Unsustainable Green Jobs

With the American mid-term elections finally over, the deafening din of political propaganda and news punditry has dropped to a dull roar. Having admitted that there were no “shovel ready” jobs in the offing, and that taking a “shellacking” is no fun, Barack Obama has nonetheless continued to talk up the idea of “green jobs.” This flies in the face of both reason and experience. To date, green job creation has been a resounding failure. American intellectuals and left leaning politicians have pointed out that Europe is a decade ahead of the US in embracing the new green economy. Since this White House seems infatuated with all things European, here is a lesson they can borrow from the old continent: creating artificial green jobs is bad for a nation's economy.

In today's trying economic times no phrase rings more hollow, and no lie more pernicious, than the promise of “green jobs.” Back in January of 2010, President Obama unveiled a program that was to provide $2.3 billion in tax credits for the clean energy manufacturing sector. This was a move aimed at creating 17,000 jobs, a cost of a mere $135,000 per job. “If we harness ingenuity, take the talent of our workers and innovators, and we invest in it, we'll forge a future where life is better in our country over the long run,” Obama said at the time.

Ten months later the US economy is still gasping for breath and unemployment is still stuck above 9%, even higher in the nation's industrial heartland. Some sources are reporting that the shine is off the green job apple and that the current administration is quietly backing away from the claim that a new green economy will pull America's economic fat from the fire. The Washington Times note in September:

Noticeably absent from President Obama's latest economic-stimulus package are any further attempts to create jobs through "green" energy projects, reflecting a year in which the administration's original, loudly trumpeted efforts proved largely unfruitful.

After months of hype about the potential for green energy to stimulate job growth and lead the economy out of a recession, the results turned out to be disappointing, if not dismal. About $92 billion - more than 11 percent - of Mr. Obama's original $814 billion of stimulus funds were targeted for renewable energy projects when the measure was pushed through Congress in early 2009.

Why the sudden change of heart? It may be that even the eco-leftist ideologues within the Obama White House have come to realize that government cannot manufacture economic growth from hope and wishful thinking. But, perhaps not. Recently Obama announced a $900 million government giveaway to build a massive solar plant in California. The resulting full time job count for the plant is a paltry 300, meaning those green jobs cost $3,000,000 apiece.

The saddest part of all this wasted money and effort is that the government should have known better, for ample evidence of the green jobs folly was available from Europe. One of the nations that embraced the new green economy in a big way was Spain. Government funding for wind and solar power was aggressively pursued over the past decade, creating green jobs a declared goal. A study of Spanish green jobs by researchers at King Juan Carlos University has laid bare the truth about “green jobs” and their impact on a nation's economy. Here are the first few paragraphs of the introduction:

Europe’s current policy and strategy for supporting the so-called “green jobs” or renewable energy dates back to 1997, and has become one of the principal justifications for U.S. “green jobs” proposals. Yet an examination of Europe’s experience reveals these policies to be terribly economically counterproductive.

This study is important for several reasons. First is that the Spanish experience is considered a leading example to be followed by many policy advocates and politicians. This study marks the very first time a critical analysis of the actual performance and impact has been made. Most important, it demonstrates that the Spanish/EU-style “green jobs” agenda now being promoted in the U.S. in fact destroys jobs, detailing this in terms of jobs destroyed per job created and the net destruction per installed MW.

The study’s results demonstrate how such “green jobs” policy clearly hinders Spain’s way out of the current economic crisis, even while U.S. politicians insist that rushing into such a scheme will ease their own emergence from the turmoil.

The Spanish study reports that since 2000, Spain spent $759,899 (€571,138) to create each “green job,” including subsidies of more than $1.33 million (€1 million) for each wind industry job. The study also calculates that the programs that created those jobs resulted in the destruction of nearly 110,500 jobs elsewhere in the economy. That means 2.2 jobs were destroyed for every “green job” created.

Furthermore, each “green” megawatt installed destroyed 5.28 jobs on average elsewhere in the economy: 8.99 by photovoltaics, 4.27 by wind energy, 5.05 by mini-hydro. “These costs do not appear to be unique to Spain’s approach but instead are largely inherent in schemes to promote renewable energy sources,” the researchers concluded.

Despite its hyper-aggressive (expensive and extensive) “green jobs” policies it appears that Spain likely has created a surprisingly low number of jobs, two-thirds of which came in construction, fabrication and installation, one quarter in administrative positions, marketing and projects engineering, and just one out of ten jobs has been created at the more permanent level of actual operation and maintenance of the renewable sources of electricity

The plain truth is that the private sector will be responsible for actually producing jobs, green or otherwise. Government created jobs, like all government jobs, do not help an economy to grow. They are based on a fiction that any employment adds to the nation's wealth and productivity. This is patently untrue—government jobs are not part of economic production, they are overhead. While many of the functions of government are useful, good and even necessary—police, firemen, emergency medical and disaster recovery personnel for example—the hordes of document shuffling bureaucrats that fill government offices at all levels add nothing to a nation's economic output.

Only jobs that produce something of worth are sustainable in the long run. It is useful to grow things, dig materials from the earth, transform raw material into finished goods, transport goods from factory to consumers, etc. In short, useful jobs add value by an investment of labor. Jobs created by the government, which can only be maintained with continued public largess, are even worse than direct government jobs. Funded using money wrested from other citizens through taxation, they represent a net economic drag, a less than zero contribution. It is no wonder that green jobs are so hard to create and expensive to maintain, they are the economic equivalent of a vacuum and the economy, like nature, abhors a vacuum.

Within the energy sector there is no question that green jobs policy has distorted an otherwise free market. As markets forces correct the imbalance, Europe wrestles with the bitter fruit of its green economic policy. Vestas, the Danish wind turbine manufacturer, recently announced it would close five production plants across Scandinavia and cut 3,000 jobs—green jobs. The group said the surge in demand for wind power it had hoped for in Europe had not materialized and it is closing four plants in Denmark and one in Sweden, including one in Viborg where it has been manufacturing since 1989.

Still US politicians blather on about “green jobs” and stimulating the economy. Those fully invested in the green economic myth continue to claim that green jobs will add millions of new jobs to the US economy. Climate change propagandist Al Gore claims that due to “deniers” we are losing “green jobs” to China. “Every day we fail to take action, we export green jobs and our technological advantage to China,” states the former high priest of global warming on his blog. True believers like Gore simply cannot accept that they have been proven wrong about climate change and are no longer relevant. Those pushing green jobs today claim it is to help the economy or to ensure energy independence, not to halt global warming—the world has moved on.

Given the American left's fascination with everything European it is a pity that they cannot be bothered to learn from Europe's mistakes. Even to those in socialism's thrall it should be clear that artificially created green jobs are not a cure but a disease. Know the truth: government cannot create any productive jobs, let alone green ones.

Be safe, enjoy the interglacial and stay skeptical.

An old saying ...

... has it that the US never institutes a policy until it has completely failed in Europe, and Australia never does so until it has completely failed in the US.

Perhaps this is just another example...