It's certainly a good idea, as Joseph Romm suggests at Grist, to use the Wall Street bail out to push for a similarly immense investment in solving the climate crisis, which, after all, would be sure to yield valuable dividends for taxpayers, such as the preservation of planet Earth and the salvation of the human species. But would investing in alternative energy sooner actually have prevented the financial crisis from happening in the first place? That was the contention of Bill Clinton Monday night when he spoke to a group of progressive bloggers, of which I was one. Henry Farrell at Crooked Timber has a good rundown of Clinton's idea:
Clinton’s basic argument was that the crisis was one of an overleveraged Wall Street system which emphasized the volume of transactions, and in which people were rewarded for chasing risky deals, and in which there were too few good investment opportunities. Money ended up being funneled into real estate that shouldn’t have been. Clinton furthermore argued that if there had been a real clean energy policy, it would have created alternative investment opportunities in dealing with climate change — because there wasn’t such a policy, the money was ‘misspent.’ This last bit of the argument doesn’t seem entirely plausible to me — would there really have been enough investment opportunities generated by clean energy to suck up the loose cash sloshing around? — but I’ll leave it to those with more specific expertise to evaluate properly.
Clinton seems to believe that clean energy, including the conversion of our personal automobile fleet to electric plug-in vehicles, could have been to the last eight years what the tech bubble was to the nineties. An open economy needs a major and innovative source of new jobs "every five to eight years," he said, otherwise the U.S. is bound to lose working class jobs "out the backdoor" to cheaper nations. I agree with Farrell that it seems implausible that the mortgage crisis could have been averted by energy policy alone. Brian Beutler also agrees. After all, the push to encourage home ownership and other forms of consumer debt among unprepared, uninformed borrowers is rather unrelated, and both government and the private sector bear responsibility. What do the economists in the house think?
cross-posted at TAPPED