Gunther: "Phony Green Jobs Debate"

Let’s get real: We can’t predict oil prices 12 months out. Last spring, virtually no one anticipated the global financial crisis of last fall. And we are projecting the number of green jobs that will be created or lost on a state-by-state basis by a law that won’t take effect until 2012? Who are we kidding?

I called Russ Roberts, an economist at George Mason University who hosts the fine EconTalk podcast, for some guidance on how to think about green jobs and the economics of climate regulation. “Creating green jobs is easy,” he told me. “We could employ millions of people picking up litter, and we could make them very good-paying jobs if we want. But of course that would make us poorer as a nation. There’s a cost to providing those jobs that would have to be borne by other people in the economy.”

It’s not just the cost of higher taxes that needs to be factored into the equation, he noted. To the degree that the government makes policy that favors, say, vast construction of wind turbines throughout the upper Midwest, the people doing those jobs will be drawn from somewhere else, maybe even from more productive work. If policy leads to the hiring of thousands of contractors to do energy efficiency, the cost of building a new home or renovating your basement may go up because many of the good construction workers are busy.

“As voters and citizens and readers, what we want to think about is the big picture—are we moving in the right direction when it comes to environmental policy?” Roberts says. Put another way, are we spending enough money today to head off the threat of global warming in the future? Because if anyone tells you that we can deal with climate change at no cost, they probably shouldn’t be trusted.

Maybe that’s what bothers me about the green jobs ads. They’re like political campaign ads. They promise something for nothing. They treat the voters like children. They’re emotional and not educational. And they’re not helping to build a movement around climate change.

Other than that, they’re fine.

It is certainly good to have worthwhile projects to employ people doing, while we reconsider how to arrange things so that having a job stays rewarding while not having one gets a lot less punishing. And unless we get very lucky, this carbon thing is going to cost us plenty, no matter how we approach it. But the issue is not jobs. That just reinforces people's confusion. 

The environment is not a subsidiary of the economy. It is the other way around.

Something called the Sustainable Development Commission in the UK, which appears to have some sort of government charter, issued a report called Prosperity Without Growth which is on the whole a worthwhile read for people unfamiliar with the idea of a steady-state economy. There are lots of good quotes in there that will be showing up here.

It also talks about the confusion in the relationship between "green jobs" and the redesign of the economy. They point out that the natural inclination of politicians is to just treat the "green jobs" thing as an ordinary Keynesian stimulus, to get the economy "back on track". I believe Prof. Obama is doing an astonishingly good job at this goal, actually, which is unfortunate given that it is the wrong goal.  

The report hits on the awkwardness of the Keynesian strategy at this juncture at several points. For instance, while we see this on p.69:

By early 2009, a strong international consensus had emerged in support of a very simple idea. Economic recovery demands investment. Targeting that investment towards energy security, low carbon infrastructures and ecological protection offers multiple benefits. These benefits include:

• freeing up resources for household spending and productive investment by reducing energy and material costs
• reducing our reliance on imports and our exposure to the fragile geopolitics of energy supply
• providing a much-needed boost to jobs in the expanding 'environmental industries' sector
• making progress towards the demanding carbon emission reduction targets needed to stabilize the global atmosphere
• protecting valuable ecological assets and imporving the quality of our living environment for generations to come

which is all true and very compelling, but on the other hand, from p. 71:

it is difficult to escape the conclusion that in the longer term, we're going to need something more than this. Returning the economy to a condition of continual consumption growth is the default assumption of Keynesianism. ... the systemic drivers of growth push us relentlessly towards ever more unsutainable resource throughput. A different way of ensuring stability and maintaining employment is essential. 

A great deal depends on how these policies are sold and implemented. Were it not for the financial crisis, it might be better to wait until the public gained a better grip on the issues. There is a real risk that supporters will end up as confused about the fundamental purpose of these initiatives as its opponents. 

Some of us are eager to challenge the structure of society, and specifically of its economics. I myself am not so reckless as to look forward to it. I do understand that it is necessary. I wonder if those advocating "green jobs" while avoiding explaining how serious the underlying issues are might not be doing more harm than good.  If the economy can be rebooted, will people shrug off the idea of sustainability as some nice WPA-like project and get on with business?

Will people ever get the idea that the planet is full, and that consequently the basic idea of the invisible hand is broken? That nothing you do is only your own business anymore? That we're not on the lonesome prairie, we're on a leaky boat, and we'd better learn how to get along because there's no place further west to go? 

I don't know. Not if we don't try to explain it, I reckon.

Update: See also John Whitehead on the Environmental Economics blog, who doesn't think that "green jobs" necessarily will have a net positive impact on employment.