James K. Galbraith makes a compelling case for “natural capitalism” as an economic strategy for the new, new Democrats. Deficit reduction to bring down interest rates (a la Rubinomics) won’t solve today’s economic problem — namely, businesses awash in overcapacity, government retrenching domestically to overextend itself overseas, and consumers propping up the whole deal by maxing out every last source of credit (particularly their home equity. Meanwhile, the indicators don’t look good; we can’t count on foreign capital to keep us afloat forever.

Instead, we need new drivers of economic growth and job creation, and this time a little more durable than building fiber optic lines so that Tuvaluans can buy kitty litter online.

We need, in short, a patient strategy for social investment — to meet pressing national objectives while creating jobs, recognizing that success will take determination, time, and money.

What objectives? The foremost candidate is sustainable energy security. Reducing our exposure to the world oil economy is a vast public challenge. It would move us toward compact cities, new transport systems, and renewable energy sources, as well as toward much more conservation and efficiency in the use of oil. That is the sort of national effort that would bring good jobs in quantity to the next generation, leaving our children and grandchildren better prepared to live well — and in peace.

How to pay for it? Of course we must repeal George W. Bush’s tax cuts on the wealthy. We should also forthrightly consider tax incentives to reward efficient energy use and to penalize waste. But for a project of national reconstruction and investment, much of the necessary funds can, and properly should be, borrowed. Policy should do what is necessary to restore jobs. Full employment, sustainable development, and national security are proper goals for policy. Deficit reduction, as such, is not. Public debt to enrich the wealthy is one thing. Debt to rebuild the country is something else again. If we have to go that route, we should do it and not look back.

Meanwhile, the right way to display fiscal discipline would be to separate capital from current expenditures in the budget, leaving the former free from any cap.

Indeed, such a forward-thinking initiative wouldn’t just increase productivity, reduce our environmental burden, and generate short- and long-term jobs; it could also save governments the tremendous sums that currently go to subsidize our petroleum habit.

On another front, I recently found the Apollo Alliance — a coalition of environmental and labor groups that is starting to make the broader case for clean-energy economic growth. The Apollo Project is an appropriately optimistic metaphor, but other examples of capital investments (the Interstates, the Marshall Plan) paying off many times over abound in the postwar period.

What’s even more exciting about many clean-energy solutions is that many substitute human capital for natural capital as an input — that is, the goods require fewer natural resources but more labor to produce. For instance, building houses in cities is inherently more of a challenge than building them in the suburbs, requiring more and better skilled labor. Some may view that as inefficient, but I would rather spend my money on people than on consuming nonrenewable resources. Best yet, jobs in sectors like transportation and construction can’t be offshored.