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  • A Price on Carbon: the New Greenmail

    Hidden from view during the Australian election, a carbon price is back on the political agenda. This comes as no surprise. Anyone following the debate, however, will see that it has nothing to do with the environment. For some time we have been urged to “act now”, but the grounds keep shifting and changing. Early on it was the drought. Then the Great Barrier Reef. After that the Bali Conference. Then the election of Barack Obama. Next came the Copenhagen Conference. Then being “left behind” in clean technology. Now, apparently, “inaction will cost more in the end”. All have come and gone – including the drought which was supposed to be with us forever.

    Even so, we are assured that a price on carbon is “inevitable”.

    The frantic search for a rationale is driven by the plain fact that there is no environmental reason for Australia to have a carbon price. In tandem with efforts to manufacture urgency, there has been an equally devious campaign to misrepresent the process of climate change, or at least the IPCC’s “consensus” version. Crucial has been the cynical manipulation of words like “pollution” and “clean”. “Carbon pollution” is a scientifically absurd term designed to distort the basic issue. If the “consensus” science is right, the problem is with the concentrations of carbon dioxide, not the natural, clean, life-giving gas itself. Most of the public associate “pollution” with “dirty” emissions such as exhaust fumes and particulate matter. By definition, reducing such pollution is good. Many, if not most, still believe this is what climate action is about, thanks to obscurantist Greens and others. In the same way, “clean” energy is seen as the antidote to “dirty” or “polluting” gases. Who can be against cleanliness? Derivative terms like “the big polluters” are also deceptive.

    Greens, activists and others with a stake in climate action live in mortal dread of the public grasping the truth. Since the concentrations are the issue, rather than carbon dioxide as such, Australia can do nothing about climate change. Our share of global emissions is too small. Nor do the world’s highest emitters show any sign of caring about what we do.

    No Australian Prime Minister did, or could have done, more to push climate onto the world’s agenda than Kevin Rudd. Asked about the Copenhagen fiasco in the dying days of his prime ministership, Rudd delivered this famous outburst: “There was no government in the world like the Australian Government which threw its every energy at bringing about a deal, a global deal, on climate change. Penny Wong and I sat up for three days and three nights with 20 leaders from around the world to try and frame a global agreement.” The UN assigned Rudd a special role drafting the text of the prospective protocol. Ultimately, he was rebuffed by large and small emitters alike. The face-saving accord was cobbled together without him.

    Australia can’t combat climate change directly by reducing its own emissions, or indirectly by encouraging larger emitters to reduce theirs. If we lack the power to prevent adverse climate effects, should they eventuate, we can’t avoid any higher costs of delayed action. Forget the constant bleating about China “doing its part.” Now the world’s largest emitter, China’s official policy is to reduce the “carbon intensity” of its economy (the carbon emitted per unit of GDP), not to cut emissions. This means emissions will continue to rise, although (possibly) at a diminishing rate. The point is this “action” is way short of what the IPCC considers necessary to make a difference. Greens keep asking the wrong question. It’s not whether China does “something” that matters, but whether that something is relevant. India does even less. As for the second largest emitter, opinion polls suggest a carbon price will remain dead in the United States after the November mid-term elections.

    So why must Australia have a carbon price? One thing is for sure: it has nothing to do with climate. In his early interviews as Minister for Climate Change, Greg Combet referred to it, repeatedly, as “a very important economic reform”. Calling it an environmental measure would raise too many awkward questions. Certainly, a carbon price has serious economic impacts, but gracing it with the label “economic reform” is disingenuous. The word “reform” connotes improvement. Economic reform is designed to spur growth by improving productivity and efficiency. In contrast, a carbon price damages productivity, by raising cost inputs, and hampers efficient resource allocation. It isn’t economic reform. It’s an environmental measure, but utterly futile.

    Climate activists were elated when Marius Kloppers, the boss of BHP Billiton, recently declared that a global carbon price is inevitable, so Australia should get in early. His grounds for this belief are a mystery. All the evidence suggests that a global price on carbon will be as elusive as world peace. He would have been on firmer ground to restrict his prediction to Australia. Still, environmental factors were far from Kloppers’s mind. As the arguments for a carbon price fall in succession, one lingers on. Endless speculation is undermining investor confidence, so the argument runs, and producing uncertainty in industries with long investment lead times, like the capital-intensive energy industry. This can only be ended with the swift introduction of a carbon price. Of course the argument is entirely circular. The activists, politicians and journalists who push this line are themselves instrumental in generating the speculation, uncertainty and paralysis, and for obvious reasons.

    Back in the 1980s, “greenmail”, an amalgam of blackmail and greenback, referred to the practice of buying enough shares in a company to threaten a takeover, thereby forcing the company to buy the shares back at a premium. As the practise and word have since faded away, perhaps it’s time to revive the term “greenmail” and invest it with new meaning. Greenmail occurs when officials and activists with media power disrupt stability and certainty in a particular industry, maintaining pressure and an air of crisis, to intimidate business leaders holding out against some senseless green measure.

    If Australia does end up with a carbon price, it will be due to greenmail rather than any rational consideration.

    This article first appeared at The New City Journal.

    Photo by Amit (Sydney)

  • Environmental Consequences of Low Fertility Rates

    But isn’t it great news for the environment that we are having fewer children?”

    We should always stress the positive in life. Were it not for the dramatic slowdown in birthrates that began the late 1960s and 70s, the apocalyptic warnings of overpopulation then voiced Paul Ehrlich, the Club of Rome, and many others could well have come true in short order. We are lucky that they did not. But it is not clear the “the planet” is any better off as a consequence.

    Consider, for example, that when Japan, South Korea, Singapore, and the other Asian Tiger countries first began to experience sharp declines in fertility in the 1970s, their economies simultaneously took off, leading to far higher levels of per capita and total consumption. More recently, China, and to a lesser extent India, have followed the same pattern. Viewed through the lens of demography this does not look like a coincidence.

    The first order effect of fertility decline is that there are proportionately fewer children to raise and educate. This both frees up female labor to join the formal economy, and allows for greater investment in the education of each remaining child. All else being equal, both factors stimulate economic development, and by extension pollution and resource depletion.

    Low fertility societies can put extra burdens on the environment in other ways as well. For example, they have a higher proportion of singles and childless couples, who generally have more money and opportunity to engage in new forms of consumption, such as world travel or eating out regularly, than do people bearing the responsibilities of family life. (Think of Japan’s so-called “parasite singles”—childless, young adults notorious for their high living).

    A rising proportion of childless households also affects the pattern of living arrangements in ways that can be harmful to environment. Five childless singles living in separate housing units, each with its own washer and dryer, stove, refrigerator, etc., will tend to have a bigger environment footprint than a five-person family that lives under one roof, as will be confirmed by any “carbon footprint” calculator. Such factors help to explain why even in places like Japan and Germany where population is already deceasing in absolute size, increases in per capita consumption result in increasing total carbon emissions.

