Spanish Flu: Stimulating Unemployment with Green Jobs?
Updated June 25, 2009
With the recent spread of the swine flu in North Carolina, affecting hundreds and claiming the life of at least one individual in the state, the media is again reminding citizens of the deadly Spanish influenza pandemic of 1918-1919 that killed millions. Not unsurprisingly, however, they’ve been mostly silent about another Spanish flu that’s about to hit – the job destruction that may strike like a wave when the United States copies Spain’s green jobs model.
According to Barack Obama’s Blueprint for Change, if the government spends $150 billion on clean energy over a decade, five million new green jobs will be created. White House economists insist that the $58 billion in energy programs in the stimulus package will create over 450,000 jobs.
Given the questionable methodology with which job creation projections are being calculated, it’s hard to verify these numbers. But in North Carolina, Bev Perdue was quick to board the green train in her budget, proposing to spend $5 million annually to subsidize “green” businesses while basic public services that benefit all taxpayers are cut – a program that the legislature is likely to include in its 2009-10 state budget.
Whatever the case, state agencies are stepping up to the plate. After learning of a $52.78 million stimulus award to North Carolina by the US Department of Energy for a weatherization program consisting of energy audits, insulation installation, and improvements to air conditioning and heating systems for low-income homeowners, the State Energy Office instituted a series of five energy-related seminars, for which attendance by contractors participating in the grants will be required.
Is the green jobs nirvana just around the corner?
Didn’t Work In Spain
The renewable energy industry – things like windmills, solar energy and ethanol - are advertised as environmentally friendly job bonanzas. But Dr. Gabriel Calzada Alvarez at Spain’s King Juan Carlos University conducted a study of Spain’s experience, which Obama cited as his model. The study used two different methodologies, yet it could only “optimistically” conclude that for every renewable energy job created, “the US 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.”
Is the loss of twice the jobs gained a viable economic strategy?
In 1997, European Union directives under the Kyoto Global Warming treaty mandated doubling renewable energy use from 6-percent to 12-percent by 2010. In the United States, Obama pledges to double the amount of renewable energy produced over the next three years through the use of stimulus dollars (the industry is current providing 7-percent of total energy use with hydroelectric accounting for 42-percent of that according to the Energy Information Administration). Existing companies like Namaste Solar, who are already frontrunners in the industry, will be given additional tax credits and loan guarantees to continue doing what they’re already doing.
But with this plan, there’s a problem.
Like the Spanish example, Obama’s energy dictate will kill jobs because it costs nearly seven times as much to produce solar power electricity as compared to clean coal, five times as much as nuclear power, and four times as much as natural gas. Windmills are higher priced, too, by a factor of up to 60%. Obama’s renewable energy will either lead to shocking increases in consumer bills or require massive debt-financed government subsidies.
Using the example cited by Obama, Spain pumped $36 billion into subsidies over a decade. Additionally, the Spanish green jobs program created fifty thousand jobs while over a hundred thousand jobs were destroyed through higher costs imposed on industries across the economy.
In North Carolina, green energy requirements are costing consumers $310 million in higher utility rates, another blow to our competitiveness and chance for economic success.
Politics
When the job-destroying facts about green jobs are known, why would politicians acting like princes of compassion foist it on us? Politics, of course. The seen and the unseen.
Workers building a windmill are visible. Politicians can take credit for them. Jobs lost in businesses hurt by rising energy costs or crowded out of capital markets by exploding government borrowing are invisible. Unemployment can be blamed on poorly understood forces like globalization as jobs shift or are lost to lower cost locations, corporate greed or other easy villains.
Workers getting a job at a windmill will be grateful to the stimulus program. They’ll make wonderful, heartwarming stories on CBS News. But workers in a food processing plant (a hard hit industry in Spain) that lose their jobs when the company moves to Mexico for lower energy costs will just be bitter and confused.
Are politicians really that cynical? Don’t bet against it.
No doubt, renewable energy is an idea whose time has come. Energy consumers are not stupid. A distaste for America’s dependence on foreign oil and an increased awareness of the personal benefits of energy conservation are driving many people toward taking steps on their own toward becoming users of renewable energy – and it’s a trend that’s likely to grow. But it must be remembered that every dollar that goes to subsidize one targeted industry is a dollar taken from another industry, and the taxpayers who are invested in it. By picking winners and losers in the subsidies game through the stimulus package, the government is implicating itself into private markets where decisions have been better made by the consuming public throughout our country’s history.
It may not offer the same benefits for politicians, but it works.
