What an amazing birthday present from the President, a plan that will almost immediately save countless lives, finally start the path to a more energy efficient life for this country and the possibility of a brighter future for the world. Later today, President Obama will sign the legislation into law in Denver. By subsidizing health care for those who are losing their jobs and the states that otherwise were going to be cutting care to those who need it most, I reckon that thousands of lives will be saved and millions given a piece of mind. The greening of federal buildings and two million homes is a down payment on a sustainable future. And perhaps the biggest change from the last administration is the signal that the government should be built on the social contract laid out in the Constitution’s preamble:
One of the toughest problems in a market economy is to have goals that the whole society can reach. In that our survival may depend on reduced carbon output and generally on having a lighter touch on the environment, waiting for disaster to change the market to these goals is both folly and misanthropic. A small percentage of people in a market choosing to be altruistic is inadequate and a recipe for disaster. Having regulations that save lives immediately and over time may be tougher to get democratic buy in, especially when those who profit by the current system take great measures to block any impediments to even more profits.
The recovery plan maps out a clever enhancement to the market system, using government funds to weatherize two million homes. Although I have heard criticism that the plan would end and the new jobs in weatherizing would blow away, the reality is potentially the opposite. First, the weatherizing of homes will save society from wasting large amounts of energy which may help to stem the demand for energy more broadly. Then market forces will help by adjusting to a new reality, a significant portion of homes that should be valued higher, because the homes cost less to run. Much like other home improvements, the methods of measuring home energy efficiency can be estimated by the realty industry and be a major factor in home valuations.
Those homes that are not weatherized through the recovery plan will be valued relatively less, which will create market pressures for the remaining homes to be weatherized. In addition, a whole new industry created by the weatherization of the two million homes will probably attempt to market their new skills and use home valuation and comfort to drive new sales. And at that point the government will be influenced to make up any small differences between individual outlay and societal savings through direct subsidization, guaranteeing loans and by pushing for better and more energy efficient building codes.
It is nearly impossible to feel the effects of one person being energy efficient. Market forces inhibit an individual from making energy efficient purchases. Part of this is the difficulty of measuring the return on investment over the years, having the cash on hand for this speculative investment and having few market based methods such as bank loans for higher costs of energy efficient homes, cars, etc. However, if a high percentage of the population were to become energy efficient, the individual returns would be substantial in the form of lower energy prices, higher standard of living, and a healthier environment.
The only way a society can realize those gains that come from a high percentage of the population being more energy efficient is to have smart government regulations and incentives. In this way, individuals can more immediately see the gains from their investments. And then society wide efficiencies can be substantial, so that if a majority of all homes are energy efficient, then fewer power plants need to be built and a lower demand for energy. And any cost of regulations and incentives is far outweighed by decreased cost of energy, higher productivity and better quality of life. And, oh yes, a better chance that we can to survive and thrive.