Posted 5 years ago on March 1, 2012, 12:47 p.m. EST by francismjenkins
This content is user submitted and not an official statement
Watching Europe sink into recession – and Greece plunge into the abyss – I found myself wondering what it would take to convince the chattering classes that austerity in the face of an already depressed economy is a terrible idea.
After all, all it took was the predictable and predicted failure of an inadequate stimulus plan to convince our political elite that stimulus never works, and that we should pivot immediately to austerity, never mind three generations’ worth of economic research telling us that this was exactly the wrong thing to do. Why isn’t the overwhelming, and much more decisive, failure of austerity in Europe producing a similar reaction?
I know Krugman is right on this point, we could stimulate our economy through fiscal stimulus. The Keynesian approach has worked well in the past, and even in our modern economy, it's still the gold standard (in terms of reigniting robust economic growth). We know this because there is an ongoing stimulus, it's just monetary (versus fiscal), but still Keynesian in nature.
Of course we face many problems, none of which seem to have simple solutions. While austerity in the face of economic decline is the worse possible approach, we also have to recognize that unchecked growth of the state can become a threat to liberty. The line in the sand (the point at which the danger arises) is unfortunately abstract and difficult to quantify, further complicating things. Nevertheless, a fiscal stimulus does not require growth of the state apparatus (for the most part, government will not directly rebuild physical infrastructure, private companies and union workers will do the rebuilding).
As Congress debates how to meet the nation’s long-term transportation needs, decaying roads, bridges, railroads and transit systems are costing the United States $129 billion a year, according to a report issued Wednesday by a professional group whose members are responsible for designing and building such infrastructure.
Still though, not as easy as it sounds. There's numerous complicating factors that need to be considered. For instance, we obviously need to modernize our infrastructure, but if we're to rebuild our electrical grid and improve our roadways, wouldn't we want to accommodate alternative energy? I think it's safe to say the answer is yes. The next question is, which alternative energy options should we choose? Here's where it get's messy.
Sure, many would agree that burning fossil fuels, like coal, is extremely dirty and harmful to our environment. However, coal miners are real people, who have real families to feed, and without coal mining, they would likely suffer economic despair.
However, there are "cleaner" (albeit not clean) ways to burn coal. We could gasify coal and convert it to syngas. We could even produce natural gas from coal. While these are viable ideas (from a technological perspective), it would only serve to further entrench coal. There is one "sort of" bright spot. If we began gasifying coal at the electrical plant, the same gasification process could use waste as a feedstock (versus coal). This would give us the ability to gradually shift away from coal, and transition coal miners to new careers as they become displaced.
More importantly, nuclear power currently provides us with about 20% of our energy needs. Many of these plants are nearing the end of their life cycle. If we don't want dirty plants that burn fossil fuels to replace these aging plants, then we need an alternative. While building a smart grid that could facilitate things like wind generation sounds like a great idea, the places where we have the most wind (the middle of the country) are also the least populated parts of our country (and there are physical limits to how far electricity can be transported). So we need something like Thorium reactors to fill the gap.
There's also other great ideas. Electric cars could replace gasoline cars in most urban and suburban areas (where most Americans live). Of course this requires much more electricity and infrastructure. Natural gas engines and fuel cells could replace dirty diesel in large trucks and buses. However, again, this requires infrastructure.
The point is, energy is much more complicated than most people give it credit for. While transitioning to alternative energy should be something we collectively work towards, it is a decade long project (at least), and so energy shouldn't be viewed as a stimulus engine (a conventional Keynesian stimulus requires spending on things that can be started immediately, not in 5 or 10 years).
So what can we do "immediately"? We have something like 70,000 bridges that need to be repaired or replaced (and however we fuel our vehicles in the future, we'll still bridges, and we don't need to worry about building electrical fueling stations on bridges). Many of our school facilities are in disrepair. Our state university systems require new and expanded facilities. Many of our major airports are crumbling. These are things we can do now.
Also, about 42,000 factories have closed, and 5.5 million manufacturing workers have lost their jobs, since 2000. Why not create a loan program that allows workers to buy and reopen these plants? For anyone who thinks the "employee owned" (ESOP) model isn't viable, here's a link (the National Center for Employee Ownership's list of the top 100 employee owned companies in America):