Anyone who understands basic economics already knows that President Obama's $2.3 billion green-jobs initiative was snake oil. Now, thanks to Kenneth P. Green, we have statistics as well as theory to prove it.
In a new article, "The Myth of Green Energy Jobs: The European Experience," the environmental scientist and a resident scholar at the American Enterprise Institute writes, "Green programs in Spain destroyed 2.2 jobs for every green job created, while the capital needed for one green job in Italy could create almost five jobs in the general economy."
Ironically, Obama boasts his initiative "will help close the clean-energy gap between America and other nations." But Green says, "(C)ountries are cutting these programs because they realize they aren't sustainable and they are obscenely expensive."
Obama claims that if we "invest" more, "the transition to clean energy has the potential to grow our economy and create millions of jobs -- but only if we accelerate that transition."
What could make more sense? A little push from the smart politicians and -- voila! -- we can have an abundance of new good-paying jobs and a cleaner, sustainable environment. It's the ultimate twofer.
Except it's an illusion, as economic logic demonstrates.
"It is well understood, among economists, that governments do not 'create' jobs," Green writes. "The willingness of entrepreneurs to invest their capital, paired with consumer demand for goods and services, does that. All the government can do is subsidize some industries while jacking up costs for others. In the green case, it is destroying jobs in the conventional energy sector -- and most likely in other industrial sectors -- through taxes and subsidies to new green companies that will use taxpayer dollars to undercut the competition. The subsidized jobs 'created' are, by definition, less efficient uses of capital than market-created jobs."
Green is using good, solid economic thinking. Many years ago, Henry Hazlitt wrote in his bestseller, "Economics in One Lesson," "The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups."
In judging any government initiative, such as Obama's green-jobs plan, you can't look just at the credit side of ledger because the government is unable to give without first taking away.
Worse than that: Inevitably, more is taken away -- destroyed -- than is given because the government substitutes force and taxation for consent and free exchange. Instead of a process driven by consumer preferences, we get one imposed by politicians' grand social designs. It's what F.A. Hayek called "the fatal conceit."
So we shouldn't be surprised that green-jobs programs make energy more expensive. "(F)orcing green energy on the market (is) much, much more expensive," Green said. "Using Spain as a model, when you do the math, you realize that creating 3 million new green jobs could cost $2.25 trillion."
Of course, many people who push "green jobs" want the price of energy to rise so we'll use less. If the environmental lobby wants Americans to be poorer, it ought to come clean about that.
The advocates of such programs don't just misunderstand economics. They have lapsed into a pre-economic mentality. Rulers once believed they could do whatever they wanted, subject only to the physical laws of nature. If things didn't work out as planned, it was because the people had failed to cooperate. But as economist Ludwig von Mises wrote, once economics emerged as an intellectual discipline, "it was learned that in the social realm too there is something operative which power and force are unable to alter and to which they must adjust themselves if they hope to achieve success ... ."
That "something" is inescapable economic forces like the law of supply and demand.
Green is right when he says, "Central planners in the United States trying to promote green industry will fare no better (than Europe) at creating jobs or stimulating the economy."
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