The On-Again, Off-Again Green Economy, Part I

Posted: December 19th, 2009 by Militant Libertarian

What It Really Is and Where (and When) It Really Thrives


The terms “green economy” and “green jobs” have become catch phrases. For socialists (aka “progressives”), the terms are rallying points for all things that are anti-capitalism and pro-government. For conservatives (aka “neo-cons”), the terms are spat out as illustrations of the evils of liberal government run amok. For capitalists (aka “libertarian” or “fiscal conservatives”), these phrases are both rallying points and an Axis of Evil.

Few political terms can be used as examples of how illustrative of paradigm differences (and similarities) between supposedly disparate groups can be. When the Republicans were in power, they worked hard to control the way some markets and businesses could operate and now that Democrats are in power, we’re seeing the same trend, just with different targets.

Capitalists, meanwhile, continue to do what they’ve always done: adapt to change, work around government’s obstacles, and keep building up the American economy. In spite of what the Republicans and Democrats do to stop them.

green-politicianOf course, those in either of the other two camps will immediately have things to say to point out the fallacy they’ll see in that last paragraph. Republicans, after all, are “pro business!” Democrats aren’t against business, just against evil corporate capitalist control.

While these two sound bytes might be enough to placate most believers in either of those paradigms, they are not the truth, nor are they really even close. They’re actually illustrative of the falseness of both points of view. The socialists refuse to admit that capitalists are what made our country great enough to provide them with enough security to be able to espouse their point of view. Neo-cons refuse to admit that “conservatism” was originally a reference to fiscal policy of “hands off” and a social policy of “stay out of it.”

As the blame game between the two sides continues, the real core of the problem remains unattended to by anyone but the capitalists. The question of the when and where for “green jobs” and a “green economy,” both of which are blanket phrases with little meaning, is left virtually unattended by both sides of the argument, except in lip service.

Before delving into the question of how green jobs will emerge with a green economy, we must first define what we mean by this phrase and also look at the history of it, specifically in the U.S.

Defining Green Jobs and a Green Economy
green-pigbankLoosely told, these two things refer to aspects of the same overall theme. While the term “green” is usually used to signify something natural, renewable, or otherwise minimally harming to nature and the earth, the other two words, “jobs” and “economy” refer to parts of that as they apply to humans.

Most of the time, these terms are applied to energy production, use, and storage. Almost always in that order. Throughout known human history, the production, use and storage of energy has been the focus of most of man’s endeavors. Whether it be growing or husbanding food sources, building and maintaining facilities to control our environment, or moving from one location to another—energy is the key.

Today, that means the production of electricity and the movement of transportation vehicles almost exclusively. In all aspects of human activity today, these two things impact our use of energy more than any other. We need energy to move our vehicles, produce and transport our foods, heat and cool our houses and buildings, and so forth.

So our definition of green jobs and economy boils down to two things: transportation and production of electricity. Most of us are fully aware how closely intertwined these two things are. Green jobs will be those jobs which are in the sectors of transportation and energy production while the green economy will be that aspect of our economy (it’s majority) that is based on those two endeavors as well.

A History of the Green Economy
Rather than delve into the far history of human endeavor, we’ll stick with the modern look at the green economy we’ve defined. Even at that, we’ll be taking a limited overview with an extremely broad account of how that economy has progressed in recent times.

At the turn of the century, as the 19th century drew to a close, the new energy economy was really heating up (so to speak). All manner of energy sources were being discovered, harnessed, and exploited as we pushed ahead with the Industrial Revolution that would define our modern existence even a full century later.

Electricity, petroleum, combustible gases, and much more were tried and refined. New materials, new chemicals, whole new sciences, and an Age of Innovation were transforming the human lifestyle from one of hard labor and difficult conditions to one of relative ease. With these changes to humans’ physical environments came an expansion of the intellectual ones, as comfort allowed for mental exploration.

This, in turn, lead to more innovation and more discoveries in what appeared to be an endless cycle. That cycle continues today, though not at the same breakneck speed that it did then. As is often the case in human history, bursts of innovation eventually lead to backlashes of anti-innovators, afraid of the new technology.

As is also often the case, those who stood to make or lose wealth based on those innovations were quick to back or oppose them. This phenomenon also continues today.

By the late 1970s, Americans had embraced most technology and were looking forward to new ones. The petroleum industry had blossomed into a huge economic force throughout the world, especially in both North America and the Middle East.

Easily predicted from hindsight, of course, we can see that as soon as the demand for oil had raised its price sufficiently (thanks largely to political, rather than economic changes), the economy that was so dependent on it (ours) began to falter. Dubbed the “Oil Crunch,” this meant that Americans had to make a choice: stay on petroleum or move towards other sources of energy.

The choice was largely left to America’s political leaders. This was unfortunate, as the market (consumers) and the capitalists who worked with the market’s forces to supply what is demanded would have been better-suited to choose. Politics mean shady dealings and back room handshakes, which meant that those who were politically connected (petroleum) made the decisions for us.


President Carter, himself not as heavily influenced by the petroleum lobby (though he had plenty of others influencing him), hoped to press the American economy towards non-oil-based alternative energy sources. He even went so far as to put solar panels on the White House roof.

His move towards green energy was not necessarily “green” in the sense we have today, but was more of a political gesture. He was acknowledging the heavy influence of the Cold War and its Middle Eastern battleground on America’s welfare and hoped to show that we could remove ourselves from this potentially disastrous foreign policy entanglement.

For a short period of time, it appeared that his support, along with the quick reactions of the capitalists who saw the opportunity, might work. Carter had poured $368 million into the research and development of renewable energy and investors were putting in a lot more as wind towers, PV panels, and more were built around the nation.

Carter further worked to get electric utilities to open their grid to smaller providers and then passed through tax credits to those investing in renewable energy. Congress later increased those subsidies thanks to another oil shock. [1] [2 ] [3]

All three approaches are laudable, though fatally flawed.

First, when government puts money into anything as an incentive, it invariably picks and chooses which is “better,” leaving others which might have a better solution out in the cold. In this case, however, the sum was small enough that it had little impact compared to the free market.

Second, strong arming the utilities into accepting other power generation sources builds bad blood. It’s likely that, given a little time, the market would have pressed this anyway. Not to mention the better way this same thing could have been accomplished by government.

That is the third initiative: tax subsidies and breaks. By offering tax subsidies, government has much more control and power over the market without requiring any new taxes and often without forcing one competitor out of the market in favor of another. Blanket subsidies would also be likely to convince power grid owners to open their grid to other sources without the use of strong arm tactics.

Regardless, the final problem here is that government is fickle. As was proven very quickly in this scenario. The oil crisis abated and petroleum was once again made cheap to purchase from the Middle East. Carter eventually left office and his successor, heavily involved in the petroleum industry, saw no reason to continue his predecessor’s policies. Congress went along, seeing no reason to continue subsidies towards something that was not needed.

green-capitalbuildingSo the subsidies were rescinded (allowed to expire) and many of the alternative energy companies of the time, who’d literally build their business models expecting those subsidies to be ongoing, bankrupted. Some that were built smarter survived, of course, and are still around today. This is part of the boom-bust cycle of any market, though as usual its effects were exacerbated by government involvement.

Until now, our dependence on foreign oil became deeper and more absolute until we’ve come to the point where we literally cannot survive economically without it.

The source of much of the greenwashing we hear today, as one side of the political isle or the other attempts to utilize “green” in their rhetoric, is thanks to the average American’s new understanding of how deep our dependence on petroleum has become.

This was originally published on Aaron’s EnvironMental Corner.  Parts 2 and 3 are coming over the next couple of days.


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