    Of course, over time, low birthrates lead not to just fewer children, but to fewer working age people as well, even as the percentage of dependent elders explodes. This means that as population aging runs it course, it may depress economic activity for a variety of reasons. Yet even if these and other factors related to population aging ultimately cause a Great Recession and thereby tamp down use of natural resources, is still not clear the consequences for the environment are necessarily positive.

    For example, a society that is paying more and more for pensions and health care also has fewer financial resources available for environmental remediation and investment in “green technology” Also, a society facing dwindling numbers of workers available to support each retiree may respond by adopting patterns of production and consumption that save labor but are far more energy intensive and thereby create lots of environmental damage. (Modern industrialized agriculture, with its high inputs of fossil energy, synthetic chemicals, and water, for example, becomes closer to a necessity if there are dwindling numbers of people available to work the land).

    An aging society may also come to believe that there is no other way to preserve an eroding tax base or to pay for old age entitlement than by stimulating economic growth by whatever means. These could include subsiding suburban sprawl, bailing out auto makers, and other measures that are particularly hard on the planet. Finally, once the point of absolute population decline sets in, this may work against the feasibility of mass transit, high speed rail, and other forms of infrastructure that require a high population density to be economically feasible.

    Was Malthus wrong?
    Malthus and his many present day followers could still be right that we face a future of scarcity. Particularly alarming is the declining growth in agricultural productivity. The so-called Green Revolution, which involved the intensive use of petroleum-based fertilizers, synthetic chemical pesticides herbicides, irrigation, genetic engineering of crops and animals, mechanization, and economies of scale, appears to be approaching its limits. Already, the rate of productivity growth on American and European agriculture has dropped substantially in this decade compared to the 1990s, due to such factors as soil and water depletion, the increasing resistance of pests to chemical treatment, and the simple fact that there is only so much fertilizer one can add to soils and still have it benefit crops. World food production no longer produces a surplus, and in recent years has fallen below the rate of population growth. Decreasing genetic diversity in the crops on which humans depend also makes world agricultural production increasingly vulnerable to climate change, which is always occurring regardless of cause. Feeding the next one billion could be a lot harder than feeding the last one billion, even if most are seniors.

    Yet here again, emerging scarcities of food and other natural resources argue against any reversal in the current downward trend in fertility. If a huge and growing portion of mankind already finds the cost of children prohibitive under modern conditions how will they respond in their family planning when the cost of food and energy (to say nothing of health care and pension contributions) rises further?

    Key to understanding here is that phrase “modern conditions,” or more specifically the institutional arrangement that affect the economics of family life far more than the simple “cost of living.” If rising food and energy prices cause a reversal of the global trend toward urbanism and a renewal of small-scale, local production and rural life, this could be begin to restore the economic basis of the family. In that process, children would regain stranding as productive assets and fertility rates could be expected to rise as a result.

    The ongoing rollback of social security and other intergenerational transfer programs around the world pushes in the same direction. But until globalism and the welfare state are damaged to the extent that they lose even their short-term viability, increasing scarcity will push down fertility rates by increasing the cost of children and thereby accelerate global aging with all its attendant challenges.

    Phillip Longman, a senior fellow at the New America Foundation and the Washington Monthly, is the author of The Empty Cradle and many other writings on demographics and social change.

    Photo by Ethan Prater

  • Living In Denial About Transportation Funding

    The reaction of various advocacy groups to President Obama’s recent call for a $50 billion stimulus spending plan for transportation infrastructure was predictable. They applauded the President’s initiative and thought that Congress should promptly approve the spending request. The benefits of investing in infrastructure are undisputable and the need for funds is urgent and compelling, they (or their press releases) proclaimed.

    But convincing the next Congress of the need to act, whether to fund the infrastructure “down payment” of $50 billion or to authorize a proposed $500 billion multi-year surface transportation program, will not be easy. Most congressional lawmakers do not perceive infrastructure as an urgent priority. They see no signs of a popular outcry about the stalled transportation reauthorization, nor do they perceive a groundswell of grassroots support for massive transportation investments.

    Indeed, what the lawmakers see is just the opposite. They witness New Jersey voters strongly approving Governor Chris Christie’s decision to cancel work on the long-planned rail tunnel under the Hudson River because, says the Governor, “the state simply doesn’t have the money” to pay for overruns in the potential $9-14 billion project. Mr. Christie, no doubt, has in mind the experience of Boston’s Big Dig which was projected in 1982 to cost $2.8 billion and ended up costing $15 billion.

    The lawmakers also see Republican candidates for governor in California (Meg Whitman), Florida (Rick Scott), Ohio (John Kasich) and Wisconsin (Scott Walker) pledging to cancel high-speed rail projects in their states if elected — and running ahead of their Democratic opponents who unanimously support President Obama’s $8 billion high-speed rail initiative. They see the public greeting with a yawn a bold and visionary Amtrak proposal to link Boston and Washington with a dedicated high-speed rail line. They read in a much noticed Sunday Times Magazine article “Education of a President,” (October 12) that the President himself thinks “there’s no such thing as ‘shovel-ready projects’ when it comes to public works.” And they hear an Administration unable to explain how the $50 billion infrastructure initiative will be paid for. When asked, a top administration official could only lamely reply “Stay tuned, we’ll let you know.”

    More evidence of public reluctance to spend on infrastructure comes from the findings of a new October 2010 survey by the Pew Center on the States and the Public Institute of California titled “Facing the Facts: Public Attitudes and Fiscal Realities in Five Stressed States.” By a large margin, respondents in five states (California, Arizona, Florida, Illinois and New York) showed a strong unwillingness to support additional transportation funding and offered to put transportation on the chopping block when asked which of their state’s biggest expenses they would least protect from budget cuts.

    It may be impolitic to suggest it, but dire warnings about the sorry state of the nation’s infrastructure seem to come largely from organized interests — stakeholders and advocacy groups. That is not to say that the nation’s transportation infrastructure has not been neglected or that America does not need better roads and transit systems. But rightly or wrongly, congressional lawmakers often discount cries about “crumbling infrastructure” as self-serving demands for more government money, often for projects that yield small economic return.

    Moreover, many lawmakers come from rural districts that experience little traffic congestion, whose roads are well maintained and which never hope to benefit from high-speed rail service. Their reluctance to spend more money on public works also has been fueled by what they see as disappointing results from the stimulus initiative. As Rep. John Mica (R-FL), ranking member of the House Transportation and Infrastructure Committee and potential future T&I Committee chairman in the 112th Congress likes to point out, more than 60 percent of the stimulus infrastructure dollars still remain unspent, while unemployment in the construction industries remains high. All this adds weight to the legislative reluctance to tackle an ambitious infrastructure spending bill any time soon.

