The financial crisis and subsequent recession in the United States have prompted some to begin calling for a completely new kind of economy. This new economy would be based on environmental values, a so-called “Green New Deal” to be ushered in by President Obama and leaders in Europe. The plan includes cap-and-trade legislation, new spending on “green” jobs, subsidies for favored firms and technologies, and trade restrictions against out-of-favor products and industries.
The United States is the world’s most crucial economic engine, and before it goes much further down this road, it might want to look at Europe’s experience with a similar deal. It has done little to help the environment but much to harm consumers and the broader economy.
In Europe, green ideas have been in fashion for two generations and have driven policy to a much greater extent than in the United States. Despite this, we have not witnessed a sizable green wave of new jobs, as evidenced by our unemployment rates, which are routinely several percentage points higher than in America.
The green movement has succeeded in generating increased government spending and subsidies at taxpayer expense. Much of this spending has been directed toward inefficient renewable-energy projects, such as solar and wind power. In my own country, these subsidies appease Germany’s mighty pro-green lobby, but they have done little to put downward pressure on unemployment, and their contribution to Germany’s overall energy mix is small.
Germany, like the United States, is a major industrial and manufacturing powerhouse. It continues to rely on fossil fuels and will do so for a long time to come. There is no escaping this fact, no matter what the Green New Deal enthusiasts say.
To that end, it’s important that Washington not make some of the mistakes we in Europe have made. Specifically, U.S. political and industry leaders should be careful not to follow Europe’s path of buckling under to “greenmail,” which undermines sound policy and genuine sustainable economic growth.
Here is what has happened in Europe: Caving to pressure from alarmist environmental groups, European companies such as Carrefour, Metro AG and Unilever have elected to halt the purchase of certain food, industrial and paper products from developing countries. The green groups claim these products, made in Southeast Asia, Africa and Latin America, harm rain forests and other critical habitats.
However, several reputable studies show that nothing could be further from the truth. Instead, the global trade in goods created in these areas provides jobs and incomes to those desperately in need of economic advancement. These economic advances make environmental improvements in their home countries possible. The irony is that by refusing to trade with producers from these developing countries, European companies are making the global environment worse, not better.
Consider the global trade in paper products that are produced in Southeast Asia. This has been one of the great economic success stories of the region, as undeveloped countries such as Indonesia tap their environmental resources - in this case, renewable forests - to create products for exchange in global markets. The resulting pulp and paper industries employ hundreds of thousands of people across Southeast Asia, giving them good jobs and a chance to provide steady livelihoods for themselves and their children. This has been crucial to establishing a middle class and promising a better economic future for all in the region.
But radical environmental groups, mostly based in Europe, claim that the purchase of paper goods from these countries harms wild habitat. This is untrue. Countries such as Malaysia and Indonesia have some of the strongest wildlife and rain-forest protections in the world. They have set large swatches of their land off-limits, out of the reach of industrial interests. Their commitment to their own natural environments far exceeds anything in Europe’s own environmental history.
But facts rarely stop green pressure groups once they fixate on a target. The eco-activists pressure Western companies - via greenmail campaigns - to stop purchasing these goods, thus harming the economic prospects of Southeast Asia. The activists believe this is part of the larger Green New Deal they are orchestrating. But it’s a raw deal for the workers of developing countries and the consumers of Europe and the United States. And it does nothing to protect the environment.
Of course, this fits well with the agenda of the environmental left, which wants to limit consumer choice for wealthy Westerners and prevent the poor in developing countries from kick-starting economic growth. For too long, Europe has been complicit in perpetuating these deeply inhuman policies. It will be an even greater economic and humanitarian shame if America follows suit.
Holger Krahmer is a German Liberal and a member of the European Parliament’s environment committee and the temporary committee on climate change.