Heritage Foundation: Slowing down innovation

Another entry by Emanuel F.

I enjoy reading articles that have a critical argument on environmental policies, and expose me to different ideas and points of view. Recently I read a Heritage Foundation study Impact of CO2 Restrictions on Employment and Income: Green Jobs or Gone Jobs? I couldn’t help wondering how Mr. Kreutzer, Senior Policy Analyst in Energy Economics and Climate Change at The Heritage Foundation's Center for Data Analysis, thinks that “green jobs are phantom job creation.” His article failed to consider the importance of CO2 restrictions in the form of a “cap and trade” and ignored the definition of green jobs.

A green job is not a “phantom job.” A green job is (and I paraphrase a definition that I have heard many times) in essence a job that addresses the environmental challenges of our country; it is a job that does something for people, and is helpful to, or at least not damaging to, the environment.

According to Green Jobs Now, green jobs are: 

• Local jobs that can't be shipped overseas.  The green economy means weatherizing thousands of buildings, installing thousands of solar panels and erecting thousands of wind turbines.
• Good jobs –jobs that clean up our communities and offer career pathways to prosperity.  Green jobs are about purpose and a paycheck.
• Green-collar workers will save the planet and rebuild our economy.  Green-collar workers are the heroes (and sheroes) of the new century.
• Giving a shade of green to the Midwest rust belt that has suffered the most due to unfair free trade agreements that make it easier to out source jobs overseas. Jobs that in these difficult times still have dozens of openings and new job openings get added everyday.  

Green jobs are not taking jobs from other industries, but giving a second chance to our miners who mine iron ore in Minnesota and ship it to steel mills in Indiana. The green economy is bringing jobs back to the communities that need jobs the most. For example, some are now making the steel which is being used to build wind turbines. Those are called green jobs. Some people might get laid off from their current blue-collar jobs, which are part of the market. But, blue-collar workers will get laid-off due to companies like Maytag, that prefer to outsource the jobs from Newton, Iowa, to another country that has more lax environmental regulations and cheaper labor.  When Maytag left, residents of Newton lost their jobs.  However these workers' livelihoods were saved by the opening of a plant that makes blades for wind turbines and a company that builds the concrete towers to support the massive turbines. Both companies opened in the same town a few months after Maytag left. This is one of the dozens of green jobs stories that have been in the media in the month of November alone. Business will boom for those in the industry to reduce CO2 emissions.

It is time to get it right, green jobs are not phantom jobs. The Heritage Foundation might be able to put a price on the environment, a worker, national security, but in your calculations you forget about the cost of the environment via the concept of externalities, and the cost to society that not taking action on global warming will bring to future generations. Therefore, I ask how much of the taxpayers money will the government need to use due to our inaction that will lead us to deadly global warming. In the end green policies bring a net gain in jobs.

For more information on Green Jobs read the U.S. Conference of Mayors, U.S. Metro Economies Study
 or visit our Good Jobs Green Jobs National Conference and Job Expo February 4-6, 2009.

Comments

[Sherry]

Not enough credit is being given to the high gas prices this past year and it's serious damage on our economy and society. That one factor alone has caused serious stress in both individuals and businesses. A record number of homes and jobs have been lost as a direct result. And, while we are doing the happy dance around the lower prices at the pumps OPEC is announcing cuts to manipulate the prices upward again. We must get on with becoming energy independent.We can't take another year like this past. There is a wonderful new book out about the energy crisis and what it would take for America to become energy independent. It covers every aspect of oil, what it's uses are besides gasoline, our reserves, our depletion of it. Every type of alternative energy is covered and it's potential to replace oil. He even has proposed legislative agenda's that would be necessary to implement these changes along with time frames. This book is profoundly informative and our country needs to become more informed and move forward with becoming energy independent. Green technology would not only provide clean cheap energy it would create millions of badly needed new jobs. The Book is called The Manhattan Project of 2009 Energy Independence NOW. Our politicians all need to read this book. www.themanhattanprojectof2009.com

[Charlie]

Emanuel - I think you need to get out more. The whole "green jobs" concept is a farce. Read John Stossel's article below to get a better understanding of why Obama's "green jobs" program is nothing more than a gimmick.

