Mark Blyth (8): How Germany gets to eat our lunch

Click to listen to Chris’ conversation with Mark Blyth (32 min, 15 meg)

Mark Blyth is back in the pub, just in time, with the economic script for 2012. You remember the Sean Connery version of a trans-Atlantic political economist at Brown? As usual, he’s talking faster through that Glasgow brogue than I can listen or think. But when I transcribe him, I begin to get his big picture: of Europe still strangling itself with debt born of Euro-nomics, while Germany (despite everything) takes care of industrial business. The US, meanwhile, looks to be tip-toeing away from financial meltdown but neglecting its old productive core.

Nobody’s noticed this. Two years ago the Germans decided they were phasing out nuclear power, completely. Nuclear power is around 20 percent of their electricity generating capacity. If you spend any time in Germany in the winter, you will know one thing: it faces Russia, and it’s cold. This is not something you screw around with. So what are these guys going to do? Well, when you think about Germany, you think about — apart from austerity and madness in the Eurozone — you think of really good engineers, right? You think about people that still have serious apprenticeships, serious skills, an entire engineering culture… (I’m sure I’m talking into a German microphone; that means it isn’t going to break.) The point is: what they’ve basically decided to do is go all-out into alternative energy. They’re going to put about 300-billion Euros into it just to get started over the next ten years. They’re bringing together all the top guys and top firms in collaborative research. They’re not competing; they’re trying to develop the best technologies — wind, solar, everything. Why? Because they know something we’re in denial about. Oil is running out. That’s a fact. The planet’s warming up. That’s a fact. You can call it Climate Change Chicanery if you want; but you’re not paying attention. The Germans don’t believe any of that stuff, and they know we’ve got one shot, and one shot only. Whoever figures out how to make sustainable green tech in the next 30 years gets to sell it to everybody else for the next 1000. That’s what they’ve figured out. What are we doing? We’re shutting down our engineering. We’re hollowing out our skills. We’re closing down our options. The Germans are going to have our lunch. The Chinese will be in for the appetizers, but the Germans are going to take the main.

On the Occupy movement which Mark Blyth says could be back any minute because the streams of discontent are o’errunning their banks — sky-high college costs and 20-percent youth unemployment feeding the flood: You heard it here first that it wasn’t the scruffy kids who started Occupy. It was their parents.

A lot of this is an inter-generational problem. My colleague Sven Steinmo — a Norwegian-American who teaches now in Florence — finds himself telling his kids when they ask what he wants for Christmas or his birthday: ‘I want nothing! I have everything! My generation has absolutely everything.’ He came of age in the 1960s when it was perfectly possible to go to Berkeley for $400, and he did. And then grad school, and then a job in a higher-ed system that was expanding. And then he lived through the 1980s and 90s when investments were booming. And now he’s the guy who’s coming up for a pension, and he’s got two houses and lives in Italy. And all the people coming after him, including his kids between them, can’t afford a mortgage. So there’s an interesting problem. The people who vote in the US, and the people the politicians pander to, tend to be old, and gray. They have the money. They have the pensions. They have it all, and they’re not giving it up for anyone. So you have an inter-generational conflict that hasn’t yet spoken its name. Maybe that’s the way Occupy comes back.

Mark Blyth with Chris Lydon in Boston, March 26, 2012

Hang in for the Blyth case — listen three times if you must, as I do — that there’s no plausible alternative out there to an “American-dominated global order.” It has everything to do with the point that China’s assets are still, in the end, our paper.

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  • Mark Blyth’s comment about Germany and their $300b investment in alternative energy really struck a chord with me. Profound.

    For several years, I’ve held the position that climate change is a real problem and a real opportunity, both. The US would be best served by setting aside the climate change _debate_, and instead jump whole-hog into the _opportunity_.

    Climate change as a catalyst could fuel an engineering, development and manufacturing renaissance in the US. Solve our economic and environmental challenges in meaningful ways.

    Agreeing on the cause(s) is not a prerequisite for success. Germany-like action is, IMHO. US-based Believers would be satisfied by knowing their country is doing something meaningful. US-based business and government would be satisfied by the revenues generated as a result of talking consumers into replacing all of their last-century products with new, fully available eco-friendly products.

    I’ve got a lot more to add, but this is long enough already 🙂

  • orangescissor

    I hope Obama proposes a plan to re-invest in America this summer – education, infrastructure, new energy and small business. He needs t to re-energize the grassroots, idealistic young base from 2008 and the Republican plan to cut everything, including regulations tees it up for him to do something big.

  • Sean McElroy

    If Germany had to negotiate with Greece and Italy in order to pursue its Clean Energy policy, it would be pursuing it with the same verve as the US, that is, very tepidly. Go below the Mason/Dixon line and there is no energy problem to solve. Of course less than half the population of the US lives below that geographic divide. And yet, energy policy is dictated in the US by that minority population.

  • sifta

    Not sure that I buy into the bogieman scenario that the German investments in alternative energy will leave the USA behind for the next big thing.

    I wonder whether this is an investment in energy or technology for its own sake, or whether it is an alternative to risky and messy foreign entanglements associated with oil. That is, oil is great when it is flowing, but there are so many geo-political issues with oil that the flow is fragile. Some countries (e.g. India) might consider building a pipeline to guarantee flows of oil. However, Germany needs a lot of energy and needs a lot of strategic capacity that might not be plausible in continental europe. From Germany’s perspective, while they are buffering the Euro with Austerity, why not buffer external pressures on Oil with Alternative Energy?

