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.
First, will those poor utilities and coal companies lose jobs? The coal companies will lose a few jobs, but they don’t have many anyway; and for the utilities to lose jobs, there would have to be a massive deconstruction of our electrical system, which is unlikely to happen.
Ironically, Leonhardt spends considerable space in the article talking about one of my favorite books, Mancur Olson’s The Rise and Decline of Nations. To his credit, Leonhardt explains Olson’s theory pretty well—basically, over time, since it’s easier for small groups to organize than larger ones, and since big organizations like big corporations can organize among themselves much more easily than the population at large, the body politic will become “sclerotic.” As in blood vessels, the political system will become gummed up by “special interests”— like coal companies and utilities. So he’s using an example of a malady he’s describing to argue against clean energy investments.
Second, and most central to anti-green rhetoric, electricity bills will allegedly go up, thus jobs and everything else, including economic growth, will go down. There are two ideas being perhaps unfairly intertwined here: cap-and-trade and green collar jobs programs.
Whatever its merits, cap-and-trade need not be linked to green collar jobs. It could be linked—as dirty sources of electricity become as expensive as their true costs would indicate, wind turbines and building retrofitting will become attractive as investments, so cap-and-trade could drive green collar jobs—although for the stimulus, which needs jobs now, now, now, that might take too long.
On the other hand, it should be perfectly possible to create millions of green collar jobs without cap-and-trade legislation. These are actually the green-collar jobs being created in the stimulus package—building retrofitting, subsidies for wind and solar energy, even the pathetic extra funding for mass transit.
Far from making electricity more expensive, the direct public construction of alternative energy systems could conceivably decrease the cost of electricity. At the very least, these green collar stimuli could keep electricity at a similar cost, even as coal plants are ideally being decommissioned. Or, as seems increasingly likely, no new coal plants will be constructed, and the increase in electricity demand could lead indirectly to higher prices, which could be mitigated by some construction of wind and solar electricity-generating systems.
Which leads us to the third fallacy from the Leonhardt’s quote, that green jobs will simply displace other jobs (I’m not giving Stavins an out with his “to some degree” qualifier). Adding wealth by retrofitting buildings, building wind turbines, and creating transit is not "displacing jobs,” it’s adding jobs.
But there’s a bigger problem with this approach, which pops up at the beginning of Leonhardt’s article:
The economy will recover. It won’t recover anytime soon ... What will happen once the paddles have been applied and the economy’s heart starts beating again? How should the new American economy be remade? Above all, how fast will it grow?
My hypothesis is this: Unless the economy is making the transition to a green, sustainable, manufacturing-based economy, the economy’s growth will be sporadic and short-lived. In fact, the whole concept of growth will have to be reoriented towards the creation of wealth that does not deplete resources and destroy ecosystems.
In other words, green collar jobs programs are part of a system-wide, long-term response to our economic troubles, not one element in a business-as-usual economic cycle of recession and growth. As David Lindorff argues, “our national economy will never ‘bounce back’ to where it was in 2007.”
Leonhardt does go deeper than the business cycle when he identifies two causes of our current problems: the transformation from an “investment” economy to a “consumption” economy, and the loss of global leadership in education.
When you hear from an economist that we’ve been “consuming” too much, you should be very skeptical. What’s likely to come next is the advice that we have to “tighten our belts.” This sort of belt-tightening talk from economists is supposed to be hard-headed and realistic, as opposed to the soft and fuzzy environmentalist warning to stop using up all of our resources and destroying the biosphere.
But it’s usually a diversion, which really means “big business and the very wealthy need to have whatever resources are left after big business and the very wealthy have led us down the road to economic catastrophe, because only big business and the very wealthy can create jobs.”
In reality, the middle and lower classes have not gained appreciably in the last 30 years, so they are not the ones creating the huge debt that is threatening to drown the economy. And it’s not just consumers buying big TVs on credit that is the problem, its big corporations outsourcing good manufacturing jobs and binging on short-term, Wall Street-inspired financial shenanigans that has led to the lion’s share of our economic problems.
The old economy is not going to come back. We need a new economy, based on a thriving middle class, a green, domestic manufacturing economy, and a rebuilt, green infrastructure. Those would constitute a real “big fix.”
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PurpleOzone Posted 12:15 am
03 Feb 2009
We had the crawl space dug out, providing a full basement with insulated walls; added storm windows; replaced the sliding glass door with a tight expensive one. We never paid as much for heat as the previous owners, in a time of rising fuel costs.
And how did this lose jobs? We spent the money saved on electricity! on travel with the kids, private school, computers, clothes, eating out. All of these things created jobs -- and were more fun than buying more fuel! Duh!
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Russ Posted 12:17 am
03 Feb 2009
Of course, Peak Oil rules out much of this. Time is running out on their "stumulative" ideas from section 4, mass industrial education (section 6) also relies on a fossil fuel platform. But not a word about a sustainable relocalization of it (not to mention how the curriculum itself will have to be revolutionized).
As for health care (section 5) - forget it. This is going to be relocalized, deindustrialized and thus "reformed" whatever the big government/ big capitalist dreamers think.
As for some characteristic dogmas from section 1:
That last question may sound abstract, even technical, compared with the current crisis. Yet the consequences of a country's growth rate are not abstract at all. Slow growth makes almost all problems worse. Fast growth helps solve them. As Paul Romer, an economist at Stanford University, has said, the choices that determine a country's growth rate "dwarf all other economic-policy concerns."
