President Obama’s Green-print for an Economic Recovery

On Feb. 24 we once again were treated to the intelligence and inspiration we have come to expect from President Barack Obama. As the president noted in his speech, The American Recovery and Reinvestment Act is now law, and one of the central themes of the stimulus is investment in science, technology and renewable energy. President Obama’s rescue plan commits $15 billion a year to develop renewable energy technologies, such as wind and solar power, to advance biofuels, clean coal and fuel-efficient vehicles.  Speaking before Congress on February 24, Obama committed his administration to “doubling the US supply of renewable energy in the next three years.” That involves laying thousands of miles of power lines and making homes and buildings more efficient.

His call to nationalism evoked President John F Kennedy’s 1961 challenge to land a man on the moon by the end of the 1960’s. While the space race was built on a fear of war, the effort to dominate the technologies of the 21st century was a call to maintain the nation’s dominance as an economic power. President Obama observed that the rest of the world is not standing still: “We know the country that harnesses the power of clean, renewable energy will lead the 21st century. And yet, it is China that has launched the largest effort in history to make their economy energy efficient. We invented solar technology, but we’ve fallen behind countries like Germany and Japan in producing it. New plug-in hybrids roll off our assembly lines, but they will run on batteries made in Korea.”

The president hit the point precisely when he said, “to truly transform our economy, protect our security, and save our planet from the ravages of climate change, we need to ultimately make clean, renewable energy the profitable kind of energy.”  It was particularly inspiring to watch him clearly connect our economic recovery to the creation of a greener economy. What is perhaps even more remarkable is the billions of dollars that the United States has now committed to this work. It truly is the functional equivalent of the space race of the 1960s, albeit without a fixed deadline.

However, in my view the key point made by the president was in his role as historian-in-chief. Not for the first time, he dismissed the idea that America’s wealth and destiny was a pure product of free enterprise:

“I reject the view that says our problems will simply take care of themselves; that says government has no role in laying the foundation for our common prosperity. For history tells a different story. History reminds us that at every moment of economic upheaval and transformation, this nation has responded with bold action and big ideas. In the midst of civil war, we laid railroad tracks from one coast to another that spurred commerce and industry. From the turmoil of the Industrial Revolution came a system of public high schools that prepared our citizens for a new age. In the wake of war and depression, the GI Bill sent a generation to college and created the largest middle-class in history. And a twilight struggle for freedom led to a nation of highways, an American on the moon, and an explosion of technology that still shapes our world.  In each case, government didn’t supplant private enterprise; it catalyzed private enterprise. It created the conditions for thousands of entrepreneurs and new businesses to adapt and to thrive.”

And he could have added to his examples, the development of smaller computers for the space program, the development of the Internet by the Defense Department, America’s ports and the amazing growth of American agriculture that followed the creation of a system of land-grant colleges.

The idiotic and ideological idea that wealth can be created without rules, collective action and strategic planning is as ridiculous as the idea that government can create wealth without a private sector. The lesson of the 20th century was not that communism worked and it was not that free markets should always prevail. It was that we need a mixed economy. Wealth is generated when government and the private sector get good at working together.  America must be a lucky country after all. For at the very moment when we really needed a president who truly gets this fundamental truth, we got one. Even better, we got a president who is a masterful communicator and can convey this lesson to the American people.

I think the president is managing to get across a mixed message of realism and hope for the future.  He is also building a long-term trusting relationship with the American people. I think that people can accept bad news as long as it is presented honestly along with a plausible idea of how to get from bad times to good ones.  To some degree, economic revival is a psychological phenomenon. It begins when we start to take action to build the future instead of hunkering down to protect what we have. President Obama is clearly trying to reinforce the positive emotion that focuses us on the future. I think it will work as long as he continues to tell the truth and doesn’t get enveloped in the presidential cocoon.  Given his intelligence and high degree of self-awareness, I have high hopes that he can succeed. America and the world are looking for leadership and it looks like we have found it.

I am grateful for the research assistance of Sara Schonhardt, Master’s Student, Columbia University’s School of International and Public Affairs

President Obama’s Green-print for an Economic Recovery