As stock markets continue to melt, politicians and government bureaucrats scramble to find answers. Democratic presidential candidate Barack Obama has pledged to pump $150 billion into developing alternative energy sources over the next decade and the Republican candidate, John McCain, supports nuclear power. Both candidates believe that investments in the alternative energy sector will create jobs and help boost the economy. They are not alone. New York Times’ columnist Thomas Friedman also encourages that we “Green the Bailout” [27 September 2008]. He laments:
“Many things make me weep about the current economic crisis, but none more than this brief economic history: In the 19th century, America had a railroad boom, bubble and bust. Some people made money; many lost money. But even when that bubble burst, it left America with an infrastructure of railroads that made transcontinental travel and shipping dramatically easier and cheaper. The late 20th century saw an Internet boom, bubble and bust. Some people made money; many people lost money, but that dot-com bubble left us with an Internet highway system that helped Microsoft, I.B.M. and Google to spearhead the I.T. revolution. The early 21st century saw a boom, bubble and now a bust around financial services. But I fear all it will leave behind are a bunch of empty Florida condos that never should have been built, used private jets that the wealthy can no longer afford and dead derivative contracts that no one can understand. Worse, we borrowed the money for this bubble from China, and now we have to pay it back — with interest and without any lasting benefit.”
Friedman believes, however, that it is not too late generate a lasting legacy from the curtail meltdown. His suggestion is to stop bawling and start building.
“We don’t just need a bailout. We need a buildup. We need to get back to making stuff, based on real engineering not just financial engineering. We need to get back to a world where people are able to realize the American Dream — a house with a yard — because they have built something with their hands, not because they got a ‘liar loan’ from an underregulated bank with no money down and nothing to pay for two years. The American Dream is an aspiration, not an entitlement.”
Like Obama and McCain, Friedman recommends that we begin to focus on the energy sector. He continues:
“When I need reminding of the real foundations of the American Dream, I talk to my Indian-American immigrant friends who have come here to start new companies — friends like K.R. Sridhar, the founder of Bloom Energy. He e-mailed me a pep talk in the midst of this financial crisis — a note about the difference between surviving and thriving. ‘Infants and the elderly who are disabled obsess about survival,’ said Sridhar. ‘As a nation, if we just focus on survival, the demise of our leadership is imminent. We are thrivers. Thrivers are constantly looking for new opportunities to seize and lead and be No. 1.’ That is what America is about.”
As I have noted before, entrepreneurs are optimists. They see opportunity even in tough times. I find it revealing that it takes a whack to the side of the head from an immigrant to remind us that “we are thrivers.” Sridhar uses an automobile analogy to explain why the bailout is necessary but insufficient.
“Our economy is like a car, added Sridhar, and the financial institutions are the transmission system that keeps the wheels turning and the car moving forward. Real production of goods that create absolute value and jobs, though, are the engine. ‘I cannot help but ponder about how quickly we are ready to act on fixing the transmission, by pumping in almost one trillion dollars in a fortnight,’ said Sridhar. ‘On the other hand, the engine, which is slowly dying, is not even getting an oil change or a tuneup with the same urgency, let alone a trillion dollars to get ourselves a new engine. Just imagine what a trillion-dollar investment would return to the economy, including the “transmission,” if we committed at that level to green jobs and technologies.'”
If the bailout focuses on nothing more than trying to free up credit, Friedman predicts that “all we will have done is bought ourselves a respite, but not a future.” In juxtaposition to the widespread negative effects of rising oil prices, Friedman sees widespread positive effects from investments in the alternative energy sector.
“The exciting thing about the energy technology revolution is that it spans the whole economy — from green-collar construction jobs to high-tech solar panel designing jobs. It could lift so many boats. In a green economy, we would rely less on credit from foreigners ‘and more on creativity from Americans,’ argued Van Jones, president of Green for All, and author of the forthcoming ‘The Green Collar Economy.’ ‘It’s time to stop borrowing and start building. America’s No. 1 resource is not oil or mortgages. Our No. 1 resource is our people. Let’s put people back to work — retrofitting and repowering America. … You can’t base a national economy on credit cards. But you can base it on solar panels, wind turbines, smart biofuels and a massive program to weatherize every building and home in America.’ … Let’s ‘green the bailout,’ as Jones says, and help ensure that the American Dream doesn’t ever shrink back to just that — a dream.”
Jon Gertner, who writes for the New York Times Magazine, recommends that we map the grand challenges and use that map as the investment plan for the future — more on that in another post. The bottom line is this: the future only looks bleak to those with insufficient vision to see opportunities. The world has stalled on the cusp of a future in which most of its inhabitants can be pulled out of the morass of poverty. Only a lack of vision and action will result in the world sliding backwards into recession, protectionism, and xenophobia.