Seen and Unseen

After business school, I spent years in corporate marketing and planning roles.  A big part of those jobs were prioritizing investment projects against limited available funds.  Perhaps it is due to this experience, but to me it seems dead obvious that shifting capital and other resources to projects businesses would not have done on their own is clearly going to result in losses to the overall economy.  It can be argued that such investments pay off in other ways, and certainly I so argued when we were discussing cleaner water and air, but the whole notion that green spending and requirements will create jobs is just a myth.

I covered this before, but here is a Spanish study on the Spanish wind programs Obama said he wished to emulate (via Carpe Diem):

1. As President Obama correctly remarked, Spain provides a reference for the establishment of government aid to renewable energy. No other country has given such broad support to the construction and production of electricity through renewable sources. The arguments for Spain's and Europe's "green jobs" schemes are the same arguments now made in the U.S., principally that massive public support would produce large numbers of green jobs. The question that this paper answers is "at what price?"

2. We find that for every renewable energy job that the State manages to finance, Spain's experience cited by President Obama as a model reveals with high confidence, by two different methods, that the U.S. should expect a loss of at least 2.2 jobs on average, or about 9 jobs lost for every 4 created, to which we have to add those jobs that non-subsidized investments with the same resources would have created.

3. The study calculates that since 2000 Spain spent €571,138 ($800,000) to create each "green job", including subsidies of more than €1 million ($1.4 million) per wind industry job. The study calculates that the programs creating those jobs also resulted in the destruction of nearly 110,500 jobs elsewhere in the economy, or 2.2 jobs destroyed for every "green job" created.

One Comment

  1. K:

    Yes, they only lose a little on each job. They make it up in volume.

    More seriously: Some alternative energy projects make sense now. Some do not but may in the future. Some never will.

    The trap lies in mandating unrealistic goals. If the legislature, in all its wisdom, decreed today that AZ must have 25% alternative power by 2012 then fiscal madness would be forced upon the utilities and upon their customers.

    Fortunately the AZ legislature has set far less difficult objectives. Not all legislatures do so.

    Even worse than setting goals by statutue is delegating the authority to set goals to unelected boards or commissions. CA is the prime example. There appointees have even less concern about economic fiascos and idiotic regulations than the elected officials.