The new conventional wisdom is that investments in “green” technologies will somehow jumpstart the sputtering American economy.
President-elect Obama is promising to invest heavily in “green-collar” jobs. Minnesota Governor Tim Pawlenty has proposed an expansion of his Job-z enterprise zones program to include “green” projects. The assumption is that the recipe for success in today’s world is to add government subsidies to government regulations and the result will be jobs.
No doubt in some limited sense that will be true, in the sense that subsidies and regulations will steer investment from one area of the economy to another. But that’s no recipe for economic vitality; it’s a recipe for economic inefficiency.
Government clearly has a role in setting environmental policy. A cleaner environment is a public good, and the free market has imperfect mechanisms for preventing levels of pollution that are unacceptable to society. So clearly there is nothing inherently wrong with government regulation to ensure cleaner water, air and food.
But there is something profoundly dishonest about the current discussion regarding “green” jobs. Almost without exception environmental regulations add costs and reduce the number of jobs available. We accept these costs because the benefits of a cleaner world outweigh them, adding to our quality of life. At least that’s true when cost-benefit analyses are done to ensure that this is the case.
The new mantra of “green –collar” jobs turns this formula on its head. Environmentalists and some politicians are now arguing that government regulations and subsidies will somehow add to our economic efficiency and to the number of jobs available, and there is precious little evidence to suggest that it’s true.
Sure, investment in green technologies will create some jobs that everybody will be able to see. But the costs involved will reduce the number of jobs elsewhere in the economy. The coming regulation of greenhouse gases will undoubtedly cause massive ripple effects in the American economy as energy prices rise and corporate investment is diverted to comply with the new regulations. The costs of compliance will be enormous.
There may be many good reasons to go “green”—although not without rigorous cost-benefit calculations to ensure that the costs associated are worth the benefit. But stimulating economic growth is certainly not one of them. Government regulations and government subsidies will do far more harm to the economy than can be recouped by the creation of new jobs.
David Strom is a Senior Policy Fellow at the Minnesota Free Market Institute
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on Friday, December 12th, 2008 at 7:10 pm and is filed under Commentaries, David Strom.
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The Myth of “Green Collar”Jobs
December 12th, 2008 by David StromThe new conventional wisdom is that investments in “green” technologies will somehow jumpstart the sputtering American economy.
President-elect Obama is promising to invest heavily in “green-collar” jobs. Minnesota Governor Tim Pawlenty has proposed an expansion of his Job-z enterprise zones program to include “green” projects. The assumption is that the recipe for success in today’s world is to add government subsidies to government regulations and the result will be jobs.
No doubt in some limited sense that will be true, in the sense that subsidies and regulations will steer investment from one area of the economy to another. But that’s no recipe for economic vitality; it’s a recipe for economic inefficiency.
Government clearly has a role in setting environmental policy. A cleaner environment is a public good, and the free market has imperfect mechanisms for preventing levels of pollution that are unacceptable to society. So clearly there is nothing inherently wrong with government regulation to ensure cleaner water, air and food.
But there is something profoundly dishonest about the current discussion regarding “green” jobs. Almost without exception environmental regulations add costs and reduce the number of jobs available. We accept these costs because the benefits of a cleaner world outweigh them, adding to our quality of life. At least that’s true when cost-benefit analyses are done to ensure that this is the case.
The new mantra of “green –collar” jobs turns this formula on its head. Environmentalists and some politicians are now arguing that government regulations and subsidies will somehow add to our economic efficiency and to the number of jobs available, and there is precious little evidence to suggest that it’s true.
Sure, investment in green technologies will create some jobs that everybody will be able to see. But the costs involved will reduce the number of jobs elsewhere in the economy. The coming regulation of greenhouse gases will undoubtedly cause massive ripple effects in the American economy as energy prices rise and corporate investment is diverted to comply with the new regulations. The costs of compliance will be enormous.
There may be many good reasons to go “green”—although not without rigorous cost-benefit calculations to ensure that the costs associated are worth the benefit. But stimulating economic growth is certainly not one of them. Government regulations and government subsidies will do far more harm to the economy than can be recouped by the creation of new jobs.
Other reads:
Kenneth Green explodes the myth of “green-collar” jobs.
David Strom is a Senior Policy Fellow at the Minnesota Free Market Institute
This entry was posted on Friday, December 12th, 2008 at 7:10 pm and is filed under Commentaries, David Strom. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.