How Greening Europe’s Economy Could Get It Out of Debt
PERI Co-Director Bob Pollin discusses the potential impact of green policies for Spain and why no-growth policies of austerity do more harm than good
JESSICA DESVARIEUX, PRODUCER, TRNN: Welcome to the Real News Network. I’m Jessica Desvarieux in Baltimore. And welcome to this edition of the Pollin Report. Now joining us from Amherst, Massachusetts is Robert Pollin. Bob is a professor of economics, and co-director of the Political Economy Research Institute at the University of Massachusetts Amherst. Bob also has a forthcoming book called Greening the Global Economy.
Thank you so much for joining us, Bob.
ROBERT POLLIN, CO-DIRECTOR, PERI: Thanks very much for having me on, Jessica.
DESVARIEUX: So Bob, big news for Podemos recently. They won mayoral seats in Barcelona and Madrid in June. You recently traveled to Madrid to present a report on green energy to Podemos leaders. Can you just briefly highlight some of the main points of your report?
POLLIN: Right, thanks. So the paper that I presented a week and a half ago in Madrid is basically a very, very simple program. It calls for massively increasing investments in clean, renewable energy and energy efficiency at the level of about 1.5 percent of the country’s GDP, which means today about $21 billion. Keeping that level of investment going every year for 20 years.
And as a result of that kind of program, what you’re able to accomplish are three really critical things. You can dramatically reduce CO2 emissions in the country from where they are right now, about 6 tonnes per person to about 2 tonnes per person or less. Number two, you can break the really serious oil import dependency that Spain operates under. Right now, oil imports on net are almost 4 percent of the country’s GDP. And it also means that whenever they start growing again, their oil imports grow faster, and it makes it difficult for the country to sustain growth. So through this investment program, it’s going to reduce dependency on using oil and other fossil fuels. Coal and natural gas. It’ll enable the country to grow in a much healthier way. And the third big factor is that it’s a big source of job creation, that it’ll generate about 320,000 jobs right off the bat, and that number will grow each year over time.
DESVARIEUX: But Bob, isn’t it possible that these savings or that added revenue created through this green energy plan, couldn’t that just end up going to service Spanish debt?
POLLIN: Well in a way it’ll help reduce the debt, and here’s why. Number one, again, the country is so heavily dependent on oil imports. And what happens through this program is the dependency on oil imports goes down. So we’re substituting domestic production of green energy and raising the level of energy efficiency for having to always borrow money in order to buy imported oil. That’s number one.
Number two, investments in energy efficiency by definition pay for themselves, by raising efficiency standards so that you get the same level of energy services, [inaud.] like for example lighting a building or heating a building, or transporting yourself from point A to point B. You get that same level of energy services by spending a lot less on energy. And I think it’s realistic to think about energy savings in the range of 30 percent. So you’re spending 30 percent less on energy, and that, the money that’s released, can pay back the money you spent for investing on green energy.
DESVARIEUX: And if viewers want more detail about that plan, we did an interview with you last week, so please do check that out.
Bob, let’s turn the corner. Let’s head in a different direction and talk about another country that’s going through some economic hardship. Greece has an unemployment crisis going on. At least 25 percent of their population unemployed. How would green energy projects help steer them away from austerity policies, and sort of return to productive investment?
POLLIN: [Good] question, because the debate around Greece has been totally consumed for five years now around the issue of debt adjustment. And obviously that’s a critical point. But what has been lost in that discussion is trying to formulate exactly your question. How do we think about some positive growth agenda for Greece?
And so the situation in Greece, like the situation in Spain, could benefit from–let’s think positively. So a green investment agenda for Greece would create jobs. It would reduce oil dependency. And it would raise energy efficiency, just like it could in Spain. And over time, again, it becomes self-financing because you are raising efficiency standards and you’re reducing oil imports.
DESVARIEUX: But Bob, hold on one second. I could hear people saying, but how could you even be talking about investing, these people are in an economic crisis. They have so much debt, how can you even think about investing?
POLLIN: You have to think about investing, that’s why, because you can’t just keep thinking about austerity. It solves absolutely nothing. The more all we talk about austerity, the deeper the austerity problem becomes. Greece right now has no solution to a positive growth agenda. It’s not being discussed.
So what happens is–all we’re debating about, for example, is how much we’re going to cut pensions. Pensions have already been cut by 45 percent, on average. So what, we’re going to cut it now to 55 percent. Well, that means that people are going hungry. People have no money. That they can’t spend anything. That means the economy’s GDP is going down. That means it makes it harder for them to pay off debts.
So the austerity agenda feeds on itself, makes conditions worse for the people in Greece, and it solves nothing even for the banks that want to just get paid back.
DESVARIEUX: Okay, Bob. Just final comment here on the referendum vote that’s supposed to be taking place this Sunday. Which way would you vote?
POLLIN: Well, I would certainly vote no. In other words, I would vote against accepting the austerity conditions.
DESVARIEUX: Okay. And can you be more specific about what the Greek people should be demanding for, if they go to negotiations again?
POLLIN: Well, as we discussed, what we need to say is okay, we’re going to restructure the debt. Meaning, it’s impossible to squeeze out more than has already been squeezed out of Greece. It’s as you said, it’s 25 percent unemployment. Pensions have been cut by 45 percent. Wages have been cut. Public spending has been cut. The GDP has fallen by 25 percent, which is more severe than what happened in the United States during the 1930s depression. You can’t squeeze more out of this country even if you wanted to.
So we have to think about some kind of positive agenda. Yes, part of that positive agenda is reducing the level of the debt burden now. But the more important part is how do we restore an equitable growth framework where we see job creation, where we see expanding opportunities, and yes, where we do in a way that it is ecologically responsible. So that’s the framework I think that applies to Greece, and in a different setting in Spain.
DESVARIEUX: All right, Bob Pollin, joining us from UMass Amherst. Thank you so much for being with us.
POLLIN: Thanks very much for having me, Jessica.
DESVARIEUX: And thank you for joining us on the Real News Network.
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