Nobel Laureates Paul Krugman (2008, Economics) and former Vice President Al Gore (co-recipient with the Intergovernmental Panel on Climate Change for the 2007 Peace Prize) contributed wonderful op-ed pieces in the New York Times (see here and here) which, taken together, provides a way forward out of the economic malaise along with solutions to America's energy problems and to the global climate crisis.
Their ideas, taken together, provide a radical change from the way the economy has been working if the idea of an economy is supposed to be about the efficient production of goods and services which improves the standard of living in a fair and equitable manner. The only thing our economy has been about recently is the creation of financial instruments designed to profit from debt and inflation, which produce nothing except profits for hedge funds and investment banks. They were purely exploitative and when they imploded, as they were bound to do, it created a disaster which everyone, except those who profited from them, must now deal with at a terrible cost.
Despite the revisionist history now being re-written by various right wing think-tanks, Dr. Krugman (along with most main-stream economists) is of the belief that FDR's New Deal brought real relief to most Americans. In Krugman's view the mistake Roosevelt made was a return at the wrong time to conservative budget principles when he cut spending and raised taxes after the '36 election, which precipitated another economic collapse that drove unemployment to double digits.
The economic lesson here "is the importance of doing enough," according to Dr. Krugman. "F.D.R. thought he was being prudent by reining in his spending plans; in reality, he was taking big risks with the economy."
Cleary, the government cannot risk not doing enough. The question is how best to apply the fiscal stimulus measures the Obama administration is sure to enact and here is where the contribution of Mr. Gore comes in.
According to Mr. Gore,
The bold steps that are needed to solve the climate crisis are exactly the same steps that ought to be taken in order to solve the economic crisis and the energy security crisis. Economists across the spectrum — including Martin Feldstein and Lawrence Summers — agree that large and rapid investments in a jobs-intensive infrastructure initiative is the best way to revive our economy in a quick and sustainable way. Many also agree that our economy will fall behind if we continue spending hundreds of billions of dollars on foreign oil every year. Moreover, national security experts in both parties agree that we face a dangerous strategic vulnerability if the world suddenly loses access to Middle Eastern oil.
Mr. Gore then goes on to describe his five-part plan "that would simultaneously move us toward solutions to the climate crisis and the economic crisis — and create millions of new jobs that cannot be outsourced."
Here then is the way forward. Dr. Krugman's liberal use of fiscal measures applied to Al Gore's plan to re-build America's energy infrastructure. It's the way to create an economy that will allow the efficient production of goods and services which improves the standard of living in a fair and equitable manner. It's a way to save the economy and the planet. It's the way forward.
