The Sustainability Transition

to a New Green Economy

A Climate-Appropriate Fiscal Stimulus Package

Posted by Maggie Winslow on November 1, 2008

After 9/11, we were exhorted to go shopping to keep the economy on track. Since consumer spending is about 70% of the nation’s GDP, if shopping slows, so does the economy. Stores and manufacturers start to lay off employees. These laid off employees then decrease their spending leading to further unemployment.

However, shopping is not the best way to help the economy. Much of what is purchased is made abroad, so most of the money spent leaves the country. Some of the money also goes to corporate profits, rather than workers who would spend most of their income. Also, in a world of finite resources, depending on consumerism to keep employment high is ultimately a dead-end.

Asking people to shop now to help the economy might be unsuccessful anyhow. Some folks are saving due to fear of what is ahead. Some folks can’t afford to shop. What is needed for the economy is for the government to step in a do some spending – a “fiscal stimulus” package.

To get the most stimulus bang for our government dollar, tax cuts and other policies which encourage across the board spending are not very effective. Far better for both speed and impact is direct government spending. Already proposals are on the table from both sides of the aisle for infrastructure spending. However, the infrastructure spending we really need to make if we wish to truly invest in our future is that which will help the economy now AND solve other problems that are a drag on the economy even in good times. Two related areas where the government should focus spending are developing renewable energy and climate change prevention.

If you think the financial crisis was bad for the economy, it is nothing compared to the approaching environmental crisis. The natural world is the foundation of the economy. Depleted and degraded resources make doing business more expensive, and increase costs to the federal, state and local governments left the task of providing clean water, recreation opportunities, and health care. Climate change has the potential to drain resources from the productive economy to deal with the myriad of problems we can expect to see, from rising sea levels, melting permafrost, changes in agricultural productivity, and crazy weather pattern.

A number of studies have now been published which show that reducing our carbon emissions will be a win-win proposition. This effort will create jobs while reducing the risk of climate change. It will also help our competitive position in the world by focusing out attention on energy efficiency and renewable energy technologies.

This crisis is also an opportunity for redirecting our economy in a necessary and effective manner. Let’s put our national resources to work for all of us.

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