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

October 28, 2010 1 comment

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.

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This post was originally published on Clean Edge Jobs

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