Clean-Tech Jobs Cannot Overcome a Broken Political and Economic System

Two recent editorials by Clean Economy Network’s Alison Wise and Breakthrough Institute’s Ted Nordhaus and Michael Shellenberger, in addition to a book by MIT’s Simon Johnson, have called into question whether the promise of clean-tech jobs can ever be realized without fixing the current broken economic and political systems. I’ve highlighted three of the most important root causes that I believe, if not addressed, make it impossible to generate the millions of clean-tech jobs vital for the U.S. to regain its economic competitiveness.

Congress’ Wall Street ties

Free-market ideology is increasingly the centerpiece of both major political parties. To its own (and the country’s) detriment, the important restrictions intended to reign in the excess of free-market capitalism have been largely fought off by financial industry lobbyists. As Senator Richard Durbin said in a May 2009 radio address, it’s “hard to believe in a time when we’re facing a banking crisis that many of the banks created – [they] are still the most powerful lobby on Capitol Hill. And they frankly own the place.”

The financial crisis probably set the clean-tech industry back a full year. As the make-or-break it piece of the equation – finance enables a concentrated solar plant in the desert, wind farm off the coast, or energy-efficiency improvements in a home. We need to make sure clean tech, and the broader productive economy (those making and deploying real products and services), is never again hamstrung by the credit crunch caused by the implosion of the banks’ most exotic and risky financial products. In addition to campaign finance reform and more transparency in government in general, this may mean promoting smaller, regional banking options in addition to more innovation in public clean-energy financing models.

To quote Wise, on the difficulty of changing from an extractive economy to a clean one, part of the problem “resides in the corruption of our economy itself”.

The winner-takes-all economy

As Johnson points out in is excellent book, 13 Bankers, and according to U.S. Census data and the Bureau of Economic Analysis, the 2000s have been a lost decade for the middle class with median income falling from $52,500 in 2000 to $50,300 in 2008.

In a recent article on the impact of the Great Recession, University of Wisconsin-Madison professor Timothy Smeeding goes as far to say the U.S. is a “winner-takes-all economy” citing 2010 Census data showing the top 20 percent of Americans received 49.4 percent of all income generated in the U.S., compared with 3.4 percent earned by those below the poverty line. According to Raghuram Rajan, a former chief economist of the IMF and current professor of finance at the University of Chicago, the disparity is not only a result of the Great Recession – but also potentially a contributor.

The Obama Administration needs to keep this in mind despite the recent heat it has taken for a disappointing number of long-term jobs being created through the stimulus, in part because of the short-term nature of home weatherization work and because much of the stimulus money is just starting to flow. Instead of retreating, the government should actually spend more on weatherization and similar programs that target low-income communities; expand retraining programs; and continue its steady investment in companies setting up longer-term clean-tech manufacturing jobs in the U.S. Salaries paid to middle class workers are typically poured right back into the economy – a much better option for turning the economy around compared to current calls for extending tax breaks for the wealthiest one percent where there is no guarantee of that money being re-invested (or in what country).

Too few acknowledge the government’s critical contributions to industry

For 150 years, the U.S. government has made major investments in everything from railroads, telecommunication, aerospace, pharmaceuticals, and energy (both fossil fuels and renewables). Our country would be nowhere near as prosperous or have such a vibrant economy without these investments. Though I don’t agree with their overall tone, I believe Nordhaus & Shellenberger are spot on with refuting the notion that government is only a problem for industry in their Green Jobs for Janitors editorial:

Born of fashionable neoclassical economic theory and  political expediency after the Reagan revolution, Democratic neoliberalism embraces the notion that private firms are better and more efficient at ‘picking winners,’ technological and otherwise, than government. This cliche was never based on the real-world history of technological innovation or economic growth but rather upon the neoclassical assumption that governments must do a worse job than private actors since they are not motivated by profit and cannot act rationally.

There are many other issues facing the nation and the build out of clean tech, but good news abounds as well. We highlighted many of these in our recently released Clean Tech Job Trends 2010 report. Clean-tech economic development strategies are being implemented on city, state and regional levels; venture-backed companies have emerged across most sectors; a new class of clean-tech elite is re-investing in new companies and ideas; the clean-tech industry lobbies are growing stronger; Google, GE, and other corporate giants are taking an active role; and interest in clean-tech jobs has never been stronger.

And to be fair, I know there are genuine champions of clean energy within government and finance – and that our economic system and relatively cheap cost of money has created significant opportunity for millions of Americans and people around the world. But right now the tradeoffs don’t pencil for Main Street and the promise of clean-tech jobs is lining up to be just another casualty of an economic and political system that is fundamentally broken.

