IN THIS ISSUE
■ PERI Releases Two Reports on Clean-Energy Investments
■ Three New Economists Join PERI's Staff
■ Policy Effects and New Releases from the Corporate Toxics Information Program

As the Obama administration begins to implement its stimulus program and its climate and energy policy, we are likely to see unprecedented levels of spending on clean-energy investments. In two complementary studies, PERI researchers examine the impact of these investments on employment, economic growth, and the well-being of low-income families in the U.S. These economic benefits of clean-energy investments would be in addition to their major significance in fighting global climate change.

"The Economic Benefits of Investing in Clean Energy: How the Economic Stimulus Program and New Legislation Can Boost U.S. Economic Growth and Employment," by Robert Pollin, James Heintz, and Heidi Garrett-Peltier (commissioned by the Center for American Progress) assesses the cumulative economic impact of the clean-energy aspects of these two policies, and estimates the employment effects of the $150 billion in annual public and especially private clean-energy investment they are likely to encourage. This study also considers the potential impact of these policy initiatives on long-term economic growth.

"Green Prosperity: How Clean-Energy Policies Can Fight Poverty and Raise Living Standards in the United States," by Robert Pollin, Jeannette Wicks-Lim, and Heidi Garrett-Peltier (co-commissioned by Natural Resources Defense Council and Green For All), considers these employment and other policy effects in terms of their ability to raise living standards for lower-income workers and families. This report shows that investments in clean energy can benefit lower-income families first by expanding job opportunities, and also by lowering household utility bills through energy efficiency investments and transportation costs by making public transportation more accessible. The two reports together significantly strengthen our understanding of how a transition to a clean-energy economy can play a major part in lifting the U.S. out of the current recession, and setting us on a course towards both environmental sustainability and rising living standards, especially for lower-income workers and their families.

ONLINE RESOURCES
■ Read more about "Green Prosperity"
■ Read more about "The Economic Benefits of Investing in Clean Energy"
■ Learn more about PERI's Green Economics research

In our largest expansion since PERI's founding in 1998, this summer we are adding three new economists to the PERI staff: Arin Dube, who will share an appointment with the University of Massachusetts Department of Economics, Heidi Garrett-Peltier, and Jeff Thompson. These three young economists will significantly expand PERI's research capacity.

New Research Fellow Heidi Garrett-Peltier is completing her Ph.D. in Economics at the University of Massachusetts, where she earned her Master's Degree in 2006. Her dissertation includes a nation-wide survey of firms in the renewable energy and energy efficiency industries, which will significantly enhance our understanding of the structure of a clean-energy economy. Over the past few years, Heidi has become a national expert in this area; she is a co-author of "Green Recovery: A Program to Create Good Jobs and Start Building a Low-Carbon Economy" as well as a number of other recent and forthcoming studies in PERI's green economics program.

Jeff Thompson, who is joining PERI as an Assistant Research Professor, will be focusing primarily on domestic economic policy, with particular emphasis on the New England region and public finance at the state and local government levels. Jeff comes to PERI from Syracuse University, where he recently completed his Ph.D. in economics with a dissertation on how migration influences the ability of states to use their tax codes to redistribute income. Prior to his Ph.D. work, Jeff was a labor analyst at the Oregon Center for Public Policy for six years and received his Master's degree from the New School for Social Research.

Arindrajit Dube joins PERI from the University of California, Berkeley Labor Center, where he has been exploring the impact of minimum wage laws around state borders; the impact of labor relations in hospitals on patient health outcomes; the effects of employer mandates on health benefits; how U.S. foreign policy affects U.S. multinational corporations; and how immigration is affecting the low-wage labor market. He received his Ph.D. in Economics from the University of Chicago. Arin looks forward to expanding his health economics research at PERI, be it understanding labor relations in the healthcare sector, understanding how communities are affected by hospital closures, or how well local health reform initiatives are working.

Justice in the Air: Tracking Toxic Pollution from America's Industries and Companies to Our States, Cities, and Neighborhoods (co-authored by PERI's James Boyce, Michael Ash, & Grace Chang, along with Manuel Pastor, Justin Scoggins, & Jennifer Tran of the Program for Environmental and Regional Equity at the University of Southern California) uses PERI's Corporate Toxics data to examine not only who receives the disproportionate share of toxic air releases -- low-income communities and people of color -- but who is releasing them.

