Tuesday, June 14, 2011

Green Jobs Again

FLG has written it before, is going to write it again, and will almost certainly write it in the future -- these so-called green jobs are like breaking windows to create jobs for carpenters and glaziers.

Unsurprisingly, FLG was screaming at the radio when he heard this report on Marketplace:
Running for office, Obama vowed to create five million green energy jobs within a decade.

[...]

Eventually, green technologies promise to generate lots of new jobs. The question is whether that'll be soon enough for Obama to save his own.

Look, this is all pretty simple. You can create jobs by having the government order all lightbulbs be replaced with newer, supposedly better lightbulbs. But this comes at the cost of destroying the value of all the existing older, supposedly crappier lightbulbs. It has the same economic effect as if the government came into your house and broke every lightbulb. It's pretty clear that the country would not be better off it that happened.

"But wait a second FLG," you say, "they aren't mandating that everybody replace their lightbulbs. You'll just have to replace them when you are ready with something new, with some incentives and whathave you thrown in."

Okay, so the argument is that it's a good idea for the government to pay FLG to break his perfectly good lightbulbs himself?

"But aren't we creating jobs?" you ask. Well, that's probably not the case either. Sure, let's say for argument's sake, that a million jobs get created making new lightbulbs and electric cars. What then happens to the jobs making incandescent and regular cars? That's right. They go away. Moreover, FLG would argue that, all things being equal, making these new green products are probably more capital than labor intensive. Thus, on net, jobs are probably lost.

But isn't that what happens with every technological innovation? Didn't he buggy whip makers go out of business when automobiles arrived? Yes, yes they did. However, that was the result of people freely choosing what they believed to be a better product. An improvement, if you will. This improvement, from incandescent to other forms of lightbulb or gasoline to electric cars, isn't being driven by people freely choosing one over the other, but mandates. This isn't to say that automobile consumption wasn't or isn't subsidized in various ways, but that it was less so, at least initially. When people freely choose, then FLG is more likely to believe that there is benefits from change. When change is mandated by the government, FLG has to wonder why exactly is must be mandated. Maybe there's a collective action problem. Maybe it's simply not an improvement.

Look, FLG is in favor of carbon pricing. He thinks internalizing the costs of emitting carbon makes sense. People will freely choose the best way to minimize carbon while maximizing their utility. This will minimize the social cost of pollution. But FLG is deeply skeptical that the country will be better off economically, as in output, because of it. And it's sure as shit not going to create net jobs. Oh, it'll create jobs if you say these people are producing things the fulfill this mandate, but that's an idiotic way to go about looking at the benefits. It omits what wealth or jobs may have been destroyed by the change.

Again, to return to an analogy FLG mentioned before, the government could hire a bunch of people (awesome), to create demand for green lightbulbs (awesome), which would result in a bunch of people being hired to make and sell green lightbulbs (awesome), at the cost of having people enter everybody's homes and smash all the lightbulbs (not so awesome) and putting all the people who make non-green lightbulbs out of work (not so awesome).

So, when FLG hears "Eventually, green technologies promise to generate lots of new jobs," his immediate response is "Go fuck yourself."

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