The world is moving towards a green economy. The United States is being left behind. If we do not catch up, the United States will not be able to compete in the world economy.
When I talk to people about global warming, some are still unconvinced of the science. I’ve stopped trying to argue the science. If you don’t believe global warming is happening by now, you probably aren’t going to be convinced by one guy quoting scientific evidence. Rather, I talk about economic realities.
In the 1990s, the American auto industry made a bad bet. They thought electric and hybrid (ie fuel efficient) cars were a trend–a fad that would do away in a few years. Instead, the American auto industry made it’s bet on SUVs and light trucks. This bet payed off in the short run. Lots of people bought Excursions, Denalis, and Explorers. We bought Ford F10s, Doge Rams, and Chevrolet Silverados. Even the Hummer had its run. We bought them….until we stopped buying them.
While the bet payed off in the short run, the American auto industry went bust when gas prices hit four dollars a gallon. Rising gas prices combined with environmental concerns made car buyers think about how much gas they would need to purchase and burn. The current recession didn’t help either… By 2008, minivans, trucks, and large SUVs saw their sales drop more than 20%.
While Detroit build gas-guzzlers, Japan began investing in making fuel-efficient cars. Their gamble paid off. Just as Americans turned away from gas-guzzlers, the Japanese manufacturers gave them a viable fuel-efficient alternative.
America seems destined to repeat the mistakes of our auto industry. The world is changing around us but we seem committed to the ways of the past. Like Detroit, America and our corporations will continue to earn big profits for a decade and maybe two. But, the renewable economy is coming. Our competitors in Asia and Europe are investing in innovation and infrastructure. We are not.
Ironically, the cornerstone of our capitalist system is that firms that are unable to adapt and compete in changing markets will not survive. Right now, we are painting ourselves into a corner. We want to make the short money, without worrying about what will make our profitable for decades to come. Europe and Asia are taking the long term approach. If we do nothing to change our course of action, the state of our auto industry is a clear example of where we will end up.