Economy

As the Senate Environment and Public Works Committee began hearings on carbon regulation, debate ran along traditional battle lines, but with a new script. Democrats Barbara Boxer (CA) and John Kerry (MA) moved away from discussing the environmental impacts of climate change - - and the reason, therefore, to take action to reduce carbon emissions - - and focused instead on the economic benefits of a domestic clean energy economy.

The feds launched the "cash for clunkers" program recently that pays you to scrap your old polluting car if you buy a fuel-efficient one. This is a great idea that can be applied elsewhere to clean the environment and stimulate economic growth. But just how far could this idea go?

Signs point to toughening times for the microfinance industry. A recent article from the Economist has echoed my concerns that selling microcredit (as a concept or a product) will grow increasingly difficult as the global economy stumbles (or crashes and burns) on the heels of a debt-led recession in the United States.  Not only in the concept politically less appetizing than it was back when Muhammad Yunus won the Nobel Peace Prize in 2006, the capital fueling the industry is drying up.  The similarities and differences between subprime lending that fueled the US recession and the "sub, sub, subprime" lending happening in developing countries through microfinance institutions have been debated and analyzed for over a year now. But only recently has the engine of seemingly-endless capital to MFIs around the world starting slowing, sputtering to slow chug in some instances.

With governments around the world shoveling money out of pubic treasuries in the hopes of stimulating their economies, how about summoning a modicum of creativity to build better mousetraps that consumers might actually want to buy? I mean even at 10% unemployment, that means 90% of the population still has a job and is buying stuff. If we can come up with a few good ideas, we can put people to work making things and, hopefully, sell a few more widgets at home and abroad.

As Wall Street continues its slow-motion hari kari, tens of millions of people on the lower-end of the income spectrum are finding that their access to credit is becoming all but nonexistent. As banks set aside ever more cash to cover themselves against potential future losses, the credit spigot that flowed so promiscuously to riskier customers is now not flowing at all.

Even with the promising plan of the federal government to take the more toxic loans off of bank balance sheets and fold them into the so-called “bad bank,” loans to the lower-end of the income spectrum are likely to be hard to come by and inordinately expensive. That is a problem that none of the current plans address and it is real one...

A little Monday morning humor, courtesy of Tom Toles at the Washington Post :

We understand if you're confused too. While both of these pear-shaped cartoon Economists have a point, we tend to side with the lady to the left.

Once upon a time, there was a farm in a town called Plainville. The farmer produced natural chickens and turkeys, free from antibiotics and fed with good, plain vegetable feed, avoiding the various "additives" that consumers feared. The result was a factory, jobs, and products that everyone was proud of and, by the way, that made more money for the smart farmer than his competitors.

In fact, this enterprise became so successful that it soon outgrew Plainville. The smart farmer found a bigger farm in another state that was less costly to operate, in part because it featured an energy-efficient processing plant, used renewable energy, and included new ways of reducing waste (remember I said this farmer was very smart!). The new farm employed even more Americans in sustainable, high-paying jobs that wouldn't someday be outsourced.

But one dark cloud loomed over this great example of ingenuity, corporate social responsibility, and investing in the American dream.

The problem was that there was no longer a need for the facility in Plainville and therefore no longer a place for those workers to earn a living. Most entrepreneurs, even the smartest of them, would chalk that up to the price of progress and point to the net benefit of the enterprise, even though one community would now do better than another. But remember I said that this particular farmer - - and business owner - -  was very smart?

• Economy Affecting Arizona Preschools, Child Care Karina Bland, Arizona Republic (November 28, 2008)
• Child Care Costs a Concern with Down Economy NACCRRA Early Childhood Focus (November 20, 2008)
• The Littlest Victims of the Mortgage Crisis Brigid Schulte, Washington Post (November 17, 2008)
• Day Care Enrollment Falls in Tight Economy Mike Markewinski, KSHB-TV (November 15, 2008)
• Parents Pull Kids From Day Care as Money Tightens Don Babwin, Associated Press (Novmber 10, 2008)
• Preschool and Daycare Enrollment Down Bonnie Obremski, Locally Grown (November 4, 2008)

As the Presidential race nears the finish line - - with the candidates and voters both gasping for air amidst the ubiquitous onslaught of commercials on everything from lawn signs to Saturday Night Live - - there are no shortages of "new and improved" proposals for dealing with the current financial mess. Well, if politicians can constantly add to their repertoires, so can we.

Earlier this month I suggested we should consider investing in cleantech infrastructure as a way to help America (and the world) work its way out of the current fiscal crisis. That offering laid out a vision for a self-supporting revamp of our transportation system that would create jobs, wealth, and improve the environment. Here's another suggestion, this time focused on our electricity energy systems.

What do schools, fire stations, hospitals, government offices, and city halls have in common? They are all vital public infrastructure buildings and many, if not most, are pretty old. The older they are, the more likely they are to be wasting electricity. How about a National ESCO Project, where we recruit energy service companies ("ESCOs"), engineering firms, electrical contractors, builders, and others to go into these buildings and identify the outdated lighting, HVAC, elevators, and other inefficient uses of electricity? While they're at it, they could also audit water use and waste disposal.

 As Washington and Wall Street dicker over a financial rescue plan, everyone is missing the real opportunity to fix the problem. Some see the variously proposed plans as bailouts of dumb borrowers and dumber lenders, while others view it as a chance to restore liquidity to the marketplace so we can all have access to credit again, whether it's for student loans or to finance the acquisition of industrial machinery.

But when the "Great Depression" struck America more than 70 years ago, we didn't just make more money available and hope people would borrow it to jump start the economy. President Roosevelt put us back to work, building bridges, highways, schools, and water projects. All of that infrastructure has served us well over the years, although at the time it must have looked like a lot of pork barrel spending designed to keep workers off of street corners and out of soup kitchens. What if we could do something like that again, but this time, make it a build-out that had fantastic economic, environmental, and social return on the invested capital?

In 2003, President Bush spoke about hydrogen cars in his State of the Union address. Shortly thereafter, the American Petroleum Institute (API) warned that building a hydrogen fueling infrastructure that could reach all Americans would cost $140 billion. Although I'm sure the API had no reason to use scare tactics and biased estimates (well, OK, maybe I'm not THAT sure), let's assume that's an accurate figure.