Green Jobs
John Stossel
Wednesday, September 10, 2008

Democratic presidential candidate Barack Obama has a great twofer pitch: "green jobs." It sounds like a winner. In one fell swoop he can promise to end unemployment and fix and save the planet from climate change.

Or so he says.

"I'll invest $150 billion over the next decade in affordable, renewable sources of energy -- wind power and solar power and the next generation of biofuels; an investment that will lead to new industries and five million new jobs that pay well and can't ever be outsourced," he told the Democratic National Convention.

Wow. Five million new jobs. All that work building windmills and creating biofuels are the "green jobs" that will come into existence when wise government creates the industries that will produce the energy and vehicles that will make fossil fuels obsolete.

Politicians always promise that their programs will create jobs. It's used to justify building palatial sports stadiums for wealthy team owners. Alaska Rep. Don Young claimed the infamous "bridge to nowhere" would create jobs. The fallacy is the same in every case: Even if the program creates jobs building bridges or windmills, it necessarily prevents other jobs from being created. This is because government spending merely diverts money from private projects to government projects.

Governments create no wealth. They only move it around while taking a cut for their trouble. So any jobs created over here come at the expense of jobs that would have been created over there. Overlooking this fact is known as the broken-window fallacy. The French economist Frederic Bastiat pointed out that a broken shop window will create work for a glassmaker, but that work comes only at the expense of the cook or tailor the shopkeeper would have patronized if he didn't have to replace the window.

Creating jobs is not difficult for government officials. Pharaohs created thousands of jobs by building pyramids. Our government could create jobs by paying people to dig holes and then fill them up. Would actual wealth be created? Of course not. It would be destroyed. It's like arguing the hurricanes create jobs. After all, the destruction is followed by rebuilding. But does anyone seriously believe that replacing destroyed buildings creates wealth?

Look at Obama's plan. His website says:

"Obama will strategically invest $150 billion over 10 years to accelerate the commercialization of plug-in hybrids, promote development of commercial scale renewable energy, encourage energy efficiency, invest in low emissions coal plants, advance the next generation of biofuels and fuel infrastructure, and begin transition to a new digital electricity grid. The plan will also invest in America's highly skilled manufacturing workforce and manufacturing centers to ensure that American workers have the skills and tools they need to pioneer the green technologies that will be in high demand throughout the world."

Note that word "strategically." It is there to suggest that Obama knows how best to "invest" the $150 billion. (Of course it is not his money, and he'll have none of his own at risk, so from his perspective, it won't really be investment.) But how does he know that the things he names ought to get the money? Will he give it to cronies of his campaign contributors? Will he appoint Al Gore to pick grant recipients? Lobbyists will make a fortune steering "green" inventors and promoters to the $150 billion.

Politicians have a lousy record trying to make "strategic investments." President Jimmy Carter's Synthetic Fuels Corporation cost taxpayers at least $19 billion but failed to give us alternative fuels. In the 1950s Japan's supposedly omniscient Ministry of International Trade and Investment rebuffed Sony and was sure the country should have just one car producer.

Neither Gore nor Obama can know how the money should best be invested. Investing is about predicting the future, and the future is always uncertain. We know from experience that people who have their own money at risk -- who face a profit-and-loss test and possible bankruptcy -- are much better predictors than people who play with other people's money. Just compare North and South Korea.

One reason decentralized markets are preferable to government central planning is that human beings are fallible. Mistakes are inevitable. Some investments will be errors. Mistakes in the market tend to be on a comparatively small scale. If one company invests in plug-in hybrids and it goes bust, only a relatively few people suffer. The assets of the bankrupt firm pass into more capable hands.

But decisions by government, especially the federal government, affect all of us. When government makes a mistake, the bureaucracy can't go bankrupt. Instead, it will use its failure to justify increased appropriations in the next budget.

