Are “Green Jobs” an answer to economy?

The prospects sound good but the conference got only half the story. Estimates of just how many jobs our push to go green may generate vary widely, but not all economists believe that there really will be any kind of green-job boom. More important is the question of whether these supposedly new jobs simply displace existing jobs or are make-work schemes to transfer wealth. Will they help improve our productivity and prosperity?

Unfortunately, the likely answer is no. The more complete story is that some jobs may be created, but only at the expense of others. Further, the result would be less overall economic growth on net, and most likely, the loss of existing capital. The notion that one can make jobs by destroying others is a variation of 19th century philosopher Frederic Bastiat’s “Broken Window” fallacy. As Bastiat explained, imagine some shopkeepers get their windows broken by a rock-throwing child. At first, people sympathize with the shopkeepers, until someone suggests that the broken windows aren’t that bad. After all, they “create work” for the glazier, who might then buy food, benefiting the grocer, or clothes, benefiting the tailor. If enough windows are broken, the glazier might even hire an assistant, creating a new job. Would it be good public policy to simply break windows at random? No, because what is not seen in this scenario is what the shopkeepers would have done with the money that they have had to use to fix their windows. If they hadn’t needed to fix the windows, the shopkeepers would have put the money to work in their shops, buying more stock from their suppliers, perhaps adding a coffee-bar, or hiring new people, or lending it to others with wealth creating ideas. Economic growth results from increases in productivity, not by destroying wealth. Government mandates that require producers and consumers to use the most expensive forms of energy, like wind, solar, and ethanol, reduce overall productivity. Less wealth and prosperity is the ultimate result. Reducing productivity also makes us less competitive internationally, in an increasingly competitive global economy. Though some jobs may be created, a longterm downward spiral is also created. Such actions are not sustainable. We must keep the long-term implications of their “job creation” arguments for increased mandates in mind as we move forward. Ideally, policies will raccount forthe fallacy of creating jobs at the expense of productivity and destroying wealth. Green energy mandates should not be implemented if the cost is less productivity, less wealth, and less prosperity for Californians and all Americans.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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