Economics 101 for the Green Initiative
I was recently asked to reflect on what the Green Initiative meant to me and instead of the natural, “It’s good for the environment” tree hugging jargon, the thought that came up in my mind was that it makes economical sense. I know what you’re thinking, “Nerd Alert!” Now, I love self deprecating humor, and I would tend to agree with you on the “Nerd Alert,” but let me preface your dork radar with an explanation and some logical thinking. Hopefully afterwards you will see this issue my way… and more than likely will still be thinking, “Nerd Alert.”
Unfortunately, the U.S. economy has been mired in a “once in a generation” recession. I am sure that everyone reading this realizes a recession is an undesirable, but usually unavoidable, part of the business cycle. The question that most people are asking is, “How do we have a jobless recovery and get out of the recession?” This is where the Green Initiative and green movement come in. Ask most economists and they will tell you, innovation in a certain sector usually leads to growth. With that growth, demand will increase, and thus help pull us out of recession. Most everyone understands the concept of supply and demand when it comes to economics. But I would counter that you can also apply the theory of cause and effect.
The recession has caused people to reconsider how they spend their money; as it should. When people lose jobs, or credit becomes tight, the natural reaction is to become frugal. The effect of that is looking for ways to save money, and people are choosing to do it in a multitude of ways. More of my friends have started compost piles to help their gardens and many are growing their own vegetables to save money at the grocery, “plus it’s green” they say. I hate paying $45 to fill up my gas tank. This has caused me to reconsider how and where I drive. The effect is that I am taking public transportation whenever possible and will DEFNITELY purchase a Hybrid for my next car. A colleague and close friend of mine recently drove his hybrid to Chicago for the weekend and got 50 miles per gallon on his way there and back… 50 miles per gallon!! Can you imagine?! But I digress.
The cause of the Green Initiative and green movement was conceptually that “It was the right thing to do for the environment” and a worry that we are irreversibly damaging the planet. So yes, the Green Initiative and green movement will lead to less demand for oil (HELLO BP!), create less trash and pollution and leave the environment in better shape than we found it. But, I say it’s the right thing to do for the economy. The effect will be more jobs in this technology sector, which will lead to more wealth creation and consumer spending, the backbone of the U.S. Economy. Your economics professor said “supply and demand”, but I say cause and effect. So go green! It’s the right thing to do for the economy. Class dismissed, you may now turn off your nerd alert.
By Phillip Roberts, Manager, New Financial Consultant Development, J.J.B. Hilliard, W.L. Lyons, LLC