    As one of our colleagues, a sincere and lifelong transportation advocate, put it, “the transportation community is mostly talking to itself and living in denial about the changing political mood.” That mood—in the nation at large as well as in the next Congress— is unmistakably becoming more conservative and skeptical of big government. An overwhelming 70 percent of Americans think the government does not spend taxpayers’ money wisely, according to a recent Rasmussen poll. Newly elected members of Congress will be marching to the drum of fiscal discipline and looking for ways to curb out-of-control spending, a GOP aide told us. Congress will be closely questioning costly new federal initiatives no matter how well intentioned, he added. The expansive federal-aid surface transportation program as we have known it in the past may no longer be thought politically acceptable or fiscally affordable.

    And who knows, the new mood of fiscal restraint may even infect the White House. As one senior White House adviser, quoted in the Sunday Times Magazine story, put it, “there’s going to be very little incentive for big things over the next two years unless there’s some sort of crisis.” And we doubt that by this he meant “infrastructure crisis.”

    Ken Orski has worked professionally in the field of transportation for over 30 years.

    Photo by woodleywonderworks

  • The EPA: Leading Into A Rain Garden?

    Newly-installed solar Panels on the White House are an obvious signal that this administration wants to lead by example. Conservatives will no doubt find ways to ridicule the panels, and liberals will praise them as a display to the world that we are a green nation. About one year ago, on Oct. 5, 2009, the President signed Executive Order (EO) 13514, “Federal Leadership in Environmental, Energy, and Economic Performance.” Like the white house solar panels, this EO also is intended to urge federal agencies to lead by example. It sets as policy that federal agencies shall “…conserve and protect water resources through efficiency, reuse, and storm water management.”

    How far have we come… and how far are we likely to be able to go in achieving these goals?

    For federal facilities, the EPA’s green infrastructure solutions , biological systems and engineered systems include, but are not necessarily limited to:

    • Rain gardens, bioretention, and infiltration planters
    • Porous pavements
    • Vegetated swales and bioswales
    • Green roofs
    • Trees and tree boxes
    • Pocket wetlands
    • Reforestation/revegetation
    • Protection and enhancement of riparian buffers and floodplains
    • Rainwater harvesting for use (e.g., irrigation, HVAC make‐up, non‐potable indoor uses)

    For new facilities, these would be good moves. For many years, our design firm has been planning new developments with very low environmental impacts, using approaches that have been either volunteered by the developer or mandated by the local regulations. We accomplish low impact designs by reducing the infrastructure needed for new development, which reduces both economic and environmental impact. Land development can be more efficient, when designed properly, than conventional or Smart Growth design methods; it can allow lower development costs while still complying with EPA mandates. It can be done by harnessing new design methods made possible by the development of new technologies. While “green” brings an image to builders’ minds of expensive, problematic development, being “green” can be less expensive if done right.

    Speaking from my experience in designing 700 neighborhoods in 46 States (and 13 countries), all with innovative design methods, and building a Net-Zero home in 1983, as well as a dual-certified Green home in 2009, here’s how I evaluate the likelihood of success of the current EPA options:

    Rain gardens, bioretention, and infiltration planters: These organic methods are possibly the most economically viable, but they do come with constant maintenance costs that the building facility owner must be aware of. A bio-retention that is not designed properly or maintained constantly will quickly fail. Unlike concrete pipes and iron sewer grates along curbs which can be left alone for decades, an organic solution to storm water must be installed by an experienced expert with a proven track record, and maintained by personnel that know what they are doing. If built correctly and maintained constantly, this can be the lowest cost solution IF there is enough land area and proper topography (flow of the land) to design the system properly in the first place. Typically, these systems rely on surface flow with no curbing or special curbing to allow drainage off paved areas. On newly developed sites, this could mean a significant cost saving. On existing development, replacing curb may be expensive.

    Porous pavements: Sounds simple – install a pavement that allows rain to flow through to the ground. The big problem and huge expense comes from making sure that the ground under the pavement also porous. In other words, if you were to remove an asphalt parking lot and replace it with porous asphalt, the environmental impact would not change. Why? Because under the original asphalt is likely a non-porous class 5 (or similar) base. In a genuinely porous paved surface, the storm water moving through the pavement must continue through the ground below. This means a base that allows storm water to be held and filtered slowly to the ground below, or directed elsewhere. Sounds expensive? You betcha! Two other major problems: heavy vehicles used at federal facilities could damage these systems, and, if the ground freezes, expansion could be a problem. Long term lifespan of porous pavements may be less than that of solid surfaces.

    Vegetated swales and bioswales: See rain gardens, above.

    Green roofs: Retrofit Green Roofs on to buildings not originally designed for them? Green roofs did not work well in 1983 when I built my Net-Zero home during the first (failed, somehow forgotten) green movement, so I’m not sure what has changed to make them feasible. Green roofs can absorb the sun’s energy to solve the heat island problem of large facilities, but simply coating a dark roof with a light or white color solves the heat island problem with little expense.

    Trees and tree boxes: Trees and tree boxes will have little impact on reducing storm water impacts. Of course there are other benefits for planting trees, so, while a good thing, this does little to comply with the mandate.

    Pocket wetlands: See rain gardens, above.

    Reforestation/revegetation: Assumes the federal facility has plenty of space to allow such a thing.

    Protection and enhancement of riparian buffers and floodplains: Assumes there are riparian buffers and flood plains on the site, or adjacent to the site, that can be altered.

    Rainwater harvesting for use (e.g., irrigation, HVAC make‐up, non‐potable indoor uses): Also a good solution when possible. For example, when 90% of the surface is paving and rooftop, the resulting storage of rainfall could be tremendous, depending upon where in the country the facilities are located, and ample to irrigate the remaining small surface.

    Nobody is an expert on all issues, so there may be new factors that I’m not aware of that would make a method more feasible than what we have experienced.

    What is completely missing from the EPA options here are ways to make an existing facility more efficient by removing excessive paved areas. When an existing facility was originally designed, was it efficient in the first place? Keep in mind that being efficient is not necessarily profitable. If the original consulting engineer and architectural firm fees were based upon a percentage of construction costs, then creating excessive construction costs meant larger fees. Paving contractors maximize profit by covering the most land possible with asphalt or concrete.

    The EPA order can be an opportunity to help design solutions that are cost effective to comply with the mandate. For my firm, the mandate could leverage our low impact software system sales, a technology that can be used to reduce wasteful construction while in redevelopment, so we may directly benefit from this mandate. But before that can happen — and before we can know how successful the EPA directives will be — many questions remain to be answered.

    Photo: Pigeons in front of the EPA building by benchilada

    Rick Harrison is President of Rick Harrison Site Design Studio and Neighborhood Innovations, LLC. He is author of Prefurbia: Reinventing The Suburbs From Disdainable To Sustainable and creator of Performance Planning System. His websites are rhsdplanning.com and performanceplanningsystem.com.

  • West Africa – Key to Feeding the Next 3 Billion?

