From a U.S. Auto Executive: Thoughts on the Recession and New Jobs Through CO2-Reduction 'Moon Shot' Program

What follows are thoughts from a good friend who leads a major automobile manufacturer in the U.S. This is worth reading by presidential candidates from both parties. Bottom line: We can attack global warming AND create new jobs in doing so.
There are so many things going wrong at once that all sections of the economy and all classes of society will be impacted. So many things have been unfunded and neglected for so many years that expectations are building fast, particularly in the field of healthcare and education. My fear is that traditional means to address them may be lacking in the coming years due to the economy.

The real estate problem is not just about poor people who got conned into deals they shouldn’t be in; rich people are also watching adjustable rates reset against them (don’t forget, 75 percent of these loans were written to prime borrowers, not sub-prime borrowers) at the same time their property values are falling. There is a stock of 11 months of unsold houses in America; you could stop building for a year and no one would notice the difference!

The fall in the stock market is also affecting everyone; short-term savings as well as long-term pensions. How do you think the UAW feels about the deal they got back in October from companies that have halved in value since?

And to think some are still saying we can “avoid a recession” or the “probability of a recession is x percent.” Who do they think they’re kidding? Why the sudden urgency about injecting $150 billion into the economy if we didn’t have a serious problem?

Of course you know all that. And, with all due respect, it won’t take a genius to convince people that the current administration has dilapidated so much of the country’s wealth and potential. The question becomes how to pull out of this mess.

And that’s tricky.

America is a country that regulates many of its social problems through high levels of employment and activity and hence the need for high consumer spending. People don’t save — they spend. People stay focused on making more money to consume even more. They stay active and are very uncomfortable when employment is tight. The problem arises when 70 percent of your GDP depends on that type of behavior. For the last eight years, people have been “forced” to consume through artificial means: zero-interest rates on car loans, mortgage refinancings, adjustable rate loans, you name it. They were given apparently free money and told to go for it. And now the piper is coming to collect. In my opinion, it would be very counterproductive to try to stimulate consumption even more.

Telling people they’re overstretched, that they are living beyond their means (which everyone who drives an SUV and lives in a McMansion knows but won’t admit to) can easily backfire.

Is there not a way of diverting people’s attentions to some alternative form of “consumption”? I have the environment in mind.

Please don’t get me wrong; my approach is not like some extremists for whom mankind is evil and can do nothing right and, therefore, needs to be regulated out of existence. If I look at the auto industry, we are on the eve of major transformations as it relates to energy and powertrains (engines). An engineer’s dream. I have faith in human intelligence and mankind’s ability to continue to improve living standards while not destroying the planet.

Government has a unique opportunity to work with industry, not just autos, to achieve results in the first and only really global issue, which is reducing CO2. No one can disagree and all are concerned. Let’s make CO2 a business proposition. If ever there was a time for the government to get a huge “return” on its spending, it’s in this field.

The country desperately needs a vision and a destination from the next president. It can’t be business as usual, only a little bit better. Like President Kennedy who told the country it would reach the moon by the end of the decade, or leaders of other countries in Asia, China in particular, who told their country they would double their income in x number of years, the U.S. needs to know where it’s going and by when.

With CO2 reduction as the vision, government can tell the country where to go and what to do in the next decade. It can reaffirm American leadership in a non-military and proactive manner. Without the U.S., the world will not be able to progress this issue. With the U.S.’s leadership on this issue, everything becomes possible. It’s what people are looking (longing?) for.

Money could go to fund education, research, business ventures with set objectives, clear metrics and deliverables. Tax dollars should go to projects that reduce their carbon footprint, houses included. You could still build McMansions, but heating and cooling them with heat pumps wouldn’t be possible. Other solutions would have to be found. Et cetera. Endless opportunities.

Job Creation

Is it possible to demonstrate a link between employment (jobs) and the environment?

I don’t have the skills or the data to be able to prove the link directly. But I looked around outside of the U.S. and found some interesting ideas that might go in the right direction.

Consider the following:

• Sweden (not a poor, struggling agrarian country with a low standard of living) has a national plan to be independent of fossil fuels by 2020.

• Norway (not far removed from Sweden when it comes to its standard of living) has a plan to be (get this) carbon-neutral by 2030.

• Israel is promoting energy independence. Nissan recently signed an agreement with Messrs. Olmert, Perez and Shai Agassi to supply them with an electric car by 2011.

Step back half a second and ask yourself how all of this is going to be made possible with: 1) technology, 2) money and 3) skills.

When you put those three elements together, guess what? Jobs, economic growth, prosperity, rising standards of living, wealth.

The U.S. did just that in the 60 years that followed WWII. There is a unique infrastructure and “partnership” in the U.S. between universities, R&D and the economy. The country has attracted the best and the brightest, which fueled the virtuous circle.

If the environment becomes the objective and the purpose of nations — granted, small ones for the time being — over time, the U.S. could be put in a position where it would be losing its competitive advantage if it doesn’t do the same, or at least to some extent. The U.S. is so big economically that it can influence the course of events like no other country.

Al Gore pointed out in Davos last week that of the 7,000 or so questions that have been posed to the candidates in the debates to date, only three were about the environment. Clearly, no one cares about this issue in the U.S. People still think energy is cheap and abundant and that all this talk about the environment is much to do about nothing. I’m exaggerating deliberately, because that’s not totally true. But awareness in Europe is much higher and there are more local initiatives than in the U.S. Don’t forget that necessity is the mother of invention. When you’re not blessed with the geography and natural wealth of the U.S., you have to find other ways of doing things.

You probably read the long article in this weekend’s New York Times on the shrinking of America. The environment with its social and economic consequences was a very central theme.

Anyway, whatever you decide to do, I still firmly believe that a vision statement is necessary; the country needs a sort of “Moon Shot”-type of goal and destination. Let it then determine the roadmap to get there. Stay away from the demons of wanting to propose the solution(s) before having agreed on what/where the landing point is to be.

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