This is funny. "Problems" are defined simply as anything that slows down, and "solutions" as anything that speeds up, with growth.
Speed and growth, worshipped for their own sakes - the theology of cancer.
Growth is the only way for a government to pay off its debts in a relatively quick and painless fashion
Yes, it is. That doesn't mean it's possible.
Yet there are real concerns that the United States' economy won't grow enough to pay off its debts easily and ensure rising living standards, as happened in the postwar decades. The fraternity of growth experts in the economics profession predicts that the economy, on its current path, will grow more slowly in the next couple of decades than over the past couple. They are concerned in part because two of the economy's most powerful recent engines have been exposed as a mirage: the explosion in consumer debt and spending, which lifted short-term growth at the expense of future growth, and the great Wall Street boom, which depended partly on activities that had very little real value.
"Two of" the engines? And what would be the other "powerful engines"? According to GDP: war. But is this really "growth"?
Richard Freeman, a Harvard economist, argues that our bubble economy had something in common with the old Soviet economy. The Soviet Union's growth was artificially raised by massive industrial output that ended up having little use. Ours was artificially raised by mortgage-backed securities, collateralized debt obligations and even the occasional Ponzi scheme.
Ours is a ponzi scheme, Harvard.
Where will new, real sources of growth come from? Wall Street is not likely to cure the nation's economic problems. Neither, obviously, is Detroit. Nor is Silicon Valley, at least not by itself. Well before the housing bubble burst, the big productivity gains brought about by the 1990s technology boom seemed to be petering out, which suggests that the Internet may not be able to fuel decades of economic growth in the way that the industrial inventions of the early 20th century did. Annual economic growth in the current decade, even excluding the dismal contributions that 2008 and 2009 will make to the average, has been the slowest of any decade since the 1930s.
Finance, nope...manufacturing, nope...infotech, nope...
So for the first time in more than 70 years, the epicenter of the American economy can be placed outside of California or New York or the industrial Midwest. It can be placed in Washington. Washington won't merely be given the task of pulling the economy out of the immediate crisis. It will also have to figure out how to put the American economy on a more sustainable path -- to help it achieve fast, broadly shared growth and do so without the benefit of a bubble. Obama said as much in his inauguration speech when he pledged to overhaul Washington's approach to education, health care, science and infrastructure, all in an effort to "lay a new foundation for growth."
This is ridiculous, and does not answer the question. If the question is, What will be the substantive basis for future growth, "Washington makework" is not even an answer, the alone a good answer. It's not even wrong.
Here's the crazy finale:
For centuries, people have worried that economic growth had limits -- that the only way for one group to prosper was at the expense of another. The pessimists, from Malthus and the Luddites and on, have been proved wrong again and again. Growth is not finite. But it is also not inevitable. It requires a strategy.
Where were so-called pessimists ever proven wrong, except on timetables? The "growth" pirates have only managed to extend their plunder grounds.
But now they reach the limits of the earth, and no spaceship delusion is going to take them further.
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PurpleOzone Posted 1:18 am
03 Feb 2009
We did save a significant amount on heating and were physically more comfortable without the drafts.
We didn't put the money saved into a piggy bank to collect dust. It did go to jobs, and probably most of the jobs were healthier and more fun than mining coal.
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Jon Rynn Posted 1:26 am
03 Feb 2009
This is why I keep pushing manufacturing (one of the reasons), at least put the discussion of economics into the real world.
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Jon Rynn Posted 1:33 am
03 Feb 2009
PurpleOzone, economists also tend to be very leary of a "free lunch", that is, they like to operate under the assumption that there is a scarcity -- that you just are stuck with dividing up a never-expanding pie. So Keynes had to invent the concept of the "multiplier", which is what your example shows. Technological change is also a "free lunch", but that's another story.
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amazingdrx Posted 2:33 am
03 Feb 2009
Many green technologies do this, reduce consumption while increasing growth.. and investment. High consumption, credit card/home equity loan growth reduces investment.
So do we want green, smart growth or consumption to grow and eat the biosphere and weird the climate? Jobs, prosperity, financial security without ever expanding destruction of the natural world? Yep.
http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin
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Gar Lipow Posted 2:47 am
03 Feb 2009
http://www.eia.doe.gov/emeu/states/sep_prices/total/pr_to ...
Yeah, slightly undre 1.2 trillion in 2006
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Russ Posted 5:53 am
03 Feb 2009
Yes, and so far as I can see, there's no element in the Washington scheme which either acknowledges resource and ecosystem constraints or which has a serious long-term plan to develop a new, reality-based manufacturing economy.
It's just zombie cant about all the same old delusions of "growth", so-called free trade, figurative and literal highways to nowhere.
I know it's not supposed to come around for another four years, (every five years, right?), but is there any real reason, if they somehow got serious about things, that they couldn't write and pass a new food/farm bill before then?
More and more I think the that's the most important legislation we need - if we don't very soon get rid of the monoculture subsidies, agrofuel mandates, redirect resources to localized agriculture,and carry out real land reform, none of the rest of it is going to matter.
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Steven Earl Salmony Posted 4:42 pm
14 May 2009
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