    Saturday October 16 marked my third day in Accra, Ghana representing AdFarm and Praxis Strategy Group at the National Food and Agriculture (FAGRO) show. We began the day with a deep dive into grower issues as panelist guests on an agriculture-focused radio program hosted by 90.1 Rite FM.

    The panel included John Dziwornu, National Secretary of the National Association of Farmers and Fishermen; Myself (Colin Clarke of AdFarm); Tony Mensah-Abrampah of Praxis Africa;  Jaques Magnee, commercial director for Raanan Fish Feed; and Andy, a farmer member of a Ghanaian Mango Cooperative.

    As a panelist on the 2+hour radio program it served as a great opportunity to learn about the challenges faced by farmers. I was pleasantly surprised to find much common ground among North American and Ghanaian farmers. The similarities were stark:

    • Farmers feel misunderstood and taken for granted. People do not understand the risks they bear to produce food. As long as there is food at the market people are unconcerned about farming.
    • Farmers may only get one paycheck per year. There are no monthly paychecks like off-farm careers.
    • Farmers take great pride in the job they do and often work under difficult conditions. There are no “days off” and farmers bear great risks.

    When asked if farmers are difficult to work with, Andy of the Mango Cooperative answered, “Farming is a difficult job – we want to complain, so let us complain!” I loved Andy’s candor. He was brutally honest and very animated. Tremendous passion for his work as a farmer.

    There was much discussion about lack of access to financing for Ghanaian farmers and the expense of finance options today. Farmers are commonly required to pay up to 22% interest on operating loans… if loans can be secured at all. Another farmer who joined the discussion stated the need for an insurance program that will protect farmers in case of crop loss so loans can be repaid. He stated instances where he has bore the entire expense of bringing a crop to harvest, then having NO market for his crop or losing his crop to a weather issue. There are many variables working against the farmer and very little assurances outside of some subsidies on crop inputs (fertilizer for example).

    My observation is the entire agricultural structure in Ghana is in its infancy. There is need for farm safety nets (insurance programs), there is need for grower education programs on production, there is need for market access expansion, there is need for improved import laws, and there is incredible need for ag infrastructure that will allow farmers to expand production and deliver their crop to market.

    An interview with Davies Korboe, Chairman of farmerdavies inc. and 2010 National Farmer of the Year reinforced many of these points. Davies is a highly diversified farmer raising a mix of crops and livestock. He would be considered a large farmer in Ghana, but even as a large farmer he is facing the same issues with financing, insurance, market access and infrastructure. He sees great opportunity for Ghanaian agriculture, but many issues to overcome.

    Our final meeting of the day was with Philip Abayori, a farmer and President of a prominent Farm and Fisherman Association. A brilliant man, he has an amazing outlook for Ghanaian agriculture. He states there are 12 MILLION hectares of productive land in Ghana and less than 2% in active production today. He describes the different growing regions suitable for different ag industries: forestry, aquaculture, production agriculture and livestock. He envisons programs where farmers and industry professionals from each track can work together towards sustainable, well-managed production. He has great faith in the capabilities Ghanaian farmers.

    My outlook towards agriculture in Ghana is one of opportunity. As we hear the “experts” tell us there is no more land available to feed the next 3 billion people I am encouraged to see places like Ghana with 12 million hectares waiting for production. Are these areas of the world forgotten? Places like Ghana can do their part to feed the world while strengthening the country’s agrarian economy at the same time. There is so much good to be done.

    So where do you want to start?

    Dr. Colin N. Clarke is a senior strategist for AdFarm. Follow him on Twitter @colinnclarke or on Facebook at Facebook.com/cnclarke

  • New York Political Leadership Forces Another Fare Hike

    The New York Post editorialized (October 8) against what it called “Another TWU Fare Hike,” blaming the union for the fares that will now rise to $2.50 for a ride. The editorial writer goes on to say of MTA chief Jay Walder, “It’s not his fault that straphangers get whacked while the MTA’s unionized workers — whose blue collars come with fur trim — don’t have to make a single sacrifice to meet the MTA’s shortfall.”

    In response, I posted the following comment to the New York Post site:

    Not his fault? Well, perhaps not personally. But surely it is the responsibility of the MTA and those in Albany who have skewed law labor and regulation to create this untenable situation. It is about time that public officials, such as those who run the MTA, be held account for what they have given away to the unions. The unions could not have taken it without the agreement of the MTA and other local and state political officials.

    The way the Post tells it, you might think that the Transport Workers Union (TWU) had engineered a coup and had forcibly taken control of the Metropolitan Transit Authority. It fact, it was all quite legal. Interests such as the TWU have used their political influence to obtain the expensive contracts that place the riders a distant second, after the employees and the taxpayers an even more distant third. The MTA was not compelled to sign overly expensive labor contracts. Albany was not compelled to insulate transit unions from the economic reality faced by everyone else, including private sector union members. Washington was not compelled to give transit labor unions job protections that would be the envy of European public sector unions. These protections are a considerable factor in driving expenditures up 100% (inflation adjusted) over the past 25 years, while ridership has risen only 40%. The appointed and elected representatives did so willingly, and to the detriment of the people, whom they were supposed to represent.

    The Post rightly complains about this, but places the blame in the wrong place. If the MTA, state and federal officials who have so skewed transit economics in favor of unions, had instead served the riders and taxpayers first, then New York and the nation would have much more transit services, its fares would be lower and there would be much more ridership.

    The Post also errs in saying “Only in New York could such a perverse equation come to be.” In fact, the situation is no different in most metropolitan areas of the nation. Transit agencies have routinely avoided efficiency measures that would have increased transit ridership and reduced costs (such as competitive contracting or competitive tendering of services), raised fares and cut services.

    As the process has unfolded over decades, the TWU and other local transit unions simply responded to the incentives that were established by the elected and appointed officials. This has contributed, along with extravagant and in rail transit expansions, to rendering transit financially unsustainable. The problem is that the public interest in transit has been hijacked by special interests.

    A more appropriate headline for the editorial would have been “New York Political Leadership Forces Another Fare Hike.”

  • Who’s Racist Now? Europe’s Increasing Intolerance

    With the rising tide of terrorist threats across Europe, one can somewhat understandably expect a   surge in Islamophobia across the West. Yet in a contest to see which can be more racist, one would be safer to bet on Europe than on the traditional bogeyman, the United States.

    One clear indicator of how flummoxed Europeans have become about diversity were the remarks last week by German Chancellor Angela Merkel saying that multi-culturalism has “totally failed” in her country, the richest and theoretically  most capable of absorbing immigrants. “We feel tied to Christian values,” the Chancellor said. “Those who don’t accept them don’t have a place here.”

    One can appreciate Merkel’s candor but it does say something the limitations about the continent’s ability, and even willingness, to absorb immigrants. It’s quite a change from the generations-old tendency among Europeans, particularly on the left, to denigrate America as a kind of hot bed for racism.  Yet even before the latest report of potential terrorist attacks in several western European cities, the center of Islamophobia – and related ethnic hatreds – has been shifting inexorably to the European continent.

