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Paul Krugman’s Core Argument: Economist Paul Krugman highlights how renewable energy—like solar and wind—has entered a “virtuous circle” of growth, where lower costs spur more production, and greater production drives further cost reductions. This progress was possible because of early government subsidies that made renewables viable against entrenched fossil fuels.

The Lesson from History: The story of America’s first great infrastructure project—the Erie Canal—shows how visionary government investment can transform a nation’s economy. In both cases, public support for innovation led to explosive private growth, linking local ambition to national prosperity.

Krugman’s Warning: Despite undeniable success, the Trump administration echoes the same outdated skepticism voiced by Dick Cheney’s 2001 task force, which dismissed renewables as “trivial.” Krugman argues that this backward view ignores global momentum—especially China’s leadership—and threatens U.S. competitiveness. The Founding Vision of Public Investment: Alexander Hamilton called for government support of emerging industries to strengthen the young republic. George Washington envisioned canals and internal improvements to unify trade routes and bind the states together. Their successors, facing disunity under the Articles of Confederation, convened in 1787 to create a stronger Constitution—precisely so that national infrastructure and commerce could flourish.

The Erie Canal as Proof of Concept: When federal aid was denied, New York State funded the project itself in 1817, led by Governor De Witt Clinton. Engineers with no formal training pioneered techniques that became the foundation of American civil engineering. Critics warned it would bankrupt the state; instead, it repaid its cost within a few years and cut shipping prices from 19 cents to under 3 cents per mile.

The canal connected the Great Lakes to the Atlantic, gave rise to booming cities like Syracuse and Rochester, and transformed New York into the nation’s commercial center. Economic and Social Transformation: The canal not only moved goods faster but moved people and ideas westward, binding new territories to the Union. It became a model for how infrastructure sparks innovation, community growth, and national unity—exactly the kind of synergy Krugman attributes to renewables today. The Enduring Message: On October 26, 1825, Governor Clinton poured Lake Erie water into the Atlantic, symbolically linking the heartland to the ocean. On October 26, 2025, Krugman reminds us that the same principle holds true: strategic government investment in innovation creates unstoppable momentum and national renewal.

Takeaway

The Erie Canal turned America into an economic powerhouse; renewable energy can do the same for the 21st century. History proves that progress doesn’t come from waiting for markets alone—it comes when government dares to build what the future requires.

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