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LosingNow

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Creating "Green Jobs"
« on: September 10, 2008, 06:43:29 AM »

The Fallacy of 'Green Jobs'
By John Stossel

Democratic presidential candidate Barack Obama has a great twofer pitch: "green jobs." It sounds like a winner. In one fell swoop he can promise to end unemployment and fix and save the planet from climate change.

Or so he says.

"I'll invest $150 billion over the next decade in affordable, renewable sources of energy -- wind power and solar power and the next generation of biofuels; an investment that will lead to new industries and five million new jobs that pay well and can't ever be outsourced," he told the Democratic National Convention

Wow. Five million new jobs. All that work building windmills and creating biofuels are the "green jobs" that will come into existence when wise government creates the industries that will produce the energy and vehicles that will make fossil fuels obsolete.

Politicians always promise that their programs will create jobs. It's used to justify building palatial sports stadiums for wealthy team owners. Alaska Rep. Don Young claimed the infamous "bridge to nowhere" would create jobs. The fallacy is the same in every case: Even if the program creates jobs building bridges or windmills, it necessarily prevents other jobs from being created. This is because government spending merely diverts money from private projects to government projects.
Governments create no wealth. They only move it around while taking a cut for their trouble. So any jobs created over here come at the expense of jobs that would have been created over there. Overlooking this fact is known as the broken-window fallacy. The French economist Frederic Bastiat pointed out that a broken shop window will create work for a glassmaker, but that work comes only at the expense of the cook or tailor the shopkeeper would have patronized if he didn't have to replace the window.

Creating jobs is not difficult for government officials. Pharaohs created thousands of jobs by building pyramids. Our government could create jobs by paying people to dig holes and then fill them up. Would actual wealth be created? Of course not. It would be destroyed. It's like arguing the hurricanes create jobs. After all, the destruction is followed by rebuilding. But does anyone seriously believe that replacing destroyed buildings creates wealth?

Look at Obama's plan. His website says:

"Obama will strategically invest $150 billion over 10 years to accelerate the commercialization of plug-in hybrids, promote development of commercial scale renewable energy, encourage energy efficiency, invest in low emissions coal plants, advance the next generation of biofuels and fuel infrastructure, and begin transition to a new digital electricity grid. The plan will also invest in America's highly skilled manufacturing workforce and manufacturing centers to ensure that American workers have the skills and tools they need to pioneer the green technologies that will be in high demand throughout the world." .

Note that word "strategically." It is there to suggest that Obama knows how best to "invest" the $150 billion. (Of course it is not his money, and he'll have none of his own at risk, so from his perspective, it won't really be investment.) But how does he know that the things he names ought to get the money? Will he give it to cronies of his campaign contributors? Will he appoint Al Gore to pick grant recipients? Lobbyists will make a fortune steering "green" inventors and promoters to the $150 billion.

Politicians have a lousy record trying to make "strategic investments." President Jimmy Carter's Synthetic Fuels Corporation cost taxpayers at least $19 billion but failed to give us alternative fuels. In the 1950s Japan's supposedly omniscient Ministry of International Trade and Investment rebuffed Sony and was sure the country should have just one car producer.

Neither Gore nor Obama can know how the money should best be invested. Investing is about predicting the future, and the future is always uncertain. We know from experience that people who have their own money at risk -- who face a profit-and-loss test and possible bankruptcy -- are much better predictors than people who play with other people's money. Just compare North and South Korea.

One reason decentralized markets are preferable to government central planning is that human beings are fallible. Mistakes are inevitable. Some investments will be errors. Mistakes in the market tend to be on a comparatively small scale. If one company invests in plug-in hybrids and it goes bust, only a relatively few people suffer. The assets of the bankrupt firm pass into more capable hands.

But decisions by government, especially the federal government, affect all of us. When government makes a mistake, the bureaucracy can't go bankrupt. Instead, it will use its failure to justify increased appropriations in the next budget.


If "green jobs" make so much sense, the market will create them. They will be created by private entrepreneurs and venture capitalists who are eager to profit from winning investments. The best ideas will rise to the top, and green energy will gradually replace coal and oil.

If politicians were serious about creating jobs and cleaner technologies, they would step aside and let the free market go to work.
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prfsr

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Re: Creating "Green Jobs"
« Reply #1 on: September 10, 2008, 12:15:56 PM »

What a load of crap!!

When an article is full of it from top to bottom, where does one start to pick holes?

NSF, ARPA, DARPA, NSA, NASA and some other DoD agencies have invested big money in research that has resulted in creating many of the technologies that put America ahead of the curve.

Not surprisingly (given his past reporting) Stossel gets nothing of this.

« Last Edit: September 10, 2008, 12:19:28 PM by prfsr »
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kban1

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Re: Creating "Green Jobs"
« Reply #2 on: September 10, 2008, 03:44:49 PM »

Absolute drivel

this is the problem with people who believe that the monetarist solution to the world's economic problems are the ONLY solution thats worth considering.

therefore, governmental fiscal spending is to be condemned because it will "crowd out" private investment which would have allowed for similar number of jobs -- a monetarist twist to the opportunity cost argument which conveniently ignores the fact that the markets are not infallible, there are lacunaes and gaps not met by the intersection of supply and demand lines -- gaps which are important to fill from a social policy standpoint and that is exactly where the government with its planned initiatives comes in.

And framing a social benefit issue in the framework of economic opportunity costs is a baffling, but I suspect deliberate, take on the whole issue. Its not just the jobs stupid, its the energy issue

After all, we have left our energy needs to market forces and we have not really gained numerous alternate energy sources in the last 30 years. What we have gained, left to market forces, is that the average mpg on autos have remained relatively constant since the early 1970's -- the benefit of market supply and demand indeed!

Thank god, these commentators were not around when the Interstates were built. Otherwise we would have still used Route 69 and US HWY 30 to traverse the country because the market would have found better use for the labor in alternative fields and that of course would "CREATE WEALTH" which government endeavors never do -- in fact the Interstate system never generated any wealth for this nation at all!!  ::) :icon_scratch:
« Last Edit: September 10, 2008, 03:46:34 PM by kban1 »
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keep-it-cool

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Re: Creating "Green Jobs"
« Reply #3 on: September 11, 2008, 04:22:27 AM »

the markets are not infallible, there are lacunaes and gaps not met by the intersection of supply and demand lines -- gaps which are important to fill from a social policy standpoint and that is exactly where the government with its planned initiatives comes in.

Agree.

In principle, I am in favour of governments staying out of most activities that are NOT strategic in nature. In strategic areas such as infrastructure, energy, education, defence, healthcare etc, while private participation is welcome (and should be encouraged, in my view), the government should have a presence to not only ensure that all segments are catered to (for instance: Indian Airlines is the only carrier that flies to some of the more remote parts of the country) but also that national interests are taken care of in times of strife (which a pure profit motive may not be able to do).

All one needs to guard against a monopoly in any venture - where, I believe, the author's concerns over inefficiency have been borne out many times - atleast in India.

At the same time, given that public funds are limited, it is imperative for the government to be prioritise and be more involved in areas such as education, social security etc where buiding a viable commercial model is difficult v/s getting into all and sundry areas. For instance, what is the point of having two government owned refineries (HPCL & BPCL)? Wouldnt it make more sense to be just in one and unlock the cash blocked in the other and use it elsewhere? Or what sense does it make to have 90% stake in ONGC when 51% allows you complete control?
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