    Of course, America has always had its bigots, and still does. And of course, Islamists who threaten or commit violence need to be arrested and thrown behind bars. But, to date, neither major political party has been able to make openly white-supremacist politics a successful leading platform. After all, what was the last time anyone took Pat Buchanan , who has made comments similar to those of Merkel, seriously? Despite the brouhaha over the Arizona anti-illegal alien law, only 5% of Americans consider immigration the nation’s most pressing issue, according to a September Gallup poll.

    The situation in Europe is quite different. Openly racist, anti-immigrant and Islamophobic groupings are on the rise, and they are wreaking havoc on once subdued European politics. Traditional mainstream parties are declining, and the new racist parties can be seen in broad daylight in Austria, Switzerland, Denmark, Sweden and the Netherlands, where populist firebrand Geert Wilders has suggested banning the Koran. In Italy the anti-immigrant Northern League is already hugely powerful.

    It is true that as many Europeans as Americans–about half–think immigration is bad for their countries.  The big difference is what Europeans are willing to do about it. Just consider French President Nicholas Sarkozy’s farcical effort this fall to expel the hapless Roma.

    Yet for most Europeans the big issue is not purse-snatching gypsies but fear and loathing toward the expanding presence of Muslims–who are at least three times as numerous in the E.U. as in the U.S.  Over half of Spaniards and Germans, according to Pew, hold negative views of Muslims. So do roughly 40% of the French. In contrast, only 23% of Americans share this sentiment.

    More disturbing, Europe is actually putting these ethnic hostilities into law. An early sign came this winter, when the usually phlegmatic  Swiss voted to prohibit the building of new minarets. More recently a ban on burqas – the admittedly unattractive female body suits favored by some orthodox Muslims – passed in France, home to Europe’s largest Muslim community. The same measure is now being considered in Spain.

    These actions reflect a broad, and deepening, stream of European public opinion. A recent Pew survey found that over 80% of the French support banning the burqa, as do over 70% of Germans and a large majority of Spaniards and British.

    In contrast, nearly two-thirds of Americans find the burqa ban distasteful. Burqas don’t exactly stir admiring glances in the shopping mall, but few Amercians think we need to ban them. The basic ideal of “don’t tread on me” means “don’t tread on them” as well – at least until they start blowing themselves up at Wal-mart.

    This nuance escapes some of our own knee-jerk racial obsessives, like the Atlanta Journal Constitution’s Cynthia Tucker, who equates opposition to a mosque at Ground Zero as proof of a “new McCarthyism”  aimed against Muslims. But you don’t have to be a bigot to have second thoughts about erecting a mosque at the very spot where innocents were slaughtered by radical Islamists.

    Critical here are profound differences between the U.S. and Europe  in  the role played by ethnicity, race and religion. On the continent national culture is precisely that — the product of a long history of a particular ethnic group. Small minorities, such as Jews in Holland or Armenians in France, are tolerated but expected to submerge their ethnic identities. France has many artists and writers who may be Jewish, but you don’t see many French Woody Allens or Larry Davids who exploit their otherness to help define the national culture.

    Muslim attitudes in Europe are not exactly helpful either.  European Muslims often seem more interested in breaking the national mold than adding to its contours.  More than 80% of British Muslims, for example, identify themselves as Muslims first before being British. This is true of nearly 70% of Muslims in Spain or Germany. Similarly, up to 40% of Britain’s Islamic population believe that terrorist attacks on both Americans and their fellow Britons are justified.

    This alienation also reflects an appalling social and economic reality. In European countries immigrants can receive welfare more easily than join the workforce, and their job prospects are confined by education levels that lag those of immigrants in the United States, Canada and Australia. In France unemployment among immigrants–particularly those from Muslim countries–is often at least twice that of the native born; in Britain Muslims are far more likely to be out of the workforce than either Christians or Hindus.

    Partly due to a less generous welfare state, American immigrant workers with lower educations have, for the most part, been more economically active than their nonimmigrant counterparts.  The contrast is even more telling among Muslim immigrants. In America most Muslims are comfortably middle class, with income and education levels above the national average. They are more likely to be satisfied with the state of the country, their own community and their prospects for success than are other Americans—even in the face of the reaction to 9-ll.

    More important still, more than half of Muslims identify themselves as Americans first, a far higher percentage than in the various countries of Western Europe.   More than four in five are registered to vote, a sure sign of civic involvement. Almost three-quarters, according to a Pew study, say they have never been discriminated against–something that is definitely not the case in Europe where a majority, according to Pew, complain of discrimination.

    Over time, these differences between Europe and America may become even more pronounced. America is becoming increasingly diverse, but it is also growing demographically, and Muslims make up a very small part of that. There’s little fear in Anerica of the kind  of  Muslim envelopment that appears to threaten a  rapidly aging, and soon to be depopulating, Europe.

    Of course the U.S. still has its bigoted Islamophobes, just as it has its own small cadre of vicious Islamists. One law of history appears to be that morons will be morons.   But America’s culture seems strong enough to resist the anti-immigrant hysteria emerging throughout Europe. This is one case where  la difference between America and Europe may prove  a very good thing indeed.

    This article originally appeared at Forbes.com.

    Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

    Photo by World Economic Forum

  • Chicago’s Eroding Competitive Performance (Chicago vs. New York)

    A lot of my thinking on Chicago has been shaped by an overarching view of its performance. Believe it or not, I used to be a huge Chicago cheerleader. I don’t think there’s any doubt that during the 1990’s, Chicago rediscovered its mojo and was really tearing up the charts of performance for big cities. But something changed in the mid-2000’s. I date it to the opening of Millennium Park. Millennium Park was a huge home run for the city, and obviously a key positive part of Mayor Daley’s legacy, no matter what the cost over runs. It added hugely to reconnecting the Loop to the lakefront park system, created a huge tourist attraction, and probably more than any other single factor sparked a residential boom in the Loop itself.

    But Millennium Park was also a sort of high water mark for the city. While I can name a lot of great things the city did before then, after that, there have arguably been more negatives than positives, ranging from a failed Olympic bid that monopolized civic attention for far too long, to a white elephant of a partially completed $300M train station under Block 37 (which hopefully will some day look like a wise move in retrospect), to a disastrous parking meter lease. What’s more, Chicago started hemorrhaging jobs and its economic performance cratered. I think anyone who looked at the situation honestly would have to admit a good chunk of the wind has gone out of the city’s sails. That’s not to say Chicago is doomed. It has fantastic strengths and resources. But it is trending the wrong direction.

    I think this is massively underdiscussed locally, both because the city is imbued with an admittedly not uncommon booster club society culture, and because America’s struggles generally of late make it seem like Chicago is just part of a macrotrend. It is, but it’s more than that.