  • Potter

    I have been wondering and wondering why oh why the push for austerity in Europe when it’s not working… and so here is the reason. (I wish could understand it better). What I did understand here made total sense.

    I like Mark Blyth’s forthright criticism of the US. We do certainly “have our heads up our ass” and will fail by “acts of our own stupidity”. We are still arguing amongst ourselves about climate change for goodness sake. This is a country so dependent upon oil and it seems we have not even started to tackle the problems ahead of us.

    I guess Southerners don’t have to worry about heating oil so much, but they will dry and fry before they get it.

    So we are okay just so long as everyone else is doing worse (except Germany).

    In the end, Mark Blyth wishes we meet again under better circumstances. In any case, this reality based analysis is very welcome. It feels so much better than living under illusions. I will look for #9.

    Happy Easter! Happy Passover!

  • Jennifer

    Change in the US is not politically possible unless it is to choose to enact more drug laws and go to war. Washington is in a hopeless logjam and both sides of the aisle are bought and paid for by special interests. We will go down the drain before any real change happens here and speaking as an American is a real disappointment.

  • Tuiffttm (tangled up in fast forward time machine)

    This might not be as specifically relevant as I’d always like to be here. Just a basic summary [tell me if it’s not, or wrong] from the minions of the simple trying to accommodate the complex. Don’t mean to spam (and I’ll limit the online duplication to one…I hope); but, actually, just put this thing up at Amit Goswami’s new site…

    “…If you read my post over there you will see my feelings re the need (despite the denial on the part of “experts”) for an updated and somewhat comprehensive circular flow diagram of the US economy.

    Such a diagram could be in the form of an interactive program, where, for instance, one could plug in different numbers with regard to taxes paid by businesses, taxes paid by individuals, subsidies, public works programs enhancing sustainability, Medicare-for-all vs the drain on resources that = 1500 HMOs, etc. I am not some obscurantist and/or dillatante with regard to this suggestion. I’ve read Greider, James Galbraith, Dollars & Sense magazine, Mark Blyth, Michael Hudson, Kwak & Johnson and on and on. AND THE FACT IS WE JUST DON’T HAVE THE RIGHT RAP-DOWN ON THE TIPS OF OUR TONGUES AT THE WATER COOLER. It is a QUANTITATIVE matter, folks. I don’t know if superpositions really exist somewhere out there or not (it looks like they really do to me at the atom level and subatomic particle level), but after I spend time thinking about such things…I wonder why my thinking with respect to something simpler like economics yields so few arguments that, for instance, make the slightest dent in the errant notions that float around in the brains/mental-bodies of flat-taxers…or those fearful of the dreaded ‘entitlements.’ An example of a circular flow model I think exemplary was STEPHEN J. ROSE’s “THE AMERICAN ECONOMY POSTER.” But that was ’86 I believe. Since then the conspiracy to hoard knowledge and trickle it out for an arm and a leg has gone on apace. One of the most fundamental areas that needs mass attention, for example, is where the US will get funds as China becomes less enchanted with buying our bonds (loaning us money). It’s something no one wants to think about. When our banks have made loans, they have created “new” money…which should be more a Treasury function (as Kucinich has pointed out; any new money created must represent some new and real asset/value out there in the real American economy…otherwise the value of the dollars you and I own plummet in value [money lent for the subprime mortgages was supposed to pay for new houses, but the borrowers could not extract earnings from the existing economy fast enough to keep the banks solvent and the MBS buyers solvent (The added values of the new homes did not add enough pump-up of the overall economy fast enough; whereas if the loans had gone to enterprises, say, that aimed to employ folks in hands-on organic agriculture or organic husbandry, it’s easy to see the overall economy would have gained much faster an exportable product (immediate value) which would have served to move it more into the black)]). There is abosolutely no focus by liberal blogs these days on the mechanics of creating money for what we need via selling T-notes (bonds). In my mind we need sort of an eco-retooling-bond, and all the money folks shelled out for’em would go exclusively to well thought out public works programs. For instance, re all requisite subsidies, the folks living on Cape Cod WOULD HAVE TO BE CONVINCED offshore wind generators were totally justified. Yes, there would have to be FAITH in the investment all the way around…on returns and on what the money would enable. Yes, consensus is a tall order.

    Likewise (a bit of a digression from my flow chart suggestion), to understand the subprime crisis, and other volatile economic predicaments which may arise later, I believe interactive teaching models or simulations might help. We reach a point where we sign a petition for a law that constrains Wall Street for example. We come to understand the danger after the fact, and resultant constraints on banks might effect subprime lending…but what about hedge funds? There is I believe a contingent of young people who are smart enough to understand other dangers, but there are few tools that exist to explain things between, on the one hand, general warnings/breakdowns in words and, on the other, the models QUANTs use. Re the interactive I mention above with respect to the economy portrayed as a circular flow…I also feel there should be teaching tools available, at least to students, that simulate big-scale-troubles hedgefunds/derivatives might facilitate…currency speculation as well (of course, teaching tools couldn’t feature as many variables as the models investors use).”

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