The wrong kind of stimulus
I am a big fan of stimulus packages for our ailing economy. But my pitch has been that we need to use the occasion to retrofit our economy to be on a more sustainable footing. So it matters a great deal on what we spend those stimulus dollars. If we launch projects that take us even further away from a sustainable economy, we are squandering those dollars.
Case in point: as reported in the Vancouver Sun, the BC government is announcing a $187 million road upgrade from Fort Nelson into BC’s oil and gas fields. This initiative will create 1,100 jobs, but is a blatant subsidy to the oil and gas industry, the source of 20% of BC’s greenhouse gas emissions (much more if we were to consider the emissions from burning that fuel out of province). Environmental NGOs have long been critical of subsidies to the oil and gas industry, and rightly so. What if the government lived up to the aspirations of its Climate Action Plan and put $187 million into green retrofits of buildings and alternative energy development?
Another obvious case is the $5 billion Port Mann super-bridge (well, $3.3 billion and rising). Its effect will be to create even more suburban communities up the Fraser Valley, locking in an unsustainable form of development for generations, and quite possibly at the expense of some of the best farmland in the province, which we will need down the road. The bridge will create lots of jobs but would we not be better off if we created those jobs as bus drivers by buying more buses to get people over the existing bridge more efficiently?
Check out this quote from Halifax MP Megan Leslie on the federal budget:
“In a couple of years, when Canada goes to climate change conventions and other countries have prepared their economies for the transition by investing in renewables and energy efficiency, when home heating and gas prices are again heading skyward and becoming unaffordable, how will we justify the lack of action? Will we say that we are still dependent on fossil fuels but that we have created a lot of backyard decks?”
http://meganleslie.ndp.ca/node/346
If Marc Lee thinks $187 million for a road upgrade for the oil industry that will create 1,100 jobs is a scandal, he aint seen nothing. That works at at a mere $200,000 or so of taxpayers’ money per job created. The British government 30 years ago handed the oil industry £10 million per job created at the Sullom Voe oil terminal in the Shetland Isles!!!! If you think Canadian politicians are mad, dont worry. Some of ours in the UK are even worse. By the way, £10million at present day prices would be a good £20million. Can anyone beat that?
I have devised a strategy by which the US government can solve the collapse and joblessness, without risk. It’s going to seem nuts, but they can stimulate demand by $11 Trillion USD and fire up good ole’ USA for another 40 years. Here’s one of the letters I’ve sent out… more will follow.
Good day Governor Schwarzenegger,
I am writing with a solution to the current economic downturn for the United States. The stimulus the US requires to recover is held by other nations… currently the sum is $11 Trillion dollars. There is a means to convert this debt into demand, powering the US economy for another 40 years, while returning the government to a viable financial position.
The US needs to approach creditor nations with an offer to repay their portion of US debt in goods. The nations would look at the US’s production capabilities and select the goods they would like to recieve. How they dispose of these products is up to them. Let’s assume the US decides to start with 10% of current debt. They would announce to the American people that they had secured contracts of $1.1 Trillion USD in trade for goods. “Demand is back boys, fire up the burners.” US employment would rise and debt would change hands; there would be no need for injections of unbacked capital. The economy would correct, and due to the increased production, much of the excess capital could be pulled out of the system through taxation, protecting some of the US dollars held by citizens and funding the massive retirement costs that loom.
Other nations in debt would need to use a similar stimulus approach for the strategy, so their economies could recover as well. The net result would be increased production and consumption globally… in other words, demand and standard of living would rise considerably over what is projected today.
Nations such as China would oppose such a plan, as it would damage their market for goods and growth, but I’ve a solution to that as well. China would become a buyer for it’s people’s goods. Infrastructure, social programs, schooling… it would create the demand to grow it’s nation. It’s currency would be propped up by the other nations currency debt shift, so it too would gain ground on it’s current position.
Please bring this strategy to the attention of your fellow politicians and help to enact it. Economists around the globe are saying the US needs innovation so the productive capacity increases can solve the problem. I’ve given you a way to stimulate demand without a new innovation. It’s much stronger than the current approach from the G-20, and it’s easily merged with President Obama’s current approach.