|The Next Bull Market By Glenn Hurowitz|
By Glenn Hurowitz
September 25, 2008
"There's always a bull market somewhere," goes the old Wall Street saw, and it's a principle that
Washington needs to keep firmly in mind as it contemplates its trillion-dollar
financial bailout. Today, that bull market is in green investing, which includes
everything from wind and solar power to forest conservation.
Since 2001, the wind industry has grown 339 percent; the solar industry has grown a whopping 579 percent; both are
projected to continue their blockbuster double-digit annual growth into the
foreseeable future. In contrast, the Dow Jones average has climbed just 2
percent during the same period, and is only barely hanging on at those levels
because of the artificial boost produced by talk of the bailout.
Instead of shoveling good money after bad, Congress should put its money into
developing this booming green economy even further.
Truly green companies aren't just providing returns to investors. They're also
an employment engine that is offsetting the job losses related to the high price
of oil and the housing collapse. Tens of thousands of people are today employed
making wind turbines, installing solar panels and making American cars more
efficient. But those jobs could be only a very small beginning compared to what
A recent report report by the Center for American Progress estimates that
investing just $100 billion in the green economy (one-seventh the amount
contemplated in the administration's proposed Wall Street bailout) would create
2 million new jobs, with a significant percentage of those coming in the
struggling manufacturing and construction sectors. In contrast, investing that
much money in the financial services sector would generate just 1.1 million
jobs, according to an analysis conducted by the study's authors, Robert Pollin
and Heidi Garrett-Peltier of the University of Massachusetts. In other words,
Wall Street's offering about half the jobs for the same money: hardly a smart
bet for the taxpayer.
A green investment on the level of the Wall Street bailout could create growth
on a much larger scale, almost entirely eliminating unemployment and
significantly raising middle-class incomes. Instead of golden parachutes for
CEOs, the government could finance America's transition from an oil- and
fossil-fuel-dependent economy into one run completely on clean energy. Instead
of buying up bad McMansion mortgages, we could pay people to retrofit their
houses with high-efficiency appliances and green roofs.
The green stimulus could reach far beyond the energy sector to provide income
and employment for rural America as well. It could finance the conservation of
tens or hundreds of millions of acres of wildlands, providing income to farmers
and other landowners--and make possible a whole new generation of national
parks. (Many of those lands are now under threat exactly because of too-easy
credit: without limits on lending, it's been all too easy for real estate
developers to find the cash to pave over back-country wilderness for sprawl and
This money also could seed a new technological revolution in agriculture--away
from land-, energy- and water-intense cultivation and towards exciting new
developments like skyscraper farms--essentially huge, multi-level urban
greenhouses powered by clean energy that use a fraction of the land, water and
pesticides of conventional agriculture.
There would be major indirect economic benefits as well. As clean energy took
over from oil, fuel costs would plummet, removing a major impediment to growth:
running a plug-in hybrid on clean energy, for instance, costs the equivalent of
less than $1.50 a gallon.
But the biggest benefit of this green recovery will come from solving a looming
financial threat as great or greater than the current one: global warming.
Conservative estimates place the costs of increased disease, flooding, drought,
extreme weather, insect infestation and other impacts of the climate crisis at
somewhere between 5 percent and 20 percent of global economic output. For the
United States alone, that adds up to a conservatively estimated $3.8 trillion
drag on the economy--every single year. A big green investment now would take a
huge bite out of the climate problem while we wait for the political stars to
align behind comprehensive global warming legislation.
Of course, spending money on a green stimulus instead of a bailout would have
consequences for the big firms at the root of the financial mess. Some of the
failed Wall Street behemoths that are relying on teachers, soldiers, policemen
and small-business owners to bail them out would probably sink.
In their place, however, a whole new multibillion-dollar green economy will
rise--and with it the kind of massive financial opportunity that could get not
only America but also Wall Street back on its feet.