In his radio address on Sunday, Obama sketched a progressive stimulus spending package that's kicked up quite a bit of chatter.
Some transit advocates were ticked off that roads and bridges got a shout-out but there was no mention of transit. Michael O'Hare goes so far as to say that "Obama has, on the whole, dropped the ball on climate change; he's not anti-science or anti-environment, but he's failing a big test here."
Ryan Avent says to chill: the road stuff is likely about repairing existing road infrastructure, not laying new roads. I'd add that transit's been mentioned by Obama's team several times since he was elected -- the latest on Friday -- so it's hard to believe there won't be substantial transit spending in the final bill.
Tyler Cowen gives it a thumbs down:
When it comes to fiscal policy, many projects are not very good. Most projects take a long time to come on-line. The fiscal stimulus should, most of all, be directed at an effective marginal incentive scheme to keep up state and local spending. I am still enthusiastic about Obama's economic team, but I am starting to worry a little. How many of these expenditures actually help needy people? How many actually will help the economy?
I think Cowen's too pessimistic. Particularly, earlier in the post he says of weatherization and efficiency retrofitting, "The mere fact that you can write in the comments section: 'Spend more today to spend less tomorrow!' does not convince me." One of his commenters asks, sensibly:
Why not? ... There's nothing contradictory about a strategy of trying to spend more today (in a recession) so that we can live well tomorrow with less spending. It's called "investment" and this is a good time to ramp it up.
There are of course legitimate questions about how fast various stimulus measures can get rolling. The New York Times offers a few numbers:
State officials say a lack of financing has stalled billions of dollars in projects. Gov. Arnold Schwarzenegger of California told Mr. Obama this week that the states were ready to break ground with $136 billion in infrastructure projects that could provide new jobs within two years.
The American Public Transportation Association, which represents local mass transit authorities, said there were $8 billion in "ready-to-go" projects that could preserve or create thousands of jobs and provide more energy-efficient transportation.
How much of that $136 billion is "green"? $8 billion ain't much stimulus in a $13 trillion economy.
Another key question is how much money could be pumped into building sector energy efficiency, and how quickly. The feds and states do some weatherization of low-income homes through LIHEAP, but those are not large agencies and probably couldn't handle tens of billions dumped on their heads. Beyond that, what? Is there an agency or program in place to retrofit federal buildings? Or to offer small- and mid-sized businesses assistance with energy retrofits?
Is the retrofit market mature enough? Even if tax credits or grants were more available, do we have the business and finance models to handle them? Another significant factor is the non-fungibility of labor. Some of the retrofitting trades are high-skilled, with high barriers to entry. Another commenter on Cowan's blog:
People capable of working on commercial HVAC systems are few and far between even in this economic climate. None of them are short on work and the barriers to entry are pretty high. ... I don't think I need to explain on economics blog what the effects of throwing a lot of money at small pool of labor with high barriers of entry would be.
The government can help lower those barriers to entry and can help ramp up vocational training, but how much impact would be felt in under a year or two?
I'm a huge proponent of green stimulus, but it's a good time for everyone to get hard-nosed about where money can most quickly be injected. This is fairly complex and technical stuff and most people making confident pronouncements about it -- myself indubitably included -- are talking out their blowholes. We're talking about cramming an enormous amount of money into an enormously complex economy at an historical moment without clear precedent technologically, socially, or economically. If the 21st century has taught us anything it's that we have no effing idea what's going to happen. Obama's proposals seems directionally correct to me so far, so hurray for that. Let's buckle our seatbelts.
Making buildings more efficient: rationalizing retrofit markets
Making buildings more efficient: looking beyond price
Merkley wants Senate jobs bill to help finance building efficiency retrofits
Comments
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Jon Rynn Posted 4:17 am
08 Dec 2008
One view of depressions is that they are partly or significantly caused by a collapse in the capital goods industries, or call them "investment" goods, if you like. That is, the machinery and such that is used to make other stuff. When these industries start to collapse, the unemployment there causes a greater lack of demand among the consumer goods industries, starting a snowballing effect in the wider economy.
So in a depression, you should try to revive, not just the consumer goods industries, but the producer, or capital goods industries as well. That means saving the Big 3, for instance, because they use a lot of capital goods. But it could also mean building lots of trains, because trains use lots of capital goods. In addition, according to WTO rules, the only way you can demand "domestic content", that is, demand that what the government subsidizes is actually produced in this country, is if the government is buying "basic infrastructure", which again, means trains.
So I would say that the horizon should be a good five years, not two, and that opens the door to many more long-term projects, perhaps even including the national electric grid and things like wind farms, that would help lift the capital goods industries out of the muck, and then the rest of the economy.
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wesrolley Posted 4:54 am
08 Dec 2008
Wes Rolley
CoChair - EcoAction Committee
Green Party US
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Jon Rynn Posted 5:10 am
08 Dec 2008
so wesrolley, to address your point, there is plenty of unskilled and semi-skilled labor in infrastructure work. And if you extend the time frame to 5 years, another big advantage is that you can assume 2 years for training, which is enough for quite a few skilled positions, although 4 years is best (and would even be enough time to train some engineers).
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Bob Wallace Posted 6:41 am
08 Dec 2008
We've got a stalled home building industry and all the people who have been building houses looking for a job. We've got manufacturers who make insulation, windows, etc. up and running. We've got distribution systems in place.
Seems like it would take nothing more than some affordable home improvement loans to get this part of conservation off the ground.
Set it up so that people would pay a bit less total for utilities and loan payments than they have been paying for heating/cooling.
We could put a lot of Americans to work within a few months and have lots of tighter houses/buildings by next winter. More tax money flowing back into our coffers, less unemployment money flowing out, less fossil fuels consumed....
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Bob Wallace Posted 6:46 am
08 Dec 2008
We did this in California several years ago. Money was made available for people to replace their old refer/water heater/air conditioner with a much more efficient model.
Doing so would give additional business to appliance manufacturers (largely in-country business) and retail stores.
More tax money, less unemployment money, less electricity needed.
Use California's program as a starting point and we could have this one up and running before summer.
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Biodiversivist Posted 1:47 pm
08 Dec 2008
In the end, it all comes down to biodiversity. Poison Darts--Protecting the biodiversity of our world
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