Jon Rynn: Manufacturing Green ProsperityMarch 22, 2011
What if there was a two-for-one solution to both our jobs crisis and our energy crisis? What if we could kick our addiction to oil and bring manufacturing jobs back to the U.S.? Jon Rynn, author of Manufacturing Green Prosperity: The Power to Rebuild the Middle Class, believes it’s time to invest in new green infrastructure and manufacturing, and push our country towards a more sustainable energy plan while getting Americans back to work.
One of the most pressing economic issues facing the U.S. is that our manufacturing sector has been outsourced; most of it, permanently. With factories shuttered around the country, millions of Americans have been left without a place to work, with little chance of their jobs ever returning.
Additionally, our addiction to foreign oil leaves our country teetering on the edge of a “second great recession,” as economist Peter Morici wrote today, which could put a chilling effect on economic recovery. He writes:
Should oil surge to $140 a barrel, gasoline prices would pierce $4.00 a gallon and U.S. growth could slow to a mere 2.5 percent. That would be barely self sustaining and not enough to create many jobs-likely many fewer than the 1.5 million needed each year just to keep up with population and labor force growth.
Developing green energy solutions may be the single most abundant place that we can create new manufacturing jobs by the millions, he says. ”Manufacturing is the foundation of a wealthy economy,” says Jon. “You really can’t have a wealthy nation unless you have a strong manufacturing sector. So what we have in this country now is a hollowing out of the manufacturing sector for decades… what we need is we need some way to boost that manufacturing system to create a demand so that firms can know that for the next 10 or 20 years is going to be a market for their goods.”
Also critical to the discussion is price manipulation of energy and the hidden costs of doing business in the Middle East. Without doing that, we’ll never actually get the marketplace to reflect the fact that “cheap oil” is not so cheap once the cost of war and environmental damage are factored in.
“Because of the unholy alliance that exists between business and state in this country, we know that supply gets manipulated by virtue of tax subsidies and other mechanisms in the legislature but more importantly, price gets manipulated – particularly for oil — in such a way that the marketplace that some of our right wing friends would so passionately advocate never actually is put into motion,” says Dylan.
Jon Rynn is a visiting scholar at the CUNY Institute of Urban Systems and author of the book Manufacturing Green Prosperity: The Power to Rebuild the American Middle Class. He blogs at New Deal 2.0, a project of the Roosevelt Institute.
DYLAN: Welcome to Episode 42 of Radio Free Dylan, I am Dylan Ratigan and joining us today is a gentleman in a name of Jon Rynn. He is a visiting scholar at the CUNY Institute of Urban Systems and author of the book Manufacturing Green Prosperity: The Power to Rebuild the American Middle Class. You can visit him on the web at globalmakeover.com/jonrynn.
His basic premise is the manufacturing industries have been outsourced and may with them much of the middle class in their jobs. We all largely agreed to that as a matter of fact, he also goes on to assert that energy solutions maybe the single most abundant place that we can look to create new millions, new manufacturing jobs by the millions, excuse me and it’s a pleasure to welcome him to this conversation. Jon how do you connect that energy solutions to job creation?
JON: Well the important thing to understand is that manufacturing is the foundation of a wealthy economy. You really can’t have a wealthy nation unless you have a strong manufacturing sector. So what we have in this country now is we have a hollowing out of the manufacturing sector for decades and so what we need is we need some way to boost that manufacturing system to create a market, create a demand so that firms can know that for the next 10 or 20 years is going to be a market for their goods.
They can build more factory, so when they build more factories, they hire millions of people to work in those factories. So then on the other hand, of course we have this great energy problem both because of climate change, the carbon emissions emitted by fossil fuels but also because we have a problem of cheap oil, seems to be getting more and more expensive and will probably again get even worse in the horizon plus all the other problems with oil. So the two together gives us a great opportunity to rebuild the manufacturing sector by rebuilding the energy sector.
DYLAN: One of the things that is really struck me not just when I look at energy but looking at healthcare, looking at the cost of credit and borrowing and that sort of thing, is that—because I’m actually a fairly firm believer in the market place and in the belief that if you actually allow supply-demand and price, to reflect themselves out in an authentic way, then ultimately money, investment and other things will go towards, excuse me, the most efficient and the most effective solutions.