————

This post was originally published on Clean Edge Jobs

Changing the China Clean-Tech Tone to Cooperative Instead of Combative

This post was originally published in March – but it’s relevant to today – and a theme that I’ll continue to address. So it’s worth a read.

Maybe I’ve been naively won over by the spirit of the Olympics, but the overall U.S. approach to China and anything clean tech or job related needs to change from combative to cooperative. Politicians and pundits alike are seething over a series of perceived U.S. government missteps with respect to foreign companies receiving stimulus funds. But this is only the latest in a misguided American drumbeat toward clean-tech protectionism on one end, and cold-war era zero-sum thinking on the other.

Laying the groundwork for this is Tom Friedman’s relentless pushing of the Sputnik analogy that has set in motion a chorus of China clean-tech fear-mongering. The analogy has clear parallels but furthers a tone of fear and animosity that is unproductive. And when it comes to international relations the tone is almost as important as the subject. On one hand this is potentially a good strategy for energizing Cold Warriors in Congress and American workers in the Rust Belt, but I think we would do better to come up with something new.

Fortunately, over the past few weeks, several thoughtful editorials have contributed a more middle-road approach to U.S.-China clean-tech relations that I would recommend reading before making China (or any other country!) your clean-tech job punching bag.

Yale Environment 360 columnist, Christina Larson, makes the best case yet for dispelling a combative approach and perfectly sums up the main sticking points in her excellent piece “America’s Unfounded Fears of A Green-Tech Race with China.”

“Just what are Americans afraid of?” asks Larson. “To distill the cloud of anxiety, there seem to be three chief fears. The first is very tangible — jobs. The second is about America’s place in the world — will the U.S. remain a global leader in innovation? And the third is about leverage — will the U.S. control its future, or be beholden to a foreign energy gatekeeper, one that exerts undue pull on its economic or foreign policy?” In her article, however, she explains that clean-energy development for China and the U.S. could be a win-win situation.

Matthew McDermott at Treehugger draws from Larson’s piece in his article, “Let’s Deconstruct the Phantom China v U.S. Cleantech War” to point out that China’s gain in jobs doesn’t automatically come at U.S. job expense. “Most of the green manufacturing jobs that supposedly are going to be lost in the U.S. as wind and solar power manufacturing takes off in China haven’t actually even been created yet,” writes McDermott. During the Bush Administration, American clean-energy companies were hamstrung by the on-again-off-again production and investment tax credits while other countries sent clear market signals via predictable clean-energy policies. That’s chiefly why 79 percent of more than $2 billion in clean-tech grants for U.S. projects were doled out to companies based overseas that are now gobbling up U.S. market share. But even in this example, there is a China bias. Despite Iberdrola Renewables, the American subsidiary of Spanish utility Iberdrola S.A., collecting $577 million (more than any other company), politicians and pundit outrage has largely focused on the American-Chinese joint venture for a wind farm in Texas seeking $450 million of stimulus funds. That project would create 300 U.S. installation jobs but 2,000 manufacturing jobs in China, because it would use Chinese turbines.

A Reuters survey of American venture capitalists shows investors are unfazed by China. Many point to the U.S. as having the best ‘innovation platform‘ in the world that, when combined with its strong support of intellectual property protection, will continue to attract companies to the U.S.

In his article, “Is There Anything Left for America to Manufacture,” author and policy advisor Terry Tamminen draws historical parallels to Japanese products in the 1950s. The answer he provides to his own headline is “yes” and highlights clean-tech companies that are creating manufacturing jobs in strategic sectors in America today – as we have done in the past with defense, IT, and aerospace.

But manufacturing will always be a point of contention with China, regardless of the sector. And the sooner we come to terms with this, the better. It’s hard to compete with cheap labor. The reality is that even if U.S. companies end up manufacturing in-country, it will inevitably be on a track to automation, just like the semiconductor industry.

And while there is definitely room for improvement for both China and the U.S. in terms of trade and monetary policies (and other issues like domestic-content requirements) – both countries (and the world) have much more to gain from a cooperative rather than combative approach.

The reality is in some cases, like some Olympic events, China will be better. But a true athlete has great respect for a fellow Olympian operating at the top of their game. It encourages them to go back and train harder. America should look deeper at what it is we do best and leverage the unique benefits China brings. Politicians and pundits need to realize that the one thing other than the Olympics that has the power to transcend 20th century economic, environment and social conflicts is clean tech.

—–
This post originally appeared on Clean Edge Jobs