Galbraith Calls Clean Energy the Next Engine for Economic Growth
Every meeting I have with the Obama administration or members of Congress these days focuses on the economic crisis. But that doesn't mean we aren't also talking about environmental solutions as well. The two are closely linked. A recent Washington Monthly article by economist James Galbraith expressed this powerfully. Galbraith believes that clean energy investment will be the next engine for economic growth in our society.
That is what we desperately need right now: an engine for growth. We need individuals and companies to invest in something on a massive scale in order to instill confidence in the financial sector, create millions of jobs, and provide a decent quality of life.
Galbraith points out that World War II jumpstarted a period of growth that helped establish the financial wealth of the middle class. In the late nineties, the dot com bubble propelled private investment. Over the past decade, the housing market was the driving force in our economy.
Now we need the next engine to pull into the station. It won't be a consumption-based one: buying consumer goods made in China will not dig us out of this deep a hole. We need an investment-driven model that builds real economic and infrastructure value here in America.
According to Galbraith, only one prospect fits the bill: clean energy and climate solutions.
Energy touches on every aspect of our economy, and the process of refashioning it into something cleaner and more sustainable will generate growth across the nation. This includes weatherizing our homes, building more efficient cars, laying down public transit systems, and writing software to engineer it all.
This process of building a cleaner American energy system will create jobs, expand the economy, and, Galbraith believes, restore financial wealth to the middle class. He writes that a comprehensive, national effort to address energy security:
If done right, combining planning and markets, could add 5 or even 10 percent of GDP to net investment. That's not the scale of wartime mobilization. But it probably could return the country to full employment and keep it there for years.
But Galbraith makes another critical point: in order to create this brighter future, we have to act today. I couldn't agree more.
I have known for several years that the scientific data on global warming points toward urgent action. Now the economic data is telling us the same thing. We have to take bold steps right now in order to prevent the worst climate and economic impacts from profoundly damaging our society.
President Obama's stimulus package and federal budget offer a good start: both offer major support for energy efficiency, renewable energy, and clean fuels.
But public funds alone won't do the job. We need policies to unleash private investment--policies like a cap on global warming pollution or a national renewable energy standard that give incentives for companies to spend on low carbon solutions.
If we get these rules right, the private sector investment will follow the public stimulus funds. Once that happens, we will enter into a new phase of prosperity.
What is the next engine for growth? The realization that a cleaner energy system and a healthier planet are the best source for job creation and financial security.