Justice in the Air enhances the data available in PERI's Toxic 100 Report with a new environmental justice scorecard, ranking the Toxic 100 companies by the share of their health impacts from toxic air pollution that falls upon minority and low-income communities. The authors conclude by recommending four ways the right-to-know and environmental justice movements can use these findings in their efforts to protect the health of vulnerable communities.

TOXIC 100 DATA BEHIND A MAJOR EPA INITIATIVE
The U.S. Environmental Protection Agency recently announced an initiative to monitor the levels of toxic air pollution around the nation's schools, and take steps to reduce airborne toxins at those schools with the highest levels. The effort will particularly focus on urban areas, low-income areas, and schools near large industrial facilities. The initiative was largely spurred by an extensive investigative article in USA Today, which built its reporting on PERI's toxic air pollution database. The EPA action is the most direct impact of this PERI project to date on the health of families. According to James K. Boyce, co-director of the Corporate Toxics project, "It's extremely gratifying to see the new administration using the analytic tools we've created in collaboration with the EPA to help the people PERI hopes to serve--children and families who have been exposed to disproportionate pollution burdens. This is a big step in making the public's right-to-know an effective means to secure the right to a clean and safe environment."

ONLINE RESOURCES
■ Download Justice in the Air
■ Go to the Corporate Toxics Information Project home page
■ Go to the Toxic 100 environmental justice rankings
■ Go to the EPA press release
■ Go to USA Today's "Toxic Air and America's Schools" story

New Labor Forum

In "Economic Prospects," PERI economists explore a range of topics, under the broad theme of how economic trends, policy debates, and economic theory matter in terms of promoting the well-being of working people in the U.S.

Winter 2009: Robert Pollin asks: how do we build a clean-energy economy, and how do we create a financial system focused on productive investment? The challenge is to combine these goals in a single set of policies, creating financial systems that inherently support a clean-energy economy. The reality is that there are only two ways to finance a clean-energy transition--public and private funding--and both will be needed. Pollin begins to explore mechanisms that will leverage private funds along with public expenditures, and guarantee that both sources of funds are channeled towards socially-desirable goals.
■ Read "Financing the Green Economy as an Answer to Casino Capitalism"

Spring 2009: Infrastructure investments make up a significant part of the Administration's recovery plan. But our national infrastructure supports traditional transportation and energy systems. While repairs and expansion to these are crucial, we must also make serious commitments to clean-energy initiatives. We also need to weigh the benefits of infrastructure investments against spending on education and health care, and address concerns that infrastructure investments favor the construction industry, where employment has long been dominated by white males. Robert Pollin describes how a plan for economic and environmental stability must combine the priorities of restoring our public infrastructure, transforming it to support a clean-energy economy, and creating jobs which provides opportunity for all.
■ Read "Infrastructure Investments and the Obama Recovery Plan"

Summer 2009: James Heintz describes the fiscal situation facing the states-- shortfalls totaling an estimated $99 billion, which may rise to over $350 billion by 2011. He explores the causes of this crisis, and recommends a set of long-run changes to state fiscal and tax policies to reduce volatility and lessen dependence on the federal government to bail states out of their crises. These include eliminating short-sighted incentives to cut taxes, expanding rainy day funds during flush periods and restricting their use, dedicating volitile sources of funds to rainy day funds, and enhancing cooperation between states to increase the corporate income tax base.
■ Read "The Grim State of the States"

Dollars & Sense

Jeannette Wicks-Lim asks "Should we be talking about living wages now?" Wicks-Lim argues that in this crisis, the lowest-paid workers are the most vulnerable, and hence this is a moment when their rights and protections need to be supported with ongoing vigilance. She looks toward two policies: using the economic recovery plan as a tool to impose living wage requirements, and creating a long-term living wage policy with multi-step raises guided by interim economic impact studies.
■ Read "Should We Be Talking About Living Wages Now?"