But what I’ve notice and it’s incredibly [gearing] [0:02:44.2] with energy, is that well, lots of politicians on the right and some on the left love to resort back to the language of a free marketer. They failed to acknowledge the fact that a free market is only as good as your ability to protect the actual integrity of supply, demand and price and because of the unholy alliance that exist between business and state in this country, we know that A supply gets manipulated by virtue of tax subsidies and other mechanisms in the legislature but more importantly, price get’s manipulated particularly for oil in such a way that the market place that some of our right wing friends would so [impassionately] [0:03:27.0] advocate never actually is put into motion.
Because without real pricing for the actual cost of our energy resources, we never actually get the market place to respond in the way that it really should which is that oils really expensive, particularly when you factor in the off balance sheet accounting that is not reflected in the cost of oil right now in the form of the war and environmental damage.
How do you address the fact that the market place is incapable of solving this problem not because the market place may not be able to do it but because the market place is rigged by special interest to them manipulate the price in order to manipulate the market?
JON: Well I would actually disagree with you a little bit there, I think even if you price that everything just so, I think we’d still have an enormous problem on our hands because unfortunately, in some ways the market can handle what we are facing. It is very difficult for the market to handle a long term problem like the decreasing supply of a critical piece of resource like oil.
It is very or the long-term climate change. But I think the way to get sort of get added that conundrum is to build a whole new system that will allow the market place to then flourish. Basically, what I argue is that the government’s role is to create the basic structure of the economy and what is in that basic structure then, that is when the market can really do its thing and do its work and create the iPhone and the iPad.
DYLAN: I guess the concern with allowing the government deform the basic structure of the market is because the government is so clearly influenced by their political contributors that they inherently create rig structures to benefit, not necessarily the best results for people but the most profitable results for those who contribute to them and those who are most likely to contribute are those who are most threatened to buy the very disruptions that need to occur in order to move us forward.
JON: Right, so we have this problem where we really need the government to come in there and do what country has been doing for hundreds of years that is encourage no industries, build things, build trains, build roads, build buildings is often what they do best but now we have this problem because they are so controlled by the financial and industrial interest.
So the only way I can get around this is that really, the public has to become educated and has to become conscious and has to discuss these various ideas and has to elect the people who will push forward, new vision of what the society can do. But in order to do that, I think we really need to have a very concrete program of what it is exactly that we want these politicians to do.
We can’t just say well, fix the problem, I think we have to come up with a more concrete solutions so for instance when I have a kid, is that we think really, really big even though I know it sound might sound crazy, let’s say we say that we want to spend one trillion dollars a nice round number every year to build high-speed rail, to build networks and wind turbans do, build walkable [0:06:59.7] neighborhoods and we hold politicians accountable, we say okay, if you are going to follow this program, then we will vote for you if not then we won’t vote for you.
We need some way to bring the grass roots back into the political process so that we can rest it away from the big corporations in time to avert these various catastrophes that are coming down unto us. But the only way, I think the best way to do that is to paint a picture, to show what a better society would look like and I think at the end of that transformation, we actually have a better society was simply be protecting what we have. It would actually be better I think. It is very important for the progressive movement to do that sort of thing.
DYLAN: And so how would you begin to paint that picture? In other words, people when force to face a decision about the future as we know, human nature has people much more likely to try prevent losing something that they fear they might lose than allowing themselves the indulgence or the creation of a real image of something better that might be in the future.
JON: Well that is only a problem so what you have to do is in a way you have to tell people that there is a scary future coming toward us but at the same time it is extremely important only to do that if you can give people way out. I mean humans evolve by--they evolve by running away from alliance but it was exciting as long as you knew you are going to get to your cave or something, get out of the way and the same way we can scare people by climate change and the end of cheap oil and maybe the economy even crashing. But people would just I think go into more of a knee-jerk despair and they wind up voting for the governors of Wisconsin or Ohio and Michigan.
So instead what we need to do is paint this picture of a better society and then I am hoping that will tilt the—that it will create a tipping point. So if we say for instance, well we want to have—we wanted to have an interstate high-speed rail system which goes along the same routes of the interstate highway system goes along. We want to have a string of wind farms all across the country so that there is always a wind blowing somewhere and we can use it to retire our cold and nuclear power plant.
And so we want to have walkable neighborhoods which research shows good 30% of the public wants to be in but only 5% of the public is in. And on top of all that, we will have tens of millions of jobs have good high-quality long-term permanent jobs. I would hope that that might be an attractive program.
