Lowry: Obama's code green economy
Former Homeland Security Director Tom Ridge was widely ridiculed for color-coding the nation's terror-alert status. The Obama administration wants to color-code the economy.
Barack Obama promised during the campaign to create 5 million "green" jobs in a decade, and they will constitute at least $15 billion a year of his stimulus package. Putting people to work weatherizing homes, building wind farms and constructing a new electrical grid will supposedly save the planet and revive the economy all at once, in a lavish, politically correct free lunch.
Michigan Gov. Jennifer Granholm explained on PBS's "NewsHour" the economic elixir of wind farms: "You need people to know how to build the turbines. You have to have people install the turbines. And turbines have to be connected to the grids. Those are all jobs that can be created if we make a smart investment right now."
To this point, construction jobs have not been widely viewed as the future of our advanced service-based economy. They once were dismissed as jobs "Americans won't do." Never mind. The fundamental problem is that biofuels and wind energy are less efficient and more expensive than coal (which provides more than half the nation's electricity) and oil (which powers essentially all of its cars).
Currently, 1.8 million jobs in the economy relate to oil and gas (half of them at gas stations). Why layer more than double -- if the Obama goal can be taken seriously -- that number of "green" jobs on top of already existing energy jobs? Even if all the traditional energy jobs disappear, we will have succeeded only in employing more people in energy than otherwise necessary.
The "green" jobs enthusiasts are making a classic error illustrated by the 19th-century French economist Frederic Bastiat. When a railroad was under construction from France to Spain, someone in Bordeaux suggested that there be a break in the tracks to boost the town's economy with all the extra work for porters to cart luggage between trains, etc. Bastiat pointed out that if breaks in the tracks were such an economic benefit, every town should have one and France should build a "negative railroad" consisting entirely of interruptions.
Of course, the French economy benefited much more from a real railroad delivering the efficient and cheap transport of goods. The push for "green" jobs is about creating a "negative" energy sector -- hampering the energy sector we already have to create one that requires more labor.
To make people buy biofuels or wind power, either these energy sources have to be subsidized (draining resources away from more productive uses) or traditional sources of energy have to be taxed or regulated, which is what Obama proposes with his cap-and-trade plan on carbon emissions. The latter policy will cost jobs in the traditional energy sector and leave consumers with less to save and spend elsewhere. As Iain Murray of the Competitive Enterprise Institute points out, advocates of "green" jobs always emphasize the gross rather than the net job figures because a more complete picture shows they are ultimately subtracting, not adding.
Creating "green" jobs isn't a new policy. The federal government basically invented the American ethanol industry, with subsidies, tax credits and a tariff to protect it from foreign competition. Ethanol still is only two-thirds as efficient as gasoline and requires about as much energy to produce as it provides. The federal government has invested billions of dollars in its own "flex fuel" fleet of cars, but 92 percent of the fuel for the cars is standard gasoline.
Jimmy Carter launched a kind of "green jobs" program a full three decades ago. He poured $3 billion into a Synthetic Fuels Corporation that was an embarrassing bust.
It's always a mistake to believe that government can "create" jobs. It only creates jobs by taking resources from the economy, and therefore destroying jobs out of sight. It should attempt to create a favorable business climate and leave the rest, including the color-coding, to the market.
Rich Lowry can be reached via e-mail: firstname.lastname@example.org