We will not fall magically into a rising tide of job creation, just by depriving ourselves of services and privileges we have built into our way of life and on which our prosperity depends. And we will not create jobs by privileging those industries that are doing the least to innovate. Innovation is the American way; it is what the nation has always struggled to accomplish, and it must be the cornerstone of a new job-creation boom.
It may be that moments of grave economic pressure put grave strain on a culture’s ability to give voice to and to share a common understanding of core values. It may be that after the financial collapse that struck in 2007 and 2008, the US is facing a crisis of conscience and a struggle to regain its identity. We need to remember that we can take the reins of the 21st century economic landscape, and build the economy of tomorrow.
We could look at the crisis and its aftermath and say, ‘we need some tough love to get us back on track’, and we would probably be right. But we can’t use that sentiment, that truism, to justify bad policy choices or to seek comfort in the idea of a swift break with good social services being better than a slow recovery. The stakes are too high, and the work of building a 21st century world-leading economy requires more vision than that.
It’s not always healthy to divide the world into then and now, before and after, but we can say that many of the old comforts of boundless American resources and economic prosperity are no more; we need to make a future from what we have, and the best resource we have is the ability to invent new paradigms and erect the infrastructure to put them into practice.
One very important clarification must first be made, however, before we can examine with any degree of seriousness how innovation will help to restore our economy to vigorous and viable health: narrowly focused innovations carried out by cartels of privilege to maximize their hold on the marketplace are not true innovations, but mere reiterations of the primitive practice of concentrating wealth to build feudal spheres of influence.
In a 21st century democracy, innovation has to work to the genuine benefit of the democratic landscape of ideas and interests, to the benefit of free individuals seeking to optimize their experience of democratic freedom. Economic innovation that liberates capital flows and actually expands opportunity for ordinary people is of paramount importance in this recovery. Another way to say this would be to specify that we cannot accept simply “more of the same”, along with the vague promise that eventually it will benefit the hundreds of millions of citizens who are not millionaires or billionaires.
We need to demand genuine improvements, in policy and in practice, that restore decentralized economic vigor to our society. And we have genuine technological innovations that bring with them this very important combination of decentralized capital flows and innovation of business models and economic assumptions.
We stand now at the brink of a new industrial revolution, for the information age: the building of a green economy sustainable in terms of its relationship with the natural environment, but also in its use of resources, and its generation of prosperity. The transition to a smart-grid, clean-energy-based economy entails decentralizing the control of powerful energy cartels over the resources that give life to our society and to its markets. It entails the vital correction of distorted price signals, which presently conceal costs and burden us with wasteful spending.
Clean energy will be free of the vast negative externalities that plague our economic system, invite volatility and hamper recovery. In a society that seeks to be truly democratic, the marketplace for enterprise must continue to innovate in ways that improve the circumstance and opportunity of all members of the society. To stagnate in terms of how intelligently we do things is to withdraw from the mission of a democracy, which is to continually expand the degree of human dignity each citizen can demand and experience without peril.
At the present time, in the United States, we face a choice between major forces that favor the economic status quo, with its massive and accelerating wealth divide, and the power of a new paradigm, which will require the participation of more people, at a higher level of responsibility and education, justly rewarded by a higher standard of living.
The American Recovery and Reinvestment Act, and the President’s long-term budget reform, aimed at “winning the future” are sound beginnings, but cautious in comparison to what could be accomplished with a more explicit and committed push for building a green economy.
We need deep reforms to our economic and public policy landscape, but that does not mean we need to gut basic social services in favor of still more unaffordable tax cuts for the superrich. There is no economic theory that can support that policy, and there is no historical evidence of any kind that it would work or has worked, to create jobs. Instead, we need to evaluate the actual social and economic value of spending (including tax cuts).
What we have seen comprehensively, since the Bush tax cuts of 2001, is that when the “supply side”, the superrich and the business sector, are given massive tax cuts for no particular reason, they are not motivated to invest that money in job creation, but rather to hide it away in high-end investment strategies that avoid the volatility of enterprise altogether.
When the ARRA was passed, this began to change, because new tax breaks were targeted toward productive entrepreneurial activities, and there was no guarantee the Bush tax breaks would be extended. Job creation boomed and continued until 2011. But in December 2010, the Bush tax cuts were extended, even for the wealthiest of the wealthy, and the clear outcome has been a month-by-month slowing of overall job creation.
Once again, the history, and the economic logic, is clear: when you give would-be investors in job creation free cash, so that they don’t need enterprise to make them their extra cash, they slow down their job-creation activity. We need policies that will motivate wealth to flow toward new jobs, sustainable jobs, the kind of employment that doesn’t evaporate when investors suddenly find what they consider a sure thing.
So, we need to build a green economy:
- we need to build the infrastructure that will carry clean, renewable energy to all points of consumption;
- we need to retrain industrial workers to produce the technology that will produce clean, renewable energy;
- we need to employ millions of people to maintain and upgrade the infrastructure, install the production capacity and manage our rapid advance toward comprehensive energy efficiency;
- we need to liberate major capital flows to foster this level of technological and commercial innovation…
Some relatively subtle policy shifts can achieve this, but first of all is the standard that we will not continue to prop up, through subsidies, negative externalities or unfair pricing, industries and entities that refuse to be part of this innovation dynamic, this transition to a sustainable economy.
Putting a price on carbon emissions will allow us to then motivate the flow of capital away from dirty, risky, expensive fossil fuels, reduce the negative externalities that plague our energy economy, and build the world-first true clean energy economy. Doing so is a national imperative, because getting beyond combustible fuels is the destination for large-scale energy production. Whoever gets there first will be the world leader in the global economy of the 21st century.
To create jobs, we need to innovate, not reward the least imaginative and least cooperative of our entrenched powers-that-be.
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Originally published July 9, 2011, at IndependentsOfPrinciple.com
The Poet Economist 