The president’s decision to pull the US out of the Paris Agreement hardly impacted the stock indices this week. But, the uproar from the biggest names in technology — from Apple to Amazon, Google, Tesla among others — has only begun. Many believe that withdrawing from the landmark deal signed by 195 nations with only three nations, Nicaragua and Syria, that have never signed on to the global agreement, and the U.S., could have lasting and disastrous impact on the US economy.
Trump’s reasoning was that the Paris accord would undermine the U.S. economy, cost U.S. jobs, weaken American national sovereignty and put the country at a permanent disadvantage to the other countries of the world. In addition to the macroeconomic effects, Trump said that the move would help to preserve jobs at power plants, coal mines, and other fossil-fuel-generating industries.
But, as in many things with Trump who is simply incapable of listening to those who know more than he does, most traditional fossil fuel companies have already begun the shift to energy efficient and renewable energy sources. The number of workers (~ 1 million) in the traditional fossil fuel industries according to the Department of Energy, is almost the same as the number of Americans employed in energy efficient and renewable energy jobs. And most of these CEOs opine that, from a long-term economic perspective, shifting toward renewable energy would likely be more beneficial for job growth.
Future Wealth’s View
Trump’s idea of taking America back to the 1950s and the 1960s in terms of coal mining jobs and assembly line jobs in the auto industry is simply not going to happen because technology has changed the landscape of business. While trying to restore jobs that may have been good jobs in the past may resonate with the public who voted for him, many of the same voters are now employed in industries with increasing levels of technology, skills and sophistication.
The fact that US unemployment rate is now at 4.4 percent and 16 million new jobs were created since 2009 tells us that the coal miners and auto workers who were displaced, have likely moved on to other jobs. And manufacturing in US has not disappeared either. In fact, the share of US output that is in the form of manufactured goods has not declined that much, but manufacturing has become so productive it requires much fewer and more skilled workers to produce the same level of output.
So, why the attempt to resuscitate dying industries and not invest the growing industries? We believe this lack of investment in the industries of the future will have long term impact on America’s competitiveness. Not to mention the fact that the estrangement of the US from the rest of the world on climate strategy will deter foreign investments and hurt sales in other industries.
As George Will wrote in the Washington Post last month – “It is urgent for Americans to think and speak clearly about President Trump’s inability to do either. His fathomless lack of interest in America’s path to the future and his limitless gullibility leave him susceptible to being blown about by gusts of factoids that cling like lint to a disorderly mind.”