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Excerpts from an article in McKinseyQuarterly.com:

It might not be "socialism", but what we are seeing not only in the US, but across the globe could be somewhat similar in concept:

State capitalism is an economic system in which governments manipulate market outcomes for political purposes. Governments embrace state capitalism because it serves political as well as economic purposes--not because it's the most efficient means of generating prosperity. It puts vast financial resources within the control of state officials, allowing them access to cash that helps safeguard their domestic political capital and, in many cases, increases their leverage on the international stage. But state capitalism also stems the rise of globalization, because to varying degrees it hampers the flow of ideas, information, people, money, goods, and services within countries and across international borders.

The rise of state capitalism

As the Cold War stumbled to a close, the belief that governments could micromanage national economies and generate prosperity seemed dead. The dynamism and market power of Japan, the United States, and Western Europe--fueled by private wealth, private investment, and private enterprise--appeared to have fully and finally established the dominance of the liberal economic model. As these countries' governments privatized businesses and pensions, companies such as Exxon Mobil, Microsoft, Toyota Motor, and Wal-Mart Stores feverishly sketched out global expansion plans. Globalization became a household word.

But even before the still-developing global financial crisis had shaken the foundations of faith in free markets, the determination of a new generation of emerging-market heavyweights (many of them politically authoritarian) to chart their own courses toward prosperity and power ensured that public wealth, public investment, and public enterprise would make a stunning comeback.

The engines of state capitalism

Yet, despite the massive state interventions in economies across both the developed and developing worlds, many corporate leaders and investors act as though globalization remains the dominant paradigm. That is a mistake. In fact, the new importance of the state had become obvious well before the onset of the current crisis. Energy markets provide a good example.

The story extends well beyond energy. Across a broad range of economic sectors, China and Russia are leading the way in the strategic deployment of state-owned enterprises, and other governments have begun to follow their lead. In defense, a growing number of emerging-market governments--power generation, telecom, metals, minerals, and aviation--not content with simply regulating markets, are moving to dominate them.

Such state-corporate activity is fueled in part by the emergence of a new class of sovereign wealth funds. States with large holdings in the currencies of other countries are establishing ever larger risk-taking funds meant to maximize their return on investment--and their political influence. With the global credit squeeze making funds harder to come by, sovereign wealth funds have become even more important for the financing of state capitalism.

The global recession has accelerated the trend of state involvement in markets as governments around the world spend billions to stimulate growth and bail out vulnerable domestic industries and companies.

Winners and losers As the landscape shifts around them, international companies and investors will discover that the large-scale injection of politics into market processes will produce its own set of winners and losers. Because political factors unique to each state will determine the response to each domestic economic slowdown, countries with relatively strong political fundamentals will have a better shot at a quick recovery.

Given the vast sums its government can spend on fiscal stimulus, China will likely emerge from the global recession before most of the developed world.

In Brazil, President Luiz Inácio Lula da Silva has over the past several years forged a durable consensus in favor of disciplined macroeconomic policy.

Second-order effects

There are other implications of these trends worth considering.

We're likely to see new restrictions on the access to certain foreign markets for some companies.

• Tit-for-tat protectionism will remain a serious threat until the global recession comes to an end.
• Social upheaval will pressure politicians to turn increasingly toward a familiar and reliable tool: subsidies.
  
• Some of the regulatory changes will favor domestic firms... and SOME domestic firms.

Read more at McKinseyQuarterly.com

President Elect Obama has made it clear that job creation in rebuilding the US infrastructure will be high on his agenda.  This slideshow synthesizes his energy plans from his campaign platform and recent transition activities.

Government policy and support with funding opens jobs in some areas...and closes them in other areas.  It is anticipated that military jobs could decrease and domestic infrastructure jobs could increase under the Obama administration.  This slideshow summarizes Obama's energy policies from his campaign...and points out some of the chnages due to today's economic situation.

The Riverside/San Bernardino communities are located east of Los Angeles and face daunting challenges such as desert conditions and earthquakes as well as the standard challenges of being near a major metropolitan center.  These communities have launched the "Green Valley Initiative" to "transform Riverside and San Bernardino counties into a region that integrates people and businesses with natural resources to create new jobs, greater opportunities and higher quality-of-life."

Inland Empire residents face some of the longest commute times in the country adding to the region's air quality concerns.  According to the American Lung Association, the Inland Empire is at th top of the list of the most air polluted regions.

Add to that equation -- high growth!  The region is a vast inland Southern California land mass with a population greater than 24 states, and an expected growth of 2 million new residents in the next 15 years.  Without local jobs to employ them, the region's already strained infrastructure will be pushed past the breaking point.

The two counties face challenges with pollution and water use.  Working stakeholder groups have been established to develop and implement strategic plans in the areas of education, policy and economic development.  Green Valley Jurisdictions are being established to incorporagte sustainable land-use and green building, business and purchasing programs.  Universities and colleges are sharing resources to establish a green brain trust.  And the region's green assets are being cataloged to identify existing resources and opportunities for expansion.

To learn more, visit www.GreenValleyNow.org

The Great Valley Center is a nonprofit organization working to improve the economic, social and environmental well-being of California's Central Valley, in partnership with the University of California, Merced. www.greatvalley.org

This community advocate is working for more sustainable communities in a broader ecosystem.  The following story shows how things change...but they don't really change...the challenges are long term.

MODESTO, California, November 30, 2005 – According to a new study from the Great Valley
Center, the health of the Central Valley’s environment is linked to the ability of the fast
growing region to attract highly educated workers and well-paying jobs.

The new report shows as the region’s population has grown, the indicators that impact
quality of life, such as pollution and water use, have also increased. In the San Joaquin
Valley, land converted to urban uses accelerated 31% and energy use increased 19%
while in the Sacramento Valley diesel emissions increased 4.5%. These findings are
among more than two dozen documented in a comprehensive revisit of environmental
data first tracked by the Modesto-based Great Valley Center in 2000. The report is part
of the Center's five-year series examining the region's economy, environment,
community well-being, health and educational performance. Its findings cover the 19
county region stretching from Redding to Bakersfield.

"The environment is tied to quality of life," said Carol Whiteside, president of the
nonprofit Great Valley Center, "The good news is we have made some progress as a
region. But it is unclear whether these gains will be overshadowed by the impact of the
Valley’s dramatic population growth.” At stake, she said, is the future ability of the
region to attract and retain businesses and skilled employees. “Educated workers will
choose regions that are healthy and desirable places to raise their children while
businesses are unlikely to make long term investments in a region that faces imminent
environmental sanctions.”

The report urges policymakers to develop effective strategies to balance population
growth with environmental management or risk facing higher long-term costs and
reduced profits in the future. For example, while progress has been made in reducing the
air pollutants that cause ozone, the number of days above government standards has
continued to increase and the emissions from road dust, exhaust and waste burning is
projected to increase – alongside population growth.

The State of the Great Central Valley: The Environment (2000-2005), is available online
at www.greatvalley.org and includes data on air quality, water supply and quality, land
use, species and habitat, and resources and energy. It was made possible with support
from the Sacramento Metropolitan Air Quality Management District, the San Joaquin
Valley Air Pollution Control District and the State Water Resources Control Board.
Additional support was provided by Citibank and Kaiser Permanente.

The Great Valley Center is a nonprofit organization that supports organizations and
activities working to improve the economic, social and environmental well-being of
California’s Central Valley. Major support for the Center is provided by the William and
Flora Hewlett Foundation and The James Irvine Foundation.