The Stimulus Bill, One Year Later

Capital Projects take time to mature and make an impact. I personally feel that the impact on the energy stimulus packages will make a positive impact in a few years. We have to be patient and continue on a sustainable energy future.

The very word Stimulis makes me sick. Although some of these things (RE renewable enegry) need to be addressed, the whole idea of stimulis is ALL wrong. No one in their right mind would go out and buy a new car the day after they have just lost their job.....and yet, that is exactly what we are doing...God Help us...we're all going to need it. stupid stupid stupid.

Everyone’s talking about how the stimulus spending will create “green jobs”. I have my doubts about the longevity of these jobs as well as the unintended side effects elsewhere in the economy.  I hope that the U.S. will become and remain the foremost global competitor in renewable energy industries, but I worry about how we will get there.

The rationale for stimulus spending during a recession is founded on Keynesian economics, i.e., countercyclical spending by government to smooth out the economic cycle. This theory had largely fallen out of favor, until recently - desperate times, require desperate measures. I hope it will work, but note that most experts tell us that the biggest long-term problem for the U.S. economy is the large and growing Federal Government annual deficit/long-term debt. Keynesian policy assumes that governments run a surplus during the expansion years (typically about 5 years out of a 7-year economic cycle) and can then afford to run a deficit for the two bad years. On the long-term, government debt doesn't grow, at least not any faster than the economy. The U.S. economy doesn't look anything like this.

The U.S. has created, dominated, and then lost one manufacturing industry after another. Unless the underlying reasons for these unhappy endings are identified and dealt with, it's hardly surprising that so called "green manufacturing" jobs end up in other countries. Even if government spending succeeds in creating a large and permanent domestic market for renewable energy, manufacturing will be done where it makes most sense. Let’s figure out how to make that happen here. Subsidizing non-competitive industries doesn’t seem like the way to do it. (Some say we need government spending because it’s a “chicken-and-egg problem” to build renewable markets and industries. Has this been proven in other industries? If so, then maybe it’s worth a try but don’t let’s bet the farm!)

What the advocates of government “green” stimulus spending seem to miss, is that every dollar spent by government on green jobs, and every extra dollar spent by consumers to buy government-mandated, higher cost, green energy, equals a dollar not being spent on other products. Governments can't create jobs, at least not in the long-term. Given: 1) the state of government finances; 2) our track record of creating and subsequently losing manufacturing industries; and 3) the fact that renewable energy generally costs more at this time than conventional energy, we must be very careful about how public funds are used to stimulate the renewable energy industry (and everything else). Perhaps our attention should be focused on how R&D and other types of knowledge generation can make our industries globally competitive.