Wednesday, February 4, 2009

Green Jobs and the Consumer Economy

Dave Leonhardt, the NYT economics correspondent, had a long article in Sunday's magazine exploring the dimensions of the economic crisis and Obama's efforts to address it. Along the way, he had one of the best explanations of how the consumer economy drives investment decisions towards short-term profits and away from long-range investments such as infrastructure. Elsewhere, Leonhardt says, the government keeps its eye on the long term, putting money into bullet trains and broadband; in the US, antipathy to government spending has blinded us to the ways private consumption depends on the common wealth. Privileging individual consumption overburdens the commons, both natural and social.

Leonhardt also reports on the difficulty we're going to have in transitioning from the consumer economy to a green-investment model, which will take nothing less than recalibrating our time-horizons and, consequently, our individual and social expectations.

Sometimes a project can give an economy a lift and also lead to transformation, but sometimes the goals are at odds, at least in the short term. Nothing demonstrates this quandary quite so well as green jobs, which are often cited as the single best hope for driving the post-bubble economy. Obama himself makes this case. Consumer spending has been the economic engine of the past two decades, he has said. Alternative energy will supposedly be the engine of the future — a way to save the planet, reduce the amount of money flowing to hostile oil-producing countries and revive the American economy, all at once. Put in these terms, green jobs sounds like a free lunch.

Green jobs can certainly provide stimulus. Obama’s proposal includes subsidies for companies that make wind turbines, solar power and other alternative energy sources, and these subsidies will create some jobs. But the subsidies will not be nearly enough to eliminate the gap between the cost of dirty, carbon-based energy and clean energy. Dirty-energy sources — oil, gas and coal — are cheap. That’s why we have become so dependent on them.

The only way to create huge numbers of clean-energy jobs would be to raise the cost of dirty-energy sources, as Obama’s proposed cap-and-trade carbon-reduction program would do, to make them more expensive than clean energy. This is where the green-jobs dream gets complicated.

For starters, 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.” Just think about what happened when gas prices began soaring last spring: sales of some hybrids increased, but vehicle sales fell overall.

1 comment:

  1. Lots of green energy and infrastructure development also means huge sums being spent on the products and services of green companies. Stocks of these companies could benefit significantly!

    For anyone interested in green and socially responsible investing, I have one of the most popular sites on the web on the subject. It also covers the latest related global news and research too. It's at

    Best wishes, Ron Robins