Heidi Garrett-Peltier explains why investments in retrofitting homes can be a win-win-win equation--for homeowners, for the larger economy, and for the climate. She lays out the simple economics behind the key fact that retrofitting buildings creates more than twice as many jobs per dollar spent than oil or coal production. Garrett-Peltier looks to the Obama administration's stimulus package to drive energy-saving improvements, accelerating the transition to a low-carbon economy while also creating jobs.
■ Read "Saving Energy Creates Jobs"

The Nation

In this short essay , Robert Pollin asks: "Neoliberal capitalism--whose defining features were Wall Street greed and big business domination of government policy-making--is dead. But what comes next?" His essay describes the steps we can take, and those the Obama administration has already taken, toward a social justice economy--steps that address our crisis and begin to formulate a vision of a truly democratic, egalitarian social order.
■ Read "Be Utopian: Demand the Realistic"

Can seemingly diverse goals be met with a single set of policies? Robert Pollin demonstrates that policies to create a clean-energy economy can also further a social justice agenda. Pollin describes how a green investment program can move employment back into a central role in our economic policy. He explores how the transition to a green economy can best protect the communities most dependent on fossil fuel industries, how the benefits of employment creation can reach women and minorities, and how green growth can also lower costs of living for families.
■ Read "Doing the Recovery Right"

Other Publications

In January 2009, Tikkun dedicated its issue to "Memos to Obama," among which were memos from Robert Pollin and our colleagues Nancy Folbre of the University of Massachusetts, Amherst, and Thomas Weisskopf of the University of Michigan. Pollin asks the President to return the objective of full employment to the policy radar screen. Folbre asks him to prioritize a range of economic policy issues critical to women and families, reminding him that "a majority of women in this country--but not of men--voted for you in November." And Weisskopf continues with the theme of economic equity by recalling the President's words to Joe the Plumber: "I think when you spread the wealth around, it's good for everybody."
■ Read "Robert Pollin on Full Employment"
■ Read "Nancy Folbre on Economic Policies to Benefit Women "
■ Read "Tom Weiskopf on Spreading the Wealth"

As part of The American Prospect's 'Green Challenge' issue, Robert Pollin addresses a few key questions about job creation through clean-energy investments. Can we expect that a green investment program today can have an effect comparable to military spending in the 1940s? What will be the net job gain given that many jobs will be lost as we reduce demand for oil, natural gas, and coal? And, perhaps most critically, how will we pay for it?
■ Read "Where the Jobs Are"

In The Economist's Voice, Robert Pollin, James Heintz, and M. Ahmed Diomande of the New York State Senate Finance Committee argue that the private credit ratings agencies operate within a perverse incentive system. These agencies are hired by the very companies they purport to evaluate without bias, and financial companies tend to hire ratings agencies which they deem likely to rate their instruments highly. The authors recommend a simple correction: a public ratings agency staffed by civil servants whose performance is evaluated on the basis of the correlation between their ratings and actual market performance over time.
■ Read "Why U.S. Financial Markets Need a Public Credit Rating Agency"

For Roll Call's special issue on the future of the American worker, Robert Pollin explores how we can use this moment of crisis to address the decline in living standards for working families in the U.S. He recommends restoring the idea of full employment at decent wages as a moral centerpiece of economic policy, as it was for a generation coming out of the 1930s depression. Pollin emphasizes the importance of enacting the Employee Free Choice Act as a major policy tool for advancing this broader agenda.
■ Read "Standard of Living Must Be Raised"

In a special issue devoted to understanding the global financial crisis, India's Economic & Political Weekly recently highlighted the work of PERI Co-Director Gerald Epstein and a number of PERI Research Associates and colleagues. In "Regulating the U.S. Financial System to Avoid Another Meltdown" Epstein and James Crotty bring the work on financial re-regulation that they laid out in their October 2008 Working Paper up to the current moment.
■ Read "Regulating the U.S. Financial System to Avoid Another Meltdown"

In this essay for Revue de la regulation, Gerald Epstein assesses the first phase of economic initiatives put forth by the Obama administration. His findings conclude with apprehension: "unless the Obama administration is able to move forward quickly and change their approach to finance by developing a financial strategy that is seen as fair, equitable and can also work to get finance flowing to the real economy, then more radical forces are likely to gain increased power. And, one should remember that in the U.S., we are coming out of a long period in which it is the radical forces of the right, rather than of the left, that have tended to prevail."
■ Read "Obama's Economic Policy: Achievements, Problems and Prospects"

Various incarnations of carbon capping policies have received intense scrutiny, and while it is clear that any caps will bring higher prices for fossil fuels, we cannot know in advance how these increases will affect the economy's overall performance. Several organizations have attempted to predict the effects of cap-and-trade policies. Robert Pollin and PERI Research Assistant Ben Zipperer have evaluated the forecasts generated by the American Council on Capital Formation and the National Association of Manufacturers (ACCF/NAM). In their assessment, even under ACCF/NAM's worst case scenario, a cap-and-trade policy will have only a minor impact on the U.S. economy over time.

