Even as budget deficits loom, pressure builds on governments globally — those who still have access to credit – to attempt to halt the global economic landslide with government spending packages. British Prime Minister Gordon Brown yesterday proposed a globally co-ordinated fiscal stimulus effort and Australian Prime Minister Kevin Rudd has reportedly agreed that spending is the answer to the world’s financial crisis. As some have said, a crisis is a terrible thing to waste.
The financial crisis is not happening in isolation. The global economy is facing a triple crunch, as the UK-based New Economics Foundation (NEF) put it in a report in July this year: “a combination of a credit-fuelled financial crisis, accelerating climate change and an encroaching peak in oil production. These three overlapping events threaten to develop into a perfect storm.”
Anticipating the drive for increased government spending, and drawing on the inspiration from Franklin D. Roosevelt’s “courageous programme launched in the wake of the Great Crash of 1929” the NEF calls for a Green New Deal, a call which has since been joined by the UN, and effectively by the US President Elect’s green jobs program, the cost of which is now being “touted as a selling point”. In Australia, the Green Gold Rush report released last week by the ACTU and the Australian Conservation Foundation calls for job creation in green industries. They quote Thomas Friedman from the New York Times:
It is critical as we bail ourselves out of this financial crisis, as we inject money into the economy, that we do it in a way that will launch a green revolution … that will leave us with a new infrastructure for a new economy.
To the same ends the NEF call for the creation of a “carbon army” to provide the human resources for a vast environmental reconstruction program, and a “bold new vision for a low-carbon energy system which would make ‘every building a power station'”. Green Gold Rush presents a plan for Australia as a global leader in green technologies led by the development of government subsidised local markets.
One marked difference between 1929 and 2008 is that the last Great Depression occurred in the context of a rising energy base and a relatively healthy global ecosystem. The next Great Depression will occur in the context of a falling energy base, as global oil production begins to dry up a little more each year, while the struggling globe provides ever fewer free ecosystem services such as plentiful clean water. This presents a deeper challenge, but perhaps not an insurmountable one, as long as government investments are made with an appreciation of this new reality.
Efforts which focus on energy conservation, relocalisation of jobs and resources, and community and household resilience may ultimately have the most economic resonance, and come with fewer unintended consequences than many major infrastructure projects or efforts to prop up ultimately doomed industries or financial institutions.
On the recent US election, The Onion commented “Nation finally sh-tty enough to make social progress”.
The global economy might just be getting sh-tty enough that there is a chance for some meaningful, national a-se saving change, if — and only if — the three aspects of the triple crunch are approached together.