Pres. Obama thinks we should subsidize green companies also, to the tune of $2.3 billion in Recovery Act tax credits for green manufacturers.
But does breaking something to allow for something else to flourish work? Kenneth Green discusses this 'broken window' fallacy first introduced in 1850 by French economist Frédéric Bastiat.(1) If a child breaks a shopkeeper's window, Bastiat said, people feel bad unless they are told the broken window leads to more work for the window repairman, who then buys more food from someone, etc. So is the little hoodlum who broke the window a civic hero? Well, no, the shopkeeper bought things with his money anyway and the intact window added value to the town - the most a repaired window can do is lose value because it's the same window purchased twice and one person was severely penalized.
Journalist John Stossel believes that we have the benefit of learning from the mistakes of others. Green programs in Spain destroyed 2.2 jobs for every green job created, he notes, while the capital needed for one green job in Italy could create almost five jobs in the general economy.
In judging any government initiative, such as Obama's green-jobs plan, you can't look just at the credit side of ledger because the government is unable to give without first taking away.That's true. I am no Adam Smith but a government first has to acquire money from somewhere to give credits to someone else. But is that 2.2 jobs ruined for every job created a real number? Like "jobs created or saved" it sounds made up. Well, he and Green at least didn't make it up. Green was citing a study by researchers at the Universidad Rey Juan Carlos who looked into the economic effects of Spain's push into wind and other renewable energy.
According to their findings, Spain spent 571,138 euros on each green job since 2000 but because Spain is a rather socialist state the government they also eliminated 110,500 jobs elsewhere in the economy. That is where the 2.2 jobs destroyed for every green job created number comes from.
You might argue those jobs would have been eliminated anyway - and you're right for saying so. If you were critical of Pres. Obama's "jobs saved or created" numbers you can't accept this because it criticizes the green economy, but they note the type of jobs this impacted is quantifiable and therefore more valid than saying every construction worker who did not get fired was not fired because of a stimulus plan. Because these were energy jobs, the higher cost of electricity was directly attributable to employment changes in metallurgy, food processing, beverage industries. etc. that have high energy usage.
Green goes on to cite similar data about efforts in Italy. I can't think of any instances where government subsidies have turned into businesses that became self-sustaining. When the government ran ARPA-NET, no one used it. It was only because a different government worker created a way to make Web pages usable for everyone (and did it for free) that the Web took off. Government did not penalize the horse and buggy industry, like they are doing with light bulbs, and subsidize automobiles. When a better solution came along, people adopted it and Big Trolley Car or whatever was powerless to stop them.
Obviously the environment is important and if we want to have people in other countries improve their quality of life a better energy solution will need to be found - but solar panels and wind farms have failed for decades and throwing government money to keep them afloat does not seem like a great solution.
NOTE:
(1) Before you criticize the source, please recognize that the number of times leftwing organizations like PBS have noted the benefits of lower taxes is still comfortably sitting at 0. So it stands to follow the only groups noting the pitfalls of spending money on big gambles will be free market.
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