By Kenneth P. Green - 09/21/11 11:04 PM EDT
Proponents of green economic planning have long fallen prey to Bullwinkle-thinking — the idea that you can make the same failed magic trick work by saying “This time for sure!” Wind power, solar power, electric cars, alternative fuels, energy conservation ... though all have failed repeatedly in the past, green planners keep jamming their hand into the magic hat in search of green rabbits.
Since the start of the Obama administration, the green rabbits have a new name: “green jobs,” for the 5 million green jobs on which the administration campaigned.
At the risk of sounding pedantic, one must point out that the government can only do things by taking money from some people and giving it to others who will do what the government wishes. They can take that money through taxes, by borrowing against future taxes or by inflating the currency, but at the end of the day, they take it and they don’t make it.
Contrary to another government myth — that people hoard money away from the economy — people who have money are generally using it to some economic purpose, whether they’re spending it, it’s sitting in a bank gathering interest or it’s invested in a municipal bond. People’s private savings, investments and retirement funds are already part of the economy, creating jobs, financing inventions and doing all the stuff the planners say they wish to do with it. Thus, the government can’t “create” jobs without taking money that’s creating jobs somewhere else in the economy.
Overall, government job creation is a losing proposition because the government takes a cut of the money it moves around, because it’s beholden to unions to pay more money per job created, because the jobs are (by definition) market-rejects of less economic value and because the government often has to subsidize green products so people will buy them.
That’s certainly been the experience of the European countries that went big for green-energy tech on the presumption that it would create jobs. In Spain, Italy and the UK, the results were entirely predictable: For every green job created, somewhere between two and seven jobs were destroyed, or foregone as part of normal economic growth. In other countries that went for green energy, skyrocketing energy rates, industry flight and crony-capitalist-corruption abounded.
As for here in the United States, the Solyndra scandal shows where we’re headed: Half a billion dollars in subsidies bought taxpayers shares in a bankrupt company, dead jobs, criminal investigations and some pricey administration photo ops.
But what about the benefits — don’t green jobs create environmental benefits more valuable than the resources they consume? Being asthmatic, and having grown up in smoggy Southern California, I’d be the last person to argue that environmental regulations didn’t provide benefits, at least in the days when pollution levels were vastly higher than they are now.
However, in the United States at least, the low-hanging fruit of environmental protection has been plucked, and the costs of additional improvements have gone up, while the benefits to be gained have declined.
This is the law of diminishing returns. The Environmental Protection Agency has gone to great lengths to pretend that the law of diminishing returns doesn’t apply to them, but as noted economists have testified to Congress, EPA’s recent claims of economic benefits — which rely on “willingness to pay” surveys rather than observed health benefits — don’t pass a laugh test, much less an economic test.
The Obama administration’s pursuit of green jobs, green tech and a green economy has largely been inspired by the misplaced notion that somehow, through sheer force of will (and an attractive set of antlers), ideas that have failed repeatedly will somehow be made to work. This would have been a bad idea even in a good economy. In a bad economy, it’s even worse, and no amount of “Nothing up my sleeve ... presto!” is going to make it any better.
Green is a resident scholar at the American Enterprise Institute.