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The Chinese Economy is On a Slowing Boat
James Finnan

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The case for more and greener stimulus Print E-mail

Steve Taub and I were just remarking on how often we see wind farms these days while driving in the countryside, especially in the more remote areas of states such as New York, Minnesota, Texas and Wisconsin.

That discussion followed my mention of data I came across yesterday that shows how little we and the rest of the world are investing in alternative energy and other so-called "green" initiatives, as measured in terms of GDP.

Notwithstanding the growing presence of wind farms, the data shows that we're missing an opportunity by failing to make larger investments, in light of the disaster in the gulf and the weak job growth evident in today's disappointing BLS report.

To be sure, the data on green investing shows that one-sixth of the more than $3 trillion in stimulus that governments around the globe provided in 2008 and 2009 was allocated to such spending. The data includes spending on renewable energy, carbon capture and sequestration, energy efficiency, public transport and rail, and improving electrical grid transmission, as well as other public investments and incentives aimed at environmental protection.

Together, the US and China accounted for roughly two-thirds of that spending.

But the amounts represent very little as a percentage of GDP, both globally and in terms on individual countries.

In the US, for example, the total amount of stimulus devoted to green initiatives represented less than 1 percent of GDP. China's spending was more than triple that but still less than 4 percent. And all told, the world's initiatives amounted to 0.7 percent of GDP.

We've got a long, long, long way to go to end our dependence on carbon. Yet there's no good reason to delay investments that will get us there in light of the Gulf spill and a recovery that remains largely jobless, not to mention the on-going troubles in the Middle East.

Government budget deficits? Those are the least of our worries, and will remain that way until we have a real recovery. But corporations are still mostly sitting on their cash and will continue to do so until there are real, honest-go-goodness signs of one. Those will not materialize until governments jump start serious growth. What better opportunity is there to do so? None that I can see. 

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