Serious About Green Jobs? It's Time to Throw 'Free Trade' out the Window
If we're going to have green jobs in this country, we'll have to face up to the real world, rather than the one imagined by free trade apostles like New York Times columnist, Thomas Friedman. He seems oblivious to the fact that the every nation, except ours, is trying to protect and enhance its key industries without worrying very much about "free trade" principles. Instead, Friedman believes that with proper carbon pricing and energy efficiency regulations, we can win the global race to produce the next wave of alternative energy technologies. He writes:
"We can either invest in policies to build U.S. leadership in these new industries and jobs today, or we can continue with business as usual and buy windmills from Europe, batteries from Japan and solar panels from Asia. If we do not impose on ourselves the necessity to drive innovation in clean-technology -- by imposing the right prices on carbon emissions and the right regulations to promote energy efficiency -- we will be laggards in the next great global industry."
According to Thomas Friedman and other globalization enthusiasts, all countries compete in a flat world, and the ones that are smartest are the ones that walk off with the prize -- new jobs and riches for their nations, as well as better products to protect us all from global warming.
As a result, globalization advocates believe that smart policies to set proper prices on carbon and to promote energy efficiency will spur more and better innovations.
Wake up Mr. Friedman and join us back here on planet Earth! Here's what your own newspaper reported just a few days after you opined about the great competitive race we should be running:
"Calling renewable energy a strategic industry, China is trying hard to make sure that its companies dominate globally. Just as Japan and South Korea made it hard for Detroit automakers to compete in those countries -- giving their own automakers time to amass economies of scale in sheltered domestic markets -- China is shielding its clean-energy sector while it grows to a point where it can take on the world."
We're about to creamed in the global race for green jobs.
Beneath the ideology of free-trade, countries do what they can to promote their comparative advantage. Some countries allow union organizers to be harassed and even killed to keep down the price of labor. The U.S. subsidizes agricultural production, much to the detriment of poorer nations that can't compete with our underpriced crops. Europe provides enormous support for key industries (like aircraft), and China manipulates its currency to keep its exports cheap.
In the case of solar energy and wind turbines, China is also protecting its homespun alternative-energy industries using every trick in the book. The New York Times reports:
"When the Chinese government took bids this spring for 25 large contracts to supply wind turbines, every contract was won by one of seven domestic companies. All six multinationals that submitted bids were disqualified on various technical grounds, like not providing sufficiently detailed data."
But don't blame China for bending the rules in behalf of its people. Blame pundits like Friedman who refuse to protect industries and workers in America. We are one of the few countries that places no barriers on corporations that move increasing numbers of jobs outside the country as soon as they can do so profitably.
As long as we worship at the alter of free trade, we can more or less predict what will happen to any green industry that involves manufacturing products like wind turbines, efficient lightbulbs, solar panels. Even if the corporate headquarters is located here, those items will be made outside the country and shipped back in. Yes, we may develop important new high-tech research jobs (for a while) and new profits for inventive corporations and entrepreneurs. And there will be jobs for those distributing, selling, installing and maintaining the equipment. But the bulk of the new jobs in manufacturing will go elsewhere, all at a time when we face a shortfall of about 25 million jobs due to the deepest recession since the 1930s.
Free-traders will argue that this is all for the good. Production should go where it is cheapest so that we all can buy more of it and lower costs. This creates higher-value jobs at home while benefiting everyone with lower prices for imported goods, assuming of course you have a job.
But part of what makes these imported products so cheap is that the global market does not price the cost of the carbon used during the production and transportation of green goods around the world.
The obvious solution is to install border-adjustment taxes on the carbon inherent in imported products. This tax would take into account the carbon emissions that are generated in the production and the transportation of good. If India or China produce wind turbines using dirty steel processes and dirty fuel sources, and then ship the steel and turbines around the world to the U.S., there must be a tax at the border on the carbon emissions involved in the production and transportation of those goods. Otherwise, we will have neither green manufacturing jobs at home, nor serious carbon reduction around the world.
My God, isn't that protectionism? Of course it is. It's also sanity. The ideal world of free global trade doesn't exist. Globalization is a policy, not an act of God. If we want a greener world and green jobs for our citizens, we'll need to protect green production with border-adjustment taxes, because markets on their own won't do it -- never have, never will.
For more on this topic, read Robert Kuttner's "Smoking the Green Shoots."