Doing the Recovery Right
Robert Pollin is professor of economics and co-director of the Political Economy Research Institute at the University of Massachusetts.
Prof. Pollin says, below: "But these achievements still do not tell us how a green investment project could also advance a broader social justice agenda, to promote good jobs and economic security, and to fight poverty. "
I can only assume Prof. Pollin knows about the synthesis of ideas presented by the brilliant progressive minds, who have, over the last couple hundred years, already presented the perfect solution to our economic woes –"to promote good jobs and economic security, and to fight poverty." Land Value Taxation / Resource Rent, in America, and everywhere else, as a 'single tax system' has the capacity to provide far higher revenues than the current tax system, (while eliminating all income and business taxes) but the trouble is that those who use land (and all other resources) for speculative purposes don't want to pay taxes. They are immersed in a great gambler's game, –watching land values go up and down in 18 year cycles, building great personal fortunes, without a care for the people they bleed in the process.
As background, in ‘The Corruption of Economics’, Professor Mason Gaffney lays out the history of the suppression of classical economics, by vested interests, in favor of neo-classical economics, –promoting real estate speculation and escalating land prices, which lead to repeated recessions. He had this to say: “There were certain things that were 'not done'. They were in 'bad taste'. One of them was to use the word land. My professors, when they used the word "land" they would put it in quotes. "LAND" As though “we don't talk about that.” or, "we're really not sure what it means." or something like that. And another was to, 'sneer' when the subject of land taxation was mentioned. Now if you've never been sneered at by a senior professor, you probably don't get the feeling. But the feeling was definitely there. "You don't talk about that. That won't get you anywhere. Its not done."
According to Prof. Gaffney, John Bates Clark (1847-1938) was appointed professor of economics at Columbia University, and was enthusiastically received by the establishment in New York city, because he justified speculation in land. He was lauded for his “deductive system of economic harmony based upon the competition of rational, self-interested men inevitably progressing.”
That’s neo-classical economics in a nutshell – and we see the consequences everywhere today.
Doing the Recovery Right
by Robert Pollin–January 28, 2009
For most of the past generation, the aims of environmental sustainability and social justice were seen as equally worthy, yet painfully and unavoidably in conflict. Tree huggers and spotted owls were pitted against loggers and hard hats. Fighting global warming was held to inevitably worsen global poverty and vice versa. Indeed, the competing demands of the environmental and social justice agendas were frequently cited as a classic example of how public policy choices were fraught with trade-offs and unintended consequences--how you could end up doing harm while seeking only to do good.
Over the past couple of years, there has been a dramatic reversal of thinking: the idea has emerged that protecting the environment--in particular, defeating global warming--can also be an effective engine of economic growth, job creation and even poverty reduction. A small band of determined activist organizations, including the Apollo Alliance, Green For All and 1Sky, deserve credit for pushing this idea into the mainstream. Labor and environmental organizations like the Steelworkers and the Natural Resources Defense Council were open to persuasion. By the time the presidential campaign began, Hillary Clinton and Barack Obama had both incorporated variations on this idea as major planks in their platforms.
Now, under President Obama, the idea of a green recovery--an investment program to promote energy efficiency and the development of renewable energy--is a central feature of his $825 billion program to defeat the most severe financial crash and recession since the 1930s.
Of course, arguments about trade-offs and unintended consequences have not disappeared. Robert Stavins, chair of the Environment and Natural Resources Faculty Group at Harvard, recently offered this analogy: "Let's say I want to have a dinner party. It's important that I cook dinner, and I'd also like to take a shower before the guests arrive. You might think, Well, it would be really efficient for me to cook dinner in the shower. But it turns out that if I try that I'm not going to get very clean and it's not going to be a very good dinner."
A weighty intellectual pedigree does undergird the Stavins story. This is a proposition developed by Jan Tinbergen, co-recipient of the first Nobel Prize in Economics and a lifelong leftist. Tinbergen held that you need separate policy tools to address distinct policy aims--that, in other words, trying to kill two birds with one stone is not likely to succeed. As the Obama administration begins spending in the range of $150 billion to create jobs and fight global warming through a single tool of green investments, it is clearly an appropriate time to examine how much Tinbergen's law might actually apply to our current situation.
What Is the Green Investment Agenda?
The transformation of our fossil fuel driven economy into a clean energy economy will be the work of a generation, engaging a huge range of people and activities. But focusing on essentials, there are only three interrelated projects that will drive the entire enterprise: dramatically increasing energy efficiency; equally dramatically lowering the cost of supplying energy from such renewable sources as solar, wind and geothermal power; and mandating limits and raising prices on the burning of oil, coal and natural gas.
In the preliminary version of the stimulus program drafted by House Democrats in mid-January, the green recovery components of the overall $825 billion measure include about $45 billion for retrofitting buildings to increase their energy efficiency significantly; $20 billion to upgrade the public transportation system; $32 billion for building "smart grid" electrical transmissions systems that can, among other things, efficiently use power from renewable sources; and $8 billion for renewable energy research and commercialization (allowing that the exact allocations for various purposes are not yet entirely clear).
The piece that's missing is some mechanism for limiting the burning of fossil fuels. One option is to raise taxes on purchasing oil, coal and natural gas. Congress has also considered "cap and trade" proposals for the past few years, which would set increasing limits on total carbon emissions and require corporations to pay the government for rights to produce fossil fuels. A significant bloc in Congress, including some liberal Democrats like Senator Sherrod Brown of Ohio, has opposed such measures because they would impose higher energy prices on businesses and individuals. But some version of this proposal will have to be implemented--if not amid the recession itself, soon thereafter--to advance a successful environmental agenda.
Success in combining the three projects--energy efficiency, renewable energy and limits on fossil fuel consumption--could produce a decisive environmental victory. It could also serve social justice in several ways, by lessening the risks of extreme weather patterns like Hurricane Katrina, allowing us to breathe clean air and breaking our dependence on oil companies and foreign oil oligarchies. But these achievements still do not tell us how a green investment project could also advance a broader social justice agenda, to promote good jobs and economic security, and to fight poverty. Are these connections real?