DYLAN: How do you explain and maybe it’s a—I’ve already answered my own question, the Obama administration and the democratic leadership, Harry Reid, Nancy Pelosi and all the rest? There are other incomplete failure to do anything like what you are describing.
JON: Well you know the democratic party and Presidents in general, I mean I’ll go back to even Franklin Roosevelt, he said make me do it or at least that he was alleged to have said. There has to be a grassroots, major grassroots efforts or else basically the major party just don’t move. I mean the popular showed that, the progressive showed that, the early 20th century, the labor unions in the new deal, civil rights and environmental activist in the ‘60s. We really need something that scares the politicians.
Like around 1970s I think it was, there was a dirty dozen environmentally dirty congressmen and most of them got defeated and that really well congress up. So I don’t think it’s going to—I think if we had something like that and people were being elected on that platform, I actually think Obama would come along with it but they are not going to lead. I don’t see Presidents or congress leading unfortunately. It would be nice if that was the case. But they really test the wind and we have to create that wind.
DYLAN: Ultimately what you are saying is they do whatever they think is going to be the most likely to help them keep their jobs and until their jobs feel threatened by some new force, they are not going to accommodate it.
JON: Yeah, basically, unfortunately, I mean there are times in history when the elites get together and decide to do something. I mean in the 1950s, the Republican President, Dwight Eisenhower, place the interstate highway system which is probably one of the great public structures of all time and if you wanted to, you could call it socialist really. No one calls interstate highway system socialist. But for some reason in the ‘50s, that is what the powerful and the public they all wanted that.
But I think that it is possible to gather a public that will push for what has occasionally happen throughout American history. Lincoln was a booster of the railroads, strangely enough Calvin Coolidge sign the legislation for the Hoover Dam. It happened throughout the American history and I’m hoping it can happen again. I think it has to happen again.
DYLAN: Professor Rynn, a pleasure, thank you so much for giving us some of your time this afternoon.
JON: I really appreciate it.
DYLAN: Alright, Jon Rynn author of Manufacturing Green Prosperity: The Power to Rebuild the American Middle Class, solve our energy problems, solve our jobs problem and for that matter, solve our security problem by solving America’s energy problem, something that I firmly believe. We will be back with my final thoughts right after this. Thank you Jon.
JON: Thank you.
DYLAN: Alright, talk soon.
DYLAN: Welcome back. The question as we look at these types of programs always comes down to how are you going to pay for it? And there was an idea that was proposed to me by a friend a few weeks ago and I brought it up on the TV show when we are out at the Hoover Dam and I want to reiterate it now and ask you if you are listening to this to share it with your friends and debate it and if you like it, advocate it inside of your own political communities, in your communities in general and it is very simple.
As you may well know, there are trillions of US dollars that are currently held offshore by a private American corporations who do not want to bring that money back to America in order to avoid paying taxes on it.
Now there is a tremendous amount of debate about how that came to be and what we can do to solve it and all the rest of it. But one idea that I think warrants consideration for those who advocate it for instance, attacks holiday to bring that money back onshore, fall short of what really is achievable.
What if we are to take the trillions of dollars that are held in private corporate accounts offshore right now and offer them a deal in which they are allowed to bring that money back onshore without paying taxes only and exclusively if that money is used to post infrastructure bonds and finance the sort of public works projects that would meaningfully help us update not only our energy infrastructure but our transportation infrastructure, our educational infrastructure, and for that matter our fundamental national resource infrastructure.
This is a very simple idea and there is no shortage of politicians who argue we should give a tax holiday to corporations to bring the money back onshore but it is very unclear to me why the American people should indulge in tax holiday for corporations that are already largely and pretty firmed control of the American government and largely profitable because of their ability to legislate and manipulate our government into various subsidies and tax loop holes and all the rest of it when they ought to be in my opinion held accountable for what they are doing. But at the same time, I want to exist as a realist in the knowledge that this money exist and that there may be a deployment of this money that could be effective.
So again, something to think about as we talk about financing all of this in taking the trillions offshore in corporate accounts allowing a tax free repatriation of that money in our own country only and exclusively if that money is then used and bonded to fund the critical and necessary changes in American infrastructure that would also create by the way millions of jobs. That is going to do it for me today on this episode of Radio Free Dylan and we’ll talk to you next time.