The Great Recession of 2008-2010/11 is going to be a very tough time economically.  As I wrote in my Forecast for 2009, this economic collapse brings four words to mind.

The first word is contraction, which is the standard way to view a recession.  Economic activity contracts and we are in a recession, economic expansion represents the end to the contraction.  The contraction was severe in the fourth quarter and will be so in the first quarter and second quarter. Output and consumption are in a deep fall right now and will remain so.

The second word is cleansing which in this context means that old ways of doing business, of looking at only the upside, of embracing debt and extreme leverage must and will be cleansed from both the economy and the way that people think. The casino capitalism of the past 20 years will soon be viewed as an unsustainable exercise in individual and corporate greed.

The third word is reorganization.  To quote from the linked column above:

Reorganization of almost everything that is part of society and how humanity operates within society.  This reorganization will happen to economic institutions, political and philosophical allegiances, geopolitical alliances, communications; all to a new global order that is getting ever more electronically connected.”

Finally, the fourth word is transformation.  “Transformation of almost everything into new ways of seeing, doing, understanding and living. All of this will ultimately move us into new transformative realms of consciousness and understanding.  That will take a decade, but the process is underway and the transition to it is what 2009 will be about.”

Now, there have been a number of stories in the media about how the credit lock down has imperiled green companies seeking additional lines of credit.  There have also been stories about the perception that since ‘green energy technology’ is more expensive than conventional energy technology the recession will slow the development of these new technologies because people are looking for cheap things across the board.  Well, there may be examples of this in the micro sense, but in the macro sense this is a completely incorrect viewpoint.

First, the contraction part of the Great Recession has greatly reduced energy consumption as people are driving and buying less, which means less greenhouse gases and less goods destined for landfills.  If the great economic machine that is contributing to the heating of the planet and the pollution of our environment has slowed, the damage it inflicts is lessened.  The idea of reuse, reduce and recycle now has taken on real economic meaning across the country and around the world.

Second the stimulus bill that was just passed dramatically, and immediately increases the amount of government funding on green energy technologies and the development of a 21st century grid in the U.S.  Because of the dire economic situation a stimulus bill including this much needed and much delayed investment was passed.  The Obama administration, and before that, the campaign was consistent and clear that a significant part of our economic future and well-being is dependent on the development of alternative and renewable sources of energy.  The urgent need for a stimulus package allowed investments in this area to occur faster than might otherwise be possible.

This leads to the reorganization and ultimately transformation parts of the Great Recession.  Yes this will be a couple of years of economic hardship, pain and suffering.  Whenever there is a transition from one age to another there is creative destruction as the old order gives way to the new.  Unfortunately this process cannot occur without pain.

The view here is that when the U.S. does emerge from this recession in 2010-11 it will be a greener country with a new vision actually taking root in the realm of alternative and renewable energy.  It will prove to be true that this recession will change habits, stop rampant consumerism, increase conservation and provoke investment in renewable and alternative forms of energy.   It is ironic that this Great Recession will actually accelerate the country into a greener future faster than if it had not happened.

5 Responses to “This Great Recession is Actually Green”

  1. george rosenbaum Says:

    Another way of thinking about the changing social order is that more is less is becoming a defining force in how we live. Beyond sustainability ie.green this is
    a powerful platform for innovation and invention…which
    can help sustain the US global leadership role even
    as China, India and other underdeveloped societies
    reach for more.

  2. Henry J Burnett Says:

    David presents an intriguing model to analyze the current Great Recession. The first three words that he describes: Contraction, Cleansing, and Reorganization are fairly straightforward and understandable. What is much more complex and esoteric is his observation about Transformation. He writes about a future state of seeing, doing, understanding, and living differently. He writes of transformative realms of consciousness and understanding.

    What the heck does that mean?

    Where are the examples of this Transformation occurring in a macro sense, either economically or socially? In some respects, the Transformation concept portrayed here becomes almost a description of a spiritual state or religion. However; I don’t think that’s the intent.

    Let’s look at more pragmatic Transformations that reflect the theme that David presents in the Great Recession Actually Being Green Post. A recent CBS 60 Minutes segment on the Nucor Corporation provides some fascinating insight. Nucor is one of the largest producers of steel in the United States. In many respects, what has occurred at Nucor since 1968 really begins to speak, in a concrete way, to the Transformation that David, I believe, is attempting to describe.

    Let’s look at the facts. Nucor’s entire concept of producing steel is based upon recycled material rather than newly mined iron ore (Quite Green). The process uses “Mini-Mill” electric arc furnaces; rather than, a coal or coke fired blast furnace. This revolutionary technological innovation has resulted in a contraction, cleansing, and reorganization within the domestic steel industry.

    Nucor’s net income for 2007 was $1.472 billion on revenues of $16.6 billion with 18,000 employees; US Steel’s net income for 2007 was $879 million on revenues of $16.9 billion with 49,000 employees. Nucor profits dropped 71% in the fourth quarter of 2008; however, Nucor has been profitable every quarter since 1966.

    In the 1980s 32 steel companies in the United States filed for bankruptcy. US United States steel originally founded by Andrew Carnegie in 1901 has had a contentious history of low wages, union strife, and limited profits.

    Nucor is nonunion. There is an egalitarian culture within the corporation (Quite Respectful). Employees have a base salary; however, performance incentives can generate 50-80% of the total salary. Throughout the history of the company Nucor has never laid off an employee (Quite Respectful). The management organizational structure of Nucor is very decentralized pushing most of the operational decision-making to the front line operational employees performing the tasks. Only 75 executives at the corporate headquarters manage a multi-billion organization. The CEO that led the major expansion of Nucor was F. Kenneth Iverson who emphasized the following management principles:

    Decentralization
    Placing trust in employees
    Egalitarian benefits
    Minimizing layers of management
    Production-based pay

    United States Steel Corporation represents the Old Corporation. Nucor represents the Transformed Corporation projected in David’s recovery from the current Great Recession. The Nucor model is a Model for The Shift Age.

  3. david Says:

    George – Absolutely, good point!
    David

  4. david Says:

    Henry –

    A great case study! thank you for this. This is indeed part of the transformation.

    David

  5. The Green Recession, Revisited Says:

    […] recession we had just entered would be a green recession. In February 2009, in a column titled, “This Great Recession is Actually Green,” I wrote: “The view here is that when the U.S. does emerge from this recession in 2010-11 it […]