Transforming the Rust-Belt into a Green Belt
President Obama announced a new series of jobs initiatives Tuesday while at the Brookings Institute. (“Recovery Act Lite”?) His announcement came a few days after visiting Allentown, Pa., as the first stop on a listening tour on the economy. And the listening tour came a few days after the “White House Summit on Jobs and Economic Growth,” which brought together business, labor and policy leaders to wrestle down some solutions to the nation’s economic crisis and unemployment rate spike to double-digit territory.
The President committed to new jobs-creation programs, business tax cuts and ramped-up business loan programs, along with new infrastructure funding and help for communities. He pledged to recycle some of the repaid TARP funds to jump-start the banking credit system, which has been seriously stalled.
It’s good to see the renewed efforts, and some of these ideas may work well. We desperately need all the help we can get. But let’s return for a moment to Allentown.
Remember Allentown? It was memorialized by the Billy Joel song about the shutdown of nearby Bethlehem Steel. During the Town Hall meeting and company visits, we heard some inspirational stories of local entrepreneurs, about the increase in federal Small Business Administration funding, and how Allentown should be able to cash in on the green-jobs boom.
In researching this story, I remembered that the Bethlehem Steel Plant had been razed to make way for a casino. I wasn’t surprised. We also have a new casino in Pittsburgh (my home town), built on an old industrial waterfront site (and despite the hype of the recent G-20 event, the City of Pittsburgh is still bankrupt). When I read that the Las Vegas casino owners in Bethlehem had problems finding enough steel to build the new gambling site—well, that’s just another day in Allentown. Or Homestead…Youngstown …Flint…and hundreds of auto-belt rust-towns and now Florida, Arizona and California boom towns gone bust.
The real economic pain of Allentown and Bethlehem cannot be solved by heartwarming vignettes. The Lehigh Valley’s unemployment rate hovers near 10 percent, almost double a year ago, the fourth highest in Pennsylvania. Like innumerable hometowns in the commonwealth and beyond to Midwest-Great Lakes towns, we need significant, long-term federal investments to recover. We need banks to begin lending money again to local businesses, especially manufacturing firms. We need advanced manufacturing jobs if we are ever going to realize the green boom.
Casinos might be fun to visit (hey, I love the comps), but the jobs don’t replace hard industries that have been lost. Service, financial, retail and hospitality jobs just camouflage the sorry reality that vast waves of our money have actually disappeared into a dark hole called financialization. Financialization led to the herding of our savings and assets into short-term, risky bets that redlined entire regions, crowded out critical industry investments, and, ultimately, contributed to the market crash.
If we can’t find enough steel to build casinos today, how in the world will we build the green jobs industries of the future? Beth Steel was originally built to forge the steel for the nation’s rail systems. Where will we get the steel to build the Obama Administration’s proposed new high-speed rail system, the new wind farms, the new green buildings?
I’m all over the President’s Main Street Tour; I hope it continues for the next seven years. We should remember that we have not had a serious effort to rebuild our industrial communities since the roof began caving in around the time of the Joel song, circa the Reagan decade. So, we should support the new administration and Congress in many of these new initiatives. But it’s going to take more money still, and then all the cavalry we can muster.
Fortunately, there’s one source of money that we, the people, actually have a say over. We own the institutional investments markets, vast pools of around $24 trillion before the crash. While it’s our money— in pension and savings plans, insurance companies, endowments, foundations and deposits—we don’t control how it’s invested. For years, it’s been churning away, hollowing our hometowns. But we—steelworkers and teachers, insurance holders and foundation chiefs—could change that, with help from the president and Congress (and that includes re-regulating the financial markets).
For the past three years, I’ve been meeting innovative, successful investment managers across the U.S. and Canada who’ve done well by creating hundreds of thousands of good-paying, mostly union jobs and similar numbers of affordable housing units—and investing in the green economy. They have capitalized $30 billion-$35 billion in ready-to-invest assets, primarily through union and public pension fund investments. With some federal funding guarantees and partnerships, we could see these investors and dozens more bring a much larger, at-scale cavalry for economic recovery.
These responsible investment funds have invested in U.S. portfolio companies to build them up, not tear them down. They’ve restructured companies in trouble, stabilizing them and saving jobs, not stripping and flipping. They’ve increasingly invested in green buildings and sustainable housing, not subprime mortgage scams. They’ve expanded renewable energy and efficient transportation firms, including builders of windmills and hybrid buses, leading to green-collar jobs (often with union wages and benefits). They’ve invested large sums, prudently and profitably, for the long term. They’ve aligned their investments with the long-term interests of their beneficiaries.
Yes, we need a lot of new federal dollars, but we also need to marshal workers’ resources—our own money—for the long run. We can’t revive our hometowns via the “small is beautiful” mantra, nor the 1990’s Clinton free-trade delusion. It’s time real money was put to work to rebuild our communities, industry by industry, block by block, brick by brick.
We have the capacity to reconstruct our infrastructure, reinvigorate our cities and create that hoped-for green-jobs future. But first, together, we have to reclaim control of our money.