In February 2019, the Green New Deal reached the House of Representatives, bringing with it a slew of controversy. House Majority Leader Nancy Pelosi called it a “green dream,” while a caucus of conservative representatives decried it as a “thinly veiled attempt to create a socialist society.”
A closer look at the resolution’s text, however, reveals a program rooted in the United States’ historic use of industrial policy. Just as the 1930s New Deal made economic stimulus and industrial growth its key goals, the Green New Deal speaks to the growing belief that the American economy should reverse deindustrialization, address wage stagnation and invest in clean manufacturing.
As simultaneous public health and economic crises have devastated global economies, world leaders like Xi Jinping and Boris Johnson have set forth proposals for their own green industrial strategy. Labor organizers and climate activists alike are encouraging the incoming Biden administration to join its international peers and transform America into a green economy while providing support to its blue-collar workers in need of relief.
Deindustrialization, Reversed
Since the 1980s, American economic policy has decisively favored deregulation and free-market enterprise. Embracing the laissez-faire policies touted by economists like Milton Friedman, the United States widely outsourced manufacturing to other countries that promoted their own industrial policies.
Reduced trade barriers and decreased investment in manufacturing became the norm, accelerating the sector’s decline. In 1979, manufacturing comprised 21% of the U.S. gross domestic product. By 2007, this figure slimmed to only 12%.
Despite a consensus largely opposed to industrial policy, economists and policy makers continued federal investment in strategic sectors throughout the 1980s and 1990s. In her recent book, “The Entrepreneurial State,” economist Mariana Mazucatto makes the argument that Silicon Valley’s economic success is largely the result of federal investment in research and development for military technology throughout the Reagan and Clinton administrations. Mazucatto extends this argument to explain that the United States’ widespread economic success is the outcome of targeted government investment in private ventures.
Additional scholars have drawn similar conclusions. Sociologist Frederic Bloc coined the term “hidden developmental state” to describe the federal government’s historic role in financing private sector innovation. In an interview with the HPR, political scientist Steven K. Vogel explained, “The launch markets for a lot of Silicon Valley technologies was the Department of Defense … Venture capital began through a government fund, oddly enough started under Reagan. All of that we didn’t call industrial policy, but it was.”
Drawing on these strategies, a growing number of economists have called for a 21st-century green industrial policy that invests in clean manufacturing of environmentally friendly technologies. Unlike current emissions regulations or pollution taxes, a green industrial strategy would require a coherent plan to subsidize American manufacturing — a policy program comparable to the American System backed by 19th-century industrialists like Alexander Hamilton.
A Green Deal for Blue Collar Workers?
Throughout the 2020 presidential campaign, both candidates Joe Biden and Donald Trump made support for American manufacturing and relief for blue-collar workers key tenets of their respective campaigns. President-elect Biden’s addition of pro-union and environmentally friendly messaging, however, raised concerns that his campaign would alienate blue-collar voters, given labor union’s reluctance to back a Green New Deal throughout the presidential primaries.
“We welcome the call for labor rights and dialogue with labor,” stated members of the AFL-CIO in a 2019 letter to Green New Deal authors Sen. Ed Markey, D-Mass., and Rep. Alexandria Ocasio-Cortez, D-N.Y. “But the Green New Deal resolution is far too short on specific solutions that speak to the jobs of our members and the critical sectors of our economy.”
This opposition emerged largely from pay discrepancies between fossil fuel and renewable energy workers. The starting salary for a solar energy worker averages to $7000 less per year than a coal mine worker. Solar installers make a median wage of $12 per hour, while their counterparts in some fossil fuel industries can make upwards of a six-figure salary.
Contributing to this pay disparity is the lack of unionization in green manufacturing sectors. The 2020 U.S. Energy and Employment Report found that 6% of solar and wind workers are unionized, while only 4% of workers in photovoltaics are union members.
According to Jason Walsh of BlueGreen Alliance, lack of unionization could have consequences for blue collar worker’s ability to ensure a just transition. “We need to ensure that the benefits of a green economy are shared equitably across our society and build ladders to the middle class,” he told the HPR. “We’re at an inflection point where it’s clear that clean technology will be the global economic race of this century. U.S. manufacturers have the ability, with the right policy support, to sell the products that any country will need to stave off the worst consequences of global warming.”
Those policy supports could come in the form of President-elect Biden’s proposed $2 trillion stimulus package, which allocates funding for manufacturing and unionized jobs in green industries. A key policy within this package includes a $400 billion government procurement of clean energy technologies such as batteries and electric vehicles — sectors in which other countries have already developed significant competitive advantages due to their public own investment programs.
Despite initial opposition to a federal green industrial program, attitudes of labor leaders have since shifted. In response to Biden’s green stimulus proposals, United Auto Workers, a union of 400,000 automobile workers, released a statement describing the president-elect’s plan as a “win-win for American manufacturing … and a cleaner environment.” State level campaigns like Climate Jobs New York and regional branches of the AFL-CIO have also expressed their support for a green industrial strategy.
A June 2019 poll by think tank Data for Progress additionally found that, in total, 62% of surveyed union members nationwide support a green economic transition through the use of industrial strategy.
“The president-elect has made it clear that he wants the jobs created by strategic federal investment to be high quality union jobs,” continued Walsh. “Growing a green and clean economy will not be possible unless there is a fundamental role for unions in this transformation.”
In America’s Heartland, is There Political Will?
Although industrial policy has recently gained popularity among union members and progressives, it has long faced opposition within both parties. In the 2012 presidential campaign, Republican vice presidential candidate Rep. Paul Ryan argued that America should not “pick winners and losers in the economy through spending, tax breaks, and regulations.” A handful of then-President Barack Obama’s economic advisors also expressed their uneasiness with industrial policy.
The Green New Deal has faced additional criticism for not addressing the concerns of rural Americans or those living in former industrial hubs. Combined with the Trump administration’s argument that federal environmental policy hurts rural economies, green growth proposals may continue to face an uphill battle with Congressional Republicans.
A small minority of Republican leaders — among them Sen. Marco Rubio — have broken rank with Congressional Republicans’ conventional support for market fundamentalism. But on the whole, Rubio’s Republican colleagues “don’t share his passion for industrial policy,” noted Vogel in his interview with the HPR.
While this opposition may continue to slow the Biden administration’s green industrial proposals, think tanks and organizing groups are more optimistic about rural America’s likelihood to support a transition to a clean economy.
In an interview with the HPR, Rob Altenburg of PennFuture, an organization leading the clean energy transition in Pennsylvania, explained that rural communities historically reliant on fossil fuels have become more open to a clean energy economy. “There’s a percentage of the Pennsylvania population whose jobs have been traditionally reliant on extractive industries — whether coal or gas. There is pushback from people who want coal to last forever, but we are seeing a realization that coal production in the state is on the decline despite Trump’s pro-coal policies.”
A Green New Deal — or an assortment of federal industrial policies — would involve significant political will and public spending to slow the consequences of climate change. Much like its Great Depression counterpart, a federal industrial program’s success will depend on coalition building and compromise between both parties. But the 1930s’ New Deal also revealed another lesson for today’s policy makers and green industrialists: An economic transformation can occur by using private enterprise to realize public goods, strengthening labor unions and investing in blue-collar communities.
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