If "green jobs" make so much sense, the market will create them. They will be created by private entrepreneurs and venture capitalists who are eager to profit from winning investments. The best ideas will rise to the top, and green energy will gradually replace coal and oil.

If politicians were serious about creating jobs and cleaner technologies, they would step aside and let the free market go to work.

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[Heather (Compass blogger)]

Charlie, please be respectful of the bloggers (and commenters). Your comment of "you need to get out more" is walking a fine line.

Thanks for sharing the John Stossel article. The problem is that the government is already giving billions in tax breaks and incentives to industries that don't need it. Example: the oil industry. That industry can stand just fine on its own, but yet each year they come begging to the government despite posting record profits.

If some of those billions were instead invested stimulating an industry (clean energy) that can fight global warming, make the US energy independent, and create jobs, then the jobs aren't phantom. Jobs won't be lost in the oil industry if the government takes away their huge subsidies.

Jobs can be created in the clean energy industry if it is helped along in the beginning as much as the oil industry has been helped along for all these years.

Here are some reports backing up our statements that clean energy investment can create jobs: http://tinyurl.com/65b3v3

Thanks for your comment.

[Charlie]

Heather, I'm not certain you read the entire John Stossel article. Because if you did, you would see that governments do not create wealth. They only move money around. And when they talk about "investment", which involves risk, they don't use their own money.

Further, you state that "If some of those billions were instead invested stimulating an industry (clean energy) that can fight global warming, make the US energy independent, and create jobs, then the jobs aren't phantom."

But they are phantom. Stossel's article points out that "Our government could create jobs by paying people to dig holes and then fill them up. Would actual wealth be created? Of course not. It would be destroyed. It's like arguing the hurricanes create jobs. After all, the destruction is followed by rebuilding. But does anyone seriously believe that replacing destroyed buildings creates wealth? "

I agree with you about the oil industry. The government should not subsidize them. But, does this justify what you are suggesting that we throw money into "green jobs?" What sense does that make? You want to move government money from going to the oil industry and put it towards "green jobs."

That's the arguement Stossel makes. It doesn't work.

[Heather (Compass blogger)]

Hi Charlie, thanks for your comments.

My point is that the government would not directly pay people to create wind turbines or install solar panels (or whatever part of the clean energy industry) - it wouldn't be government-owned companies creating these clean energy jobs.

Instead, they offer the tax incentives to that industry to stimulate it, the companies can make more of their products and do more of their business competitively.

The price on their goods/services come down, even more of those products are then in demand, they have to hire more people to create the turbines and panels (or whatever the clean energy product). That's helping to create wealth - helping give an industry an equal leg up that the oil industry has been wrongfully receiving for years now.

The same could go for retrofitting our homes, businesses, power plants and other buildings to be more energy efficient. The government offers tax incentives and rebates for those who can show a certain amount of energy they save. The industry involved in retrofitting homes and buildings sees their business jump, and they have to hire more people.

A side effect of those job increases is that hopefully more training programs will be created. The industry sees a need for more folks who can install a solar panel, or retrofit a building, whatever - and they create or help support the creation of job training programs to help feed their need for skilled workers.

We should move the incentives from the oil industry and help give the clean energy industry a boost. Of course I'd hope the government would use greater discretion at when to end these incentives with the clean energy industry once it's doing well, unlike they have with Big Oil.

I think part of the problem here is also a fundamental disagreement with you and Stossel is the size of government's role.

I understand that the government cannot solve all of our problems, but when it comes to the US becoming more energy independent and helping create jobs in the clean energy industry, I believe they can play a major role.

Thanks for the good discussion!

[Heather (Compass blogger)]

Oh, and regarding the disagreement, I mean between my opinion on government's role and the one you share with Stossel.

[william]

Let's give our support to generate more green jobs for the people!

http://www.5milliongreenjobs.org

[william]

Let us give our support to generate more green jobs for the people!

http://5milliongreenjobs.org

[oilfield equipment]

lets stick behind our government. i know its hard to do.

[drilling rigs]

we need to keep it up.