Will Clinton give industry a green edge?

• Author: Flavin, Christopher
• Position: Pres Bill Clinton

If President Clinton is to fulfill his campaign promises to foster a strong economy and a healthy environment, he will have to merge the two ... and pursue a "green" industrial strategy that encourages business to clean up its act.

As Bill Clinton prepares to take office, the United States is on the verge of a dramatic shift in the way government deals with business. If stacks of speeches and campaign papers are to be believed, the centerpiece of Clinton's presidency will be a grand effort to rebuild U.S. leadership in technology and industry. Unlike his predecessor, the president-elect believes this worthy goal requires a close partnership between business and the federal government.

Clinton's victory reflects a growing consensus that in the wake of the Cold War, the country's next great challenge is the global contest for economic competitiveness. He and his economic gurus - most notably, Harvard political economist Robert Reich - have sketched out a game plan: an industrial policy for the United States. Their prescription is to use government policies to foster a better-educated and more flexible American work force and promote development of high-tech, highly lucrative industries.

Largely missing from this economic plan, however - and from most of the literature that inspired it - is the world's most pressing concern: development of an environmentally sustainable global economy. The omission is a grave one, for while governments are responsible for setting environmental rules, it is industry that plays a major role in damaging the environment - or, ultimately, in sustaining it. While environmental policies have always been scrutinized for their economic implications, industrial strategies are rarely formulated with environmental concerns in mind.

The United States can ill afford to rebuild its industrial system without regard for the environment, however. In the world economy of the 1990s and beyond, ecological pressures will increasingly influence economic decisions. Global efforts to address pervasive environmental problems - such as ozone depletion, climate change, habitat destruction, and loss of plant and animal species - will affect virtually every industry.

The changes needed to make the global economy sustainable are likely to render some industries obsolete, while creating myriad new investment opportunities. The economic challenge is clear: national governments need to develop industrial strategies that specifically address environmental concerns. Countries that ignore this challenge are likely to lose out economically as well as environmentally.

Clinton need not look far for ways to integrate global environmental concerns with his economic plans. A green industrial strategy would be a logical union of the new president's economic philosophy and the strong environmental principles laid out in Vice President Gore's 1991 book Earth in the Balance.

Green Competition

Over the past two decades, the struggle for environmental improvement in the United States has often involved a contest between government and industry. While some firms are now cooperating with federal efforts to improve the environment, many companies are still in "attack mode" - lobbying against new environmental legislation and telling the public that these laws will cost jobs. Top auto executives, for example, devote more effort to fighting new fuel economy standards than to developing vehicles that are more fuel-efficient.

These attitudes slow the evolution of public policy and poison the corporate atmosphere - giving employees the notion that environmental improvement is something to be feared rather than invested in.

The administrations of Presidents Ronald Reagan and George Bush reinforced such misconceptions, promoting the idea that environmental standards weaken the economy. Under Reagan, Vice President Bush chaired a White House task force on "regulatory reform" that was dedicated to overturning government regulations that industries found objectionable. When Bush became president, the effort was passed on to then-Vice President Dan Quayle and renamed the Council on Competitiveness.

While such arguments are politically convenient, they fly in the face of new economic realities. There is now a competitive advantage to be gained by being cleaner: the world faces a growing array of ecological limits and many governments are responding by tightening environmental rules. Environmental protection, for instance, is already big business - with even higher stakes for the future. The Organization for Economic Cooperation and Development estimates that the worldwide market for environmental goods and services in 1990 was some $200 billion - nearly equivalent to the gross national product of Belgium.

This market is projected to grow 50 percent by the year 2000, making it one of the world's fastest growing industries. Some 80 to 90 percent of this burgeoning sector, which includes an estimated 9,000 Japanese, 20,000 European, and 30,000 U.S. firms, is in industrial nations, though it is growing rapidly in the Third World as well.

But these figures are narrowly defined, only counting such things as the market for sewage treatment equipment and the cost of cleaning up toxic wastes - so-called "tailpipe" solutions. Environmental protection is also creating huge new markets for products and technologies in many other areas, from traditional "dirty" industries, such as chemical manufacturing and metals processing, to high-tech and service industries, such as computer manufacturing and fast food. The much larger demands of...