Alongside this work, James Boyce and Research Assistant Matthew Riddle have continued their exploration of various frameworks for carbon capping, including the cap-and-dividend model. Professor Boyce, Director of PERI's Development, Peacebuilding and the Environment Program, recently submitted testimony to the Senate Finance Committee on this policy alternative.

James Crotty & Gerald Epstein
Avoiding Another Meltdown
Crotty and Epstein argue that the current financial crisis, the worst since the Great Depression, can be seen as the latest phase in the evolution of financial markets under a radical financial deregulation process that began in the late 1970s. The authors provide a comprehensive set of regulatory solutions they believe will sharply reduce financial instability.

David R. Howell & Miriam Rehm
Unemployment Compensation and High European Unemployment: A Reassessment with New Benefit Indicators
Using newly released replacement rate indicators from the OECD, Howell & Rehn offer compelling evidence that counters the assumption that benefit generosity is at the root of high European unemployment.  

Özlem Onaran
From the Crisis of Distribution to the Distribution of the Costs of the Crisis: What Can We Learn from Previous Crises about the Effects of the Financial Crisis on Labor Share?
Onaran argues that the current crisis is one of distribution, and the policy reactions are part of a distributional struggle. She presents the effects of the former crises in developing countries and in Japan on income distribution, wages, and unemployment, highlighting the differences in distributional consequences between currency crises and domestic financial crises.

Thomas Palley
The Simple Analytics of Debt-Driven Business Cycles
Palley explores the economics of debt-driven business cycles, distinguishing between Keynesian and new Keynesian approaches and finding that both are logically coherent, but the latter is at odds with the stylized facts of business cycles.

Robert Pollin
Response to "Seven Myths about Green Jobs" and "Green Jobs Myths"
Pollin responds to critics who purport to debunk "myths" about PERI's recent studies on the employment effects of investments in the clean-energy economy.

Robert Pollin &
Heidi Garrett-Peltier
Building the Green Economy: Employment Effects of Green Energy Investments for Ontario
In this study of Ontario's green economy, Robert Pollin and Heidi Garrett-Peltier present realistic estimates of the employment effects of Premier McGuinty's proposed green energy investment programs. They describe the jobs created by two alternative investment scenarios, and recommend ways for the province to maximize the quantity and quality of those jobs.

Engelbert Stockhammer &
Robert Stehrer
Goodwin or Kalecki in Demand? Functional Income Distribution and Aggregate Demand in the Short Run
Based on a general model that allows for wage-led as well as profit-led demand regimes, the authors estimate the effects of a change in the wage share on private domestic demand with quarterly data for 12 OECD countries, comparing Kalecki's  and Goodwin's conflicting theories.

David Stuckler, Lawrence King
& Greg Patton
The Social Construction of Successful Market Reforms
The authors demonstrate that the measures of policy reform constructed by the European Bank for Reconstruction and Development, upon which much of the case for neo-liberal policies is built, are biased in the direction of positive growth. When one accounts for this bias, the relationship between the EBRD's transition indicators and growth significantly weakens or disappears.

John Weeks
The Effectiveness of Monetary Policy Reconsidered
Weeks analyzes the assumption that under a flexible exchange rate regime with perfectly elastic capital flows, monetary policy is effective, and fiscal policy is not, finding that the interaction between changes in the exchange rate and the domestic price level significantly alters the standard policy rule.

Christian E. Weller
Could International Labor Rights Play a Role in U.S. Trade?
Weller combines U.S. trade data with data on international labor standards and other relevant economic variables to explore any linkages between labor rights abroad and U.S. trade deficits. He finds that the U.S. would have benefited from more exports had there been better worker rights around the world, while labor rights would not have had any measurable impact on U.S. imports.

Erinc Yeldan
On the Nature and Causes of the Collapse of the Wealth of Nations, 2007-2008: The End of a Façade Called Globalization
Yeldan suggests that the 2007-2008 crisis was the result of the systemic imbalances of capitalism over the last three decades. He considers the Marxian literature on crises, prominently that of Rosa Luxemburg, pointing to the necessity of a 'corrective war' in order to break with old institutions, technologies, and methods of accumulation.

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