Substantial, long-term investment in wind and solar power can reignite global economic growth, a Columbia University economist claims in an article for Project Syndicate.
"Our societies urgently need more investment, particularly to convert heavily polluting, energy-intensive, and high-carbon production into sustainable economies based on the efficient use of natural resources and a shift to low-carbon energy sources," writes Columbia University professor Jeffrey Sachs.
In addition investing in solar and wind power, we must push for greater use of electric cars and electric public transportation, energy-efficient buildings, and power grids that can carry renewable energy long distances, for instance from California's Mojave Desert to population centers.
As the two major groups of economists, the neo-Keynesians and the supply-siders, have failed to spark growth, it's time to follow a new strategy, one underpinned by private and public investment in sustainable energy, argues Sachs, a special adviser to the United Nations Secretary-General on the Millennium Development Goals.
Both groups have dropped the ball when it comes to investments that improve future well-being.
Investment in most high-income countries, including the United States, Japan and much of Europe, declined from 24.9 percent of GDP in 1990 to just 20 percent in 2013, Sachs states, citing IMF data. Investment spending declined from 23.6 percent of GDP in 1990 to 19.3 percent in 2013 in the U.S.
In the European Union, it fell from 24 percent to 18.1 percent.
"But just when our societies should be making such investments, the public sectors in the US and Europe are on a veritable 'investment strike,'" he laments, saying governments are cutting investment to balance budgets.
While neo-Keynesians stress public spending and supply-siders want private investment, both are wrong, Sachs argues. Public and private investment are complimentary and we need both.
For instance, private investors are reluctant to invest in alternative energy when power grids cannot carry the power long distances to population centers.
"In the U.S., public investment spending has been slashed. Neither the federal government nor the states have political mandates, funding strategies, or long-term plans to catalyze investment in the next generation of smart, clean technologies."
The Union of Concerned Scientists
also touts the economic benefits of alternative energy.
The wind energy employed 75,000 full-time workers in 2011. The solar energy employed 100,000 part-time and full-time workers. In addition, local governments gain additional tax revenues and landowners hosting wind turbines and other forms of alternative energy gain income from leases, it says.
"Renewable energy projects therefore keep money circulating within the local economy, and in most states renewable electricity production would reduce the need to spend money on importing coal and natural gas from other places."
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