybrid-electric vehicles. Regardless of your position on global warming, we cannot afford to think this way. This is the time to revitalize our economy and invest in infrastructure. Rising employment numbers may be good for the Congressmen who depend on immediate results to win elections. But for the American people, abandoning attempts to support developing industries and overhaul old ones would be a fatal blow to our future economic growth.

The driving force that propelled the U.S. economy prior to the financial collapse in 2008 was consumer spending. Savings rates which stood at roughly 12% in the late 1970s slipped below zero in 2005. When the housing bubble burst and Americans struggled to afford soaring mortgage payments and could no longer squeeze equity out of their homes, the economy faltered. The spendthrift lifestyle of the ’90s and most of last decade can no longer carry an ailing economy.

Only a small fraction of the stimulus spending is slated for energy and infrastructure. Most of it will be spent on tax cuts (shown in light purple).

So what will put us on the path towards economic growth? The New Deal, the recovery program created by President Roosevelt following the Great Depression, offers some insight. The agencies it created to improve existing infrastructure and work on new projects provided millions of jobs and helped to alleviate the depression. While such a direct government effort would not be appropriate during the current recession, infrastructure, telecommunications, and energy remain the best way to stimulate economic growth. In its recovery program, China directed the majority of its stimulus money towards fixed asset investments like infrastructure rather than the shifting of budget deficits and reduction of taxes that most of the Recovery and Reinvestment Act’s $787 billion were put towards.

Of the 1.5 trillion yuan (586 billion USD) stimulus package announced by the Chinese government in November 2008, virtually 100 percent of it is being spent on infrastructure, revitalization of industry, energy efficiency improvements, and a host of other fixed asset investments. China, whose economy is heavily dependent on exports, was hurt by the reduced foreign demand as a result of falling levels of disposable income. In difficult economic times, China is seeking to reduce its trade surpluses and invest in its economy.

The IMF was impressed by China's recovery and investment efforts

As much as increased funding for unemployment benefits, job training, and programs like Medicare and Medicaid are important in the short term, they do not contribute to economic growth. “These payments do not represent incremental ‘stimulus’ as much as ‘substitution’ for holes in state, municipal and household spending. Another way to think of them is as the ‘transfer’ of indebtedness from states, municipalities and consumers to the federal government,” said A.R. Schmeidler, a Manhattan-based investment firm in its August 2009 newsletter. “We would have expected [longer-term enhancements] from greater investment in infrastructure, telecommunications, the energy grid or clean energy alternatives.”

Bush era tax cuts, while helpful for stimulating consumer spending and employer hiring, will not help. Tax cuts might bring some level of economic recovery, but they will not help to address the issue of stagnation in the U.S. economy. Investment firms like Goldman Sachs are identifying the BRIC (Brazil, Russia, India, and China) nations as the center of future growth rather than the United States. If the United States wishes to become a competitive, growing market again, it needs to invest in emerging domestic markets. It just so happens that energy-efficient technologies is one of the fastest-growing industries worldwide.

If we wish to grow, America needs to become a pioneer in green technology and take the opportunity to repair aging public transportation. We need abandon the Bush tax cuts and instead invest those dollars in a more efficient electricity grid. We need to subsidize the spread of plug-in electric vehicles rather than keeping oil prices down, even if it means job restoration is a slower process.

So when Rush Limbaugh comes on the radio and claims that anyone who had spent a day in Econ 101 should realize that cutting taxes encourages hiring, realize that the situation is more nuanced than he would have you believe. Tax cuts are part of recovery but not, as Limbaugh erroneously claims, part of growth. If we wish to achieve sustainable economic growth, we need to invest in developing industries and resuscitate our crumbling infrastructure; that investment must be substantially more than the $150 billion provisioned by the stimulus package.

The recent blizzards in Washington could present bigger issues than the resurgence of global warming and green jobs skeptics. Congress took the week off and filibusters and partisan squabbling have prevented it from getting much of anything accomplished even when it is in session. The stimulus package is scheduled to scale back significantly in late 2010. As Paul Krugman, the Nobel Prize winning economist and New York Times columnist, points out, we may be making the same mistake Roosevelt did in 1937 by allowing that to happen. If Congress is unable to agree on a revised stimulus plan and abides by its current deadlines, it will be choking recovery spending too soon with the economy barely beginning to recover, let alone grow.

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