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The “Green Jobs” Boondoggle

More than a year ago, New York Times columnist David Brooks raised eyebrows on the right when he appeared to endorse the Obama Administration’s “Green Jobs” initiative and the idea of investing government funds to create jobs in the environmental field. Yesterday, though, Brooks jumped off the “Green Jobs” bandwagon:

With the economy stagnating and unemployment high, where are the jobs of the future going to come from? A few years ago, it seemed as though the Green Economy could be a big part of the answer.

New clean-energy sources could address environmental, economic and national security problems all at once. In his 2008 convention speech, Barack Obama promised to create five million green economy jobs. The U.S. Conference of Mayors estimated in April 2009 that green jobs could account for 10 percent of new job growth over the next 30 years.

Alas, it was not to be. The gigantic public investments in green energy may be stimulating innovation and helping the environment. But they are not evidence that the government knows how to create private-sector jobs.

Recently, Aaron Glantz reported in The Times on some of the disappointments. California was awarded $186 million in federal stimulus money to weatherize homes. So far, the program has created the equivalent of only 538 full-time jobs. A $59 million effort to train people for green jobs in California produced only 719 job placements.

SolFocus designs solar panels in the United States, but the bulk of its employment is in China where the panels are actually made. As the company spokesman told Glantz, “Taxes and labor rates” are cheaper there.

There’s a wealth of other evidence to suggest that the green economy will not be a short-term jobs machine. According to Investor’s Business Daily, executives at Johnson Controls turned $300 million in green technology grants into 150 jobs — that’s $2 million per job.

Sunil Sharan, a former director of The Smart Grid Initiative at General Electric, wrote in The Washington Post that the Smart Grid, while efficient and environmentally beneficial, will be a net job destroyer. For example, 28,000 meter-reading jobs will be replaced by the Smart Grid’s automatic transmitters.

A study by McKinsey suggests that clean energy may produce jobs for highly skilled engineers, but it will not produce many jobs for U.S. manufacturing workers. Gordon Hughes, formerly of the World Bank and now an economist at the University of Edinburgh, surveyed the landscape and concluded: “There are no sound economic arguments to support an assertion that green energy policies will increase the total level of employment in the medium or longer term when we hold macroeconomic conditions constant.”

(…)

The problem is the results are indirect, the jobs take a long time to emerge and the market may end up favoring old-energy sources instead of shiny new ones. So politicians invariably go for the instant rush. They try to use taxpayer money to create private jobs now. But they end up wasting billions. We should pursue green innovation.

We just shouldn’t imagine these efforts will create the jobs we need.

The latest example of the failure of the “Green Jobs” investment approach, of course, can be found in the Solyndra bankruptcy, which points out the problems that arise from government “investment” programs quite starkly. First, that government investment simply isn’t subject to the same set of risks and rewards that private investment decisions are, meaning that the incentives to choose wisely don’t exist when a government bureaucrat is deciding how to invest someone else’s money. This isn’t to say that private investment advisers are infallible, of course, but the fact remains that they are subject to incentives and legal obligations that government workers are not, and have an incentive to choose investments carefully. Few private investors would have invested hundreds of millions of dollars in a company that had no history of showing a profit, no prospect of one in the future, and serious doubts about the long-term viability of its production processes, at least not without getting  personal guarantees from the owners. The second risk, of course, is the risk of politics interfering with the decision process, which is arguably inevitable in any decision made by government, and seems to have happened to some degree in the Solyndra case. When the reason behind a loan decision has more to do with who your campaign contributors were than whether or not it’s a smart investment, you’ve got a problem.

Jennifer Rubin hits the nail on the head:

The lesson should not be simply that government can’t create green jobs; rather, it is that government spending is a hugely inefficient way to promote job growth. Alas for the Democrats, nothing beats the public sector. It’s not very “sexy” in their eyes to simply constrain government and let the private sector gain the glory. But in fact the primary role they can serve is to promote a reasonable regulatory system, a dependable legal system, sound money, low taxes and international trade. And then, get off the stage.

It may well be that industries like solar energy, high capacity batteries, and others that the Obama Administration has favored in its “Green Jobs” spending will be the start of a spurt in manufacturing that will hire thousands of people, if not more. The only way wer’re going to know that for sure, though, is if those companies are forced to compete in the marketplace rather than being propped up by the government because of political agendas and cronyism. If you want to help these companies, the best thing to do is to make it easier for them to do business rather than making them dependent on the state. That’s how you create innovation and new jobs.

 

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About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May, 2010 and also writes at Below The Beltway. Follow Doug on Twitter | Facebook

Comments

  1. john personna says:

    To an ideologue “green jobs” are a thing. To the left they are a thing to be supported, to the right they are a thing to be attacked.

    In fact, they are not a uniform type. There are 1001 jobs you could call green. Some of them make sense, and manage to save us money long term, while providing jobs short term. As I’ve said, my favorite example of this was the conversion of traffic lights to LED technology. It cost money short term, but as I understand it, paid back in mere months. The city electric bill was cut by that much.

    So … beware both ends of the spectrum. That is, those who would fund anything, and those who would seek to block everything.

    Like or Dislike: Thumb up 4 Thumb down