TERRE HAUTE — We often hear that President Obama’s economic stimulus package will create lots of “green jobs.” But we should be skeptical whenever people in government claim to be creating jobs, green or otherwise.
Proponents of Mr. Obama’s plan say his green jobs will include, among other things, making solar panels, insulating homes and building windmills.
Here’s a quote from the Web page of the Environmental Defense Fund praising the job-creating benefits of using windmills to make electricity.
“A typical wind turbine is made of more than 8,000 parts. Think of the skilled workers needed to make these parts, weld them together, deliver them to site and construct the facility.” Just a small wind project site uses “at least 6,500 tons of steel, 609 tons [of] composite fiberglass and 12,470 tons of concrete.” And this is “good news,” according to the Web site.
In other words, the more labor and material-intensive something is, the better. Does anyone else feel there might be something wrong with this sort of thinking?
I believe there are two serious problems with government efforts to create green jobs. First, and most important, we seem to be confusing job creation with wealth creation.
The government could create a lot of jobs in the same way it is creating green jobs by simply outlawing or badly hampering existing jobs. This is pretty much what we’re seeing with the “cap and trade” legislation now before Congress. This legislation would make carbon-based energy sources, such as coal, much more expensive and limited. As a result, alternative forms of energy — that are not economically viable now — suddenly appear viable. Presto! Green jobs!
In a similar way, the government could create a lot of green jobs in bicycle manufacturing by imposing a massive tax on gasoline and automobiles or simply outlawing cars completely. Suddenly, demand for bikes would rise and production would follow suit. Viola! Lots of new bike manufacturing jobs would be “created.”
Unfortunately, creating wealth is not as easy as creating jobs. The creation of wealth requires production. And living standards only rise when we are able to produce more goods with the same or fewer inputs of labor, land, time and capital. But much of the green job agenda involves simply replacing existing forms of production with other — more costly — forms of production. It’s very difficult to see how this will make us generally better off.
The second big problem with the crusade for green jobs is net job growth. In short, green jobs will come at the cost of other jobs. Andrew P. Morriss, a law professor at the University of Illinois, recently explained this aspect of the problem in a paper for the Independent Institute.
“Spending billions would certainly produce green jobs, but it would also eliminate jobs in areas that lose government favor,” Morriss wrote. “Green jobs advocates rarely count the job losses their programs will cause. For example, shifting electricity production from coal to wind means that many coal miners, truck drivers, utility workers and other employees will lose their jobs as energy prices soar.”
In another recent study, Gabriel Calzada, an economist at King Juan Carlos University in Madrid, Spain, estimated that each green job created by the Spanish government’s subsidies for wind and solar energy since 2000 cost 2.2 jobs in other industries. And that doesn’t count jobs lost in Spain due to companies leaving the country because of much higher energy prices.
The government cannot really create jobs. It can effectively outlaw alternative jobs designed to achieve the same thing. But simply banning one form of production to stimulate an alternative form of production seems like a strange way to make people better off.
Government also can subsidize certain types of jobs, but this doesn’t really create jobs, either. If the subsidy comes from taxes, taxpayers simply have less money to spend in other areas. This costs as many jobs as it creates. If the subsidy comes from government borrowing, private investment will decline, and again, jobs are lost. And if the subsidy comes from creating new money, the purchasing power of existing money will simply decline.
A large number of economic studies have found that as societies and countries grow wealthier, their environments become cleaner and safer. A competitive market economy, where private property rights are respected, is probably the best route to a cleaner environment. The green revolution could be doing long-term harm to the environment it is meant to protect.
Arthur Foulkes writes a column on business and economics. The Tribune-Star reporter is a Terre Haute native and longtime resident. He can be reached at (812) 231-4232 or arthur.foulkes@tribstar.com.
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ARTHUR FOULKES: Golden promises: Beware of the ‘green job’ boondoggle
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