    I’m going to illustrate Chicago’s reversal today by comparing it to New York City, looking at various key civic performance data. I’ll try to compare both metro and city where possible (all data is metro unless explicitly labeled as city), and to back to 1990 where possible, though for many items I could only conveniently get data for the past decade. You’ll see that where once Chicago was crushing New York, now the situation has reversed itself, erasing 20 years of relative gains for Chicago.

    New York’s Quality of Life Program

    While reading this I want you to keep in mind my recent post on New York’s quality of life agenda. I said I would demonstrate how that is paying dividends, and this post shows that too. Though perhaps I can’t claim causation, think about the correlation at least. In the 90’s and early 2000’s it was Chicago who was the leader in transportation and urban space, with its streetscape program and median planters, the wrought iron fence program, one of the first large scale bike lane deployments, the McDonald’s cycle center at Millennium Park, and more. Now Chicago has stagnated while New York powers ahead on all those items I’ve written about before. It’s hard for people to make the mental leap from stagnant transport planning and banal public place design to economic performance. So hopefully this helps make the picture clear.

    Population Growth

    Here’s a chart from the last decade. For these charts, I am sometimes inconsistent on my use of percentages as multiplied by 100 or not. I did not have time to make them consistent, but keep in mind that any 0.XX value should be multiplied by 100 unless otherwise noted.


    Population Growth – July 1, 2000-July 1, 2009

    Source: Census Bureau Population Estimates Program

    This one is a mixed result. Both regions have anemic growth, but Chicago wins on the metro measure while losing on the city measure. Despite the city of Chicago’s massive condo building boom, its population has been stagnant.

    Jobs

    Here is where it starts getting ugly.


    Source: BLS Current Employment Statistics

    You see Chicago jumping out to a big lead in job in the 90’s, only to see that relative performance gain almost completely erased by today. A year by year view shows this in action.

    This may be the scariest one of the bunch. I think back to 1992 when I first started work out of college. My employer was still hiring aggressively in Chicago even though it was during a recession, while one of the first rumors I heard when I started was about an east cost layoff. This chart backs that anecdote up. Now the shoe is on the other foot.

    If you pull the monthlies for 2010 to date, the situation is continuing on this trend.

    Unemployment Rate

    Unsurprisingly, we see the same trend at work in the unemployment rate, where New York was far higher than Chicago in the early to mid-90’s, but is now consistently below it.


    Source: BLS Local Area Unemployment Statistics

    Gross Domestic Product

    GDP is a basic measure of economic output. The data is only available at the MSA level for a short term period at present, and there’s some debate over how accurate narrow geographic parsing of this variable is, but the same trend is in evidence.


    Source: BEA Regional Economic Accounts

    Please keep in mind that for this and most of the other charts, I rendered them as percentage type comparisons to make the data comparable between cities. If you looked at the actual underlying values, New York’s GDP per capita is already far higher than Chicago’s – $57,097 vs. $45,463. The chart above only measures the growth in the spread between them.

    Personal and Household Income

    Again, not surprisingly, the trend flows through to per capita income:


    Source: BEA Regional Economic Accounts

    And the year by year view of the same data:

    One might argue that this is influenced by the finance bubble that particularly blessed New York. And possibly so. So let’s take a look at an alternate data point, median household income from the Census Bureau. As a median value, this should be less likely to reflect huge gains at the high end. Unfortunately, the Census 2000 data for MSAs is based on the old definition, and it wasn’t a straightforward matter to recalculate this to current definitions, so here is city only performance for the last decade:


    Source: Census 2000 and ACS 2009

    Doesn’t matter – same result.

    Educational Attainment

    I’ll round out with a couple of additional factors often viewed as important. First, the increase in percentage of adults with a college degree. Note that this is a percentage point change (difference), not a percentage change in the total value.


    Source: Census 2000 and ACS 2009

    Back to a mixed result, with New York winning on the regional basis, but Chicago doing better in the city.

    Commuting

    And lastly, a couple of commuting stats. First, public transportation mode share for commuting. Note that this again is a percentage point change, not a percent change.


    Source: Census 2000 and ACS 2009

    There’s debate to be sure on the value of public transit, but clearly New York has outperformed on getting people onto buses and trains. How has that changed commute time? Let’s take a look:

    Source: Census 2000 and ACS 2009

    The city of Chicago had a much bigger drop in commute times. I personally wouldn’t be too excited about this since since lower commute times nationally appear to be driven (so to speak) by the poor economy rather than transport efficiency. Whatever the case, New York performed slightly better on a regional basis.

    Before concluding I should note that the ACS survey has a margin of error associated with it, which should be taken into account before reading too much into changes in values derived from it. I’m only reporting the headline number.

    Conclusion

    While Chicago had a couple of bright spots, it’s pretty clear that not only is New York ahead of Chicago, something that is to be expected, but it is pulling away. It would be easy to say that New York is one of a kind and that nobody can compete with it. Well, it is one of a kind, and while it isn’t a direct competition, Chicago was doing far better than New York as recently as 15 years ago. So it can be done and indeed was being done.

    The reality is that Chicago is falling behind versus traditional peer cities, to say nothing of emerging global cities around the planet. Perhaps it’s not a direct competition, but if you aren’t creating jobs, economic output, and wealth, you aren’t going to be able to make the investments to stay relevant. One reason New York has been doing what it has been on the public space and transportation front and Chicago has not is that New York is in a lot better shape financially. We are watching the cultural institutions of Detroit get dismantled before our eyes as that city can no longer afford them. Clearly, Chicago is no Detroit and never will be. But that can serve as a sort of cautionary tale of what happens when the wealth generating capacity of your city erodes. Chicago is going to find it tougher and tougher to keep up unless it figures out a way to restore the regional economic engine to good working order. That, more than anything, is the key challenge not just for the next mayor, but for all the city and regional leadership.

    This piece originally ran at The Urbanophile.

    Aaron M. Renn is an independent writer on urban affairs based in the Midwest. His writings appear at The Urbanophile.

    Photo by Stuck in Customs

  • African Farmers Hungry for Markets

    The 30th World Food Day finds more hungry people on the planet than ever before. According to the Food and Agriculture Organization (FAO) of the United Nations 1 billion people live in chronic hunger. UN Secretary General Ban Ki-moon’s official message on this year’s theme “United against Hunger” reflects today’s global reality. “For many people, today is not World Food Day. It is another No Food Day.”

    The future holds a seemingly unceasing series of challenges as food production will have to increase 70 percent by 2050 to feed a looming population of nine billion people. Here in Accra, Ghana, however, the mood is hopeful. The Honourable Kwesi Ahwoi, Minister of Food and Agriculture proclaimed that “a lot is happening here. The country is moving forward and we are not going back.”

    Ghana is considered the gateway to Africa based on its strong agrarian roots and stable political environment. Agriculture is the dominant sector in Ghana’s economy. The sector plays a critical role in reducing poverty and achieving economic growth employing about 60% of the labor force and contributing about 40% to the Gross Domestic Product (GDP). It also accounts for over 57% of the country’s foreign exchange earnings.

    This week at the 2nd National Farm and Agric Show in Accra (FAGRO) the suggestion that some parts of Africa might be turning the corner seems at least conceivable. At the show farmers, associations of farmers and fisherman, agribusinesses from all sectors, and NGO and governmental agricultural development organizations have come together to share Ideas, showcase and promote agriculture products and learn about improved modern and innovative methods of farming.

    Farmers at the World Food Day ceremonies and the farm and agric show are confident they are up to the task. A placard carried by a farmer in the audience said as much – Aid Cannot Feed Us For Life. Rather fair prices and ready markets for what we also produce. Talking with farmers and processors who produce everything from nutmeg and tilapia to pineapple juice and dehydrated oyster mushrooms confirmed the prevailing sentiment that farmers are eager to access new technologies and reach new markets.

    Linking African producers to markets is not exactly a new idea. International aid and finance organizations have invested significant resources to provide technical assistance to help farmers use good agricultural practices and to shore up supply chains. ACDI/VOCA, for example, is improving Ghana’s agricultural sector by increasing competitiveness in domestic, regional and international markets through the USAID-funded Ghana Agricultural Development and Value Chain Enhancement (ADVANCE) program. Policies and programs like the USA’s African Growth and Opportunity Act (AGOA) offer incentives for Ghana and other African countries to continue their efforts to open their economies and build free markets.

    Significant challenges remain of course if Ghana and other African countries are going to truly turn the corner on combating hunger and malnutrition at home while penetrating new markets on the continent and elsewhere on the globe.

    Philip Abayori, Chairman of the FAGRO Advisory Board, explains that irrigation systems are vastly underutilized for production while post-harvest storage and distribution systems are entirely inadequate. So much that, in some cases, up to 40 percent of the harvest is lost to spoilage.

    At the other end of the market, particularly in foreign markets, there is a lack of information and the necessary infrastructure according to John Dziwurnu, National Secretary for the Ghana National Association of Farmers and Fishermen. Producers need to know what consumers want before they can grow to their requirements; then they must be able to ship them to points of distribution where adequate storage and quality control is in place that will enable products to reach consumers in top condition.

    Find out more about Delore’s and Colin Clark’s visit to Ghana at the AdFarm Blog.

    Delore Zimmerman is publisher of NewGeography.com and President of Praxis Strategy Group.

  • Green Jobs for Janitors: How Neoliberals and Green Keynesians Wrecked Obama’s Promise of a Clean Energy Economy

    In August 2008, then-candidate Barack Obama traveled to Lansing, Michigan, to lay out an ambitious ten-year plan for revitalizing, and fundamentally altering, the American economy. His administration, he vowed, would midwife new clean-energy industries, reduce dependence on foreign oil, and create five million green jobs. “Will America watch as the clean-energy jobs and industries of the future flourish in countries like Spain, Japan, or Germany?” Obama asked. “Or will we create them here, in the greatest country on earth, with the most talented, productive workers in the world?”

    Two years later, the answer to that second question appears to be no. Obama’s environmental agenda is in tatters. His green jobs plan has done little to make a dent in unemployment, which persists at close to 10 percent. Obama’s signature environmental initiative, cap-and-trade, died in the Senate in July. And, during the first year of Obama’s tenure, China massively outspent the United States on clean-energy technology.

    The story of how Obama’s green agenda came up empty is more complicated than the one conventionally told by Democrats and greens, who imagine that cap-and-trade would have been transformational had Republicans and global-warming deniers not gotten in the way. In truth, the president’s strategy was flawed from the start. Cap-and-trade would not have birthed a domestic clean-energy economy — indeed, it wasn’t designed to. Meanwhile, the administration’s green stimulus spending was split between short-term, if worthy, investments in green technology, to which far too little money was allocated, and over-hyped public-works projects that would never have delivered the new industrial economy Obama promised as a candidate.

    Voodoo Economics

    Shortly before the House passed its version of cap-and-trade legislation last year, the Center for American Progress (CAP), headed by Obama transition director John Podesta, released a study claiming that the cap-and-trade bill and the stimulus combined would create 1.7 million new jobs. Democrats repeatedly pointed to the CAP report to support their jobs claims. Extrapolating from the report’s analysis, it seems that over half of the new jobs, almost 900,000, were supposed to come from building retrofits. The study’s authors apparently believed that a mere $5 billion in stimulus funding for weatherization, plus a price on carbon, would leverage $80 billion annually in private investment and lead to the retrofitting of every single commercial and residential building in America in just ten years.

    Alongside the CAP report, the Natural Resources Defense Council and the leading green jobs group, Green For All, released another study written by two of the same authors, claiming that roughly half of the jobs would benefit low-wage workers and would offer “decent opportunities for promotions and rising wages over time.” Indeed, environmentalists such as Van Jones — who had come to prominence calling upon young people to “put down those handguns and pick up some caulking guns” and briefly served as Obama’s green jobs czar — claimed that building retrofits and cap-and-trade legislation could save both the planet and the inner city.

    In reality, the stimulus’s $5 billion weatherization program, according to the Department of Energy, created or saved just 13,000 jobs during the last reported quarter. But, even if more of these jobs had been created, the idea that inner-city youth should see what are essentially janitorial jobs as a pathway out of poverty was always far-fetched. America’s black middle class emerged from the steel, ship, and automobile factories of the postwar industrial heyday. Those jobs were high-skill, high-wage, and long-term. They manufactured products that could be sold on domestic and foreign markets, and they provided the economic basis for a dramatic improvement in black America’s standard of living. Jobs retrofitting buildings and weatherizing homes are, by contrast, low-skill and short-term.

    To be fair, Democrats in Congress and White House officials always believed that while the stimulus expenditures represented a down payment on the clean energy economy, the real action would ultimately be driven by private investments in response to cap and trade, not sustained public investments in innovation and manufacturing.

    In this way the green Keynesianism that characterized the stimulus comfortably accommodated itself to the neoliberal policy predilections that have, over the last 20 years, become Democratic Party orthodoxy. 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.

    Even Jones, who spent recent years railing against neoliberal economic policies, accepts this neoliberal conceit. “The real solution to this whole thing is to put a price on carbon,” Jones told Pacifica’s Democracy Now in the fall of 2008. “The biggest economic stimulus I can imagine would be a carbon tax or a cap and trade… so that suddenly there is a market signal for private capital to start moving aggressively in a clean energy, low carbon direction.”

    But cap and trade could never deliver the millions of new jobs that Obama, Congressional Democrats, and greens promised. The primary obstacle to private sector investment in clean energy technologies is not the absence of modest carbon price signals such as those in the Congress’ cap and trade proposals and currently in place in Europe. Rather, it is the vast price gap between fossil fuels and clean energy technologies. While fossil fuels are energy dense, widely available, easy to consume, and supported by a well-developed infrastructure, the alternatives are costly, cumbersome, intermittent, or all of the above.

    Yet cap and trade enjoyed mainstream credibility for as long as it did in spite of these hard technological realities because economic models seemed to show that a rising carbon price would cause technological innovation and hence emissions reductions. Cap and traders used these models to argue that once we have a carbon price, the market would magically deliver technology innovation because private firms would have an incentive to invest to make those technologies better and cheaper.

    But the magic wasn’t in the market, it was in the models constructed by neoclassical economists, which simply assume substantial rates of technological change. Innovation — non-linear, unpredictable, and ephemeral — is understandably difficult to model. Perhaps more significantly, important innovations have as often as not been the result of public investments in technology which economists, following neoclassical doctrine, are loathe to acknowledge, much less include in their models.

    The real world gives us ample reason to be skeptical of carbon pricing claims. The European Union has had a cap-and-trade system in place since 2005, and Norway and Sweden have had carbon taxes since the early ’90s. None have spurred much innovation. On the contrary, much of Europe has been on a coal-plant-building binge over the last decade. Where European nations have advanced clean-energy technologies–whether wind in Denmark, nuclear in France, or solar in Germany–they did so through direct investments in those technologies that dwarfed the economic incentive provided by carbon pricing.

    The Ideology of Decline

    In late May, President Obama told employees at a solar panel factory in California, “I’m not prepared to cede American leadership” in clean energy. But that is in effect what his policies have done. While U.S. policymakers have fetishized carbon pricing and energy efficiency retrofitting, America’s competitors have been investing heavily to deepen their domination of solar, wind, nuclear, electric car, and high-speed rail technology and manufacturing.

    China, Japan and Korea have moved forward with aggressive plans to out-manufacture, out-innovate, and out-compete the United States in clean tech. China alone plans to spend more than $740 billion (5 trillion yuan) over the next 10 years. While neoclassical economists and their disciples in Washington have presided over the deindustrialization and financialization of the American economy, our economic competitors have used long-term investments to establish dominant positions in advanced, high value manufacturing sectors such as automobiles, electronics, information technology, and now clean tech.

    Obama too could have focused on winning a similarly long-term commitment to public investment in green innovation and manufacturing. Instead, he threw his political capital behind cap-and-trade. Despite the fact that the rising domination of key clean energy technologies by our economic rivals could in no way be attributed to a price on carbon — China, Japan, and Korea don’t even have one — Obama, his Congressional allies, and their cheerleaders in the media such as New York Times columnist Thomas Friedman, have continued to insist that cap and trade legislation was the key to reestablishing U.S. competitiveness in clean tech.

    In truth, cap and trade was conceived as a strategy to minimize the cost of reducing emissions, not to create domestic industries or jobs. Indeed, economists typically argue that government should not even concern itself with such issues. To the neoclassical mind, making microchips is no better than making potato chips, as innovation expert Rob Atkinson wryly observes. If China is better at making solar panels and we are better at making foam insulation, then we should just buy our solar panels from China. From this point of view, creating low-skill construction jobs installing compact fluorescent light bulbs in old buildings has the same economic utility as creating high-skill jobs manufacturing solar panels and nuclear reactors for export.

    Apply these assumptions to climate and energy policy, and what you get is the failed Democratic agenda. Governments should cap carbon emissions and auction the right to pollute. Doing so would establish a price on carbon pollution that will make fossil fuels increasingly expensive and thus drive private investment and consumption to efficiency and renewables. If all those solar panels and windmills get made in China — so be it. America will still lead the world in potato chips or something else.

    This is not a recipe for American economic competitiveness in clean energy technology and manufacturing. America’s nascent clean energy industries need sustained public investments to survive and prosper. While neoliberal greens and their allies were hyperventilating over the death of cap and trade, the stimulus investments in technology and manufacturing were hard at work laying the foundations for a competitive clean economy. Though overshadowed by the public works-style efficiency programs, stimulus-funded investments in clean technology arguably saved the American renewables industry, which was in free-fall after the 2008 financial crisis.

    In contrast to the green public works projects, stimulus investments in manufacturing and innovation have largely done what they were intended to do — support an embryonic domestic industry and help improve clean energy technologies so that they can become competitive with fossil fuels. Those investments helped put American clean energy manufacturing back on a competitive footing globally, and, ironically, created more jobs at less cost than the green public works investments that were supposed to put millions of Americans back to work. Already, Deutsche Bank estimates that the stimulus grew U.S. battery manufacturers production capacity from two percent of the global market to 20 percent by 2012, and the story is similar for other technologies.

    Those technologies still have a long way to go before they will be good enough and cheap enough to become the basis for a sustained American economic renewal. But the road map for getting there looks a lot more like what America began through the stimulus investments in technology and manufacturing than through the green public works programs and carbon market making that have distracted the Administration and Congress for the better part of the last two years.

    This should not particularly surprise us as the history of industrialization and technology innovation in America is the history of government investment in technology. In the postwar era, the federal government made investments in the development and commercialization of new technologies such as nuclear power, computers, the Internet, biomedical research, jet turbines, solar power, wind power and countless other technologies at a scale that private firms simply could not have replicated. Those investments “crowded in” rather than crowded out private investment and the result was high growth and prosperity that benefited virtually every American.

    Unfortunately, neither Obama nor his fellow Democrats still seem to get it. While White House officials, in the wake of the collapse of cap and trade, tout the impressive short-term accomplishments of the stimulus investments in technology and manufacturing, they have done little to date to prevent them from expiring next year.

    Change We Can Believe In

    Obama appears genuinely moved by the vision of a clean-energy economy. He seems to have convinced himself, however, that America’s energy economy can be transformed through carbon markets and efficiency retrofits.

    The president’s proposal to “make clean energy the profitable kind of energy” — which was always code for making fossil fuels more expensive — today needs to be replaced by a focused effort to make clean energy cheap through innovation. Doing so will require large, direct, and sustained federal investments in new energy technologies. This focus on innovation may seem like an indirect way to create jobs, but history shows it is also the one with the strongest record of producing whole new industries — industries that have driven America’s long-term economic expansion.

    There is a growing consensus in favor of such an effort, which includes some conservatives and Republicans who opposed cap-and-trade. Support for greater investment in energy innovation includes corporate chieftains, such as Bill Gates, GE’s Jeff Immelt, and Intel founder Andy Grove, as well as dozens of Nobel laureate scientists and energy policy experts across the ideological spectrum.

    The failure of cap-and-trade to make it through the Senate may thus turn out to be a blessing in disguise. It spares the country a program that would have done little to help either the economy or the environment. And it gives Obama and the Democrats an opportunity to reconsider how they might build the clean-energy economy they were elected to deliver. With the right policies, the answer to the question Obama posed two years ago in Lansing — will the United States lead the way in creating clean-energy jobs? — can still be yes.

    This piece originally appeared at Breakthrough Blog.

    Michael Shellenberger and Ted Nordhaus are co-founders of the Breakthrough Institute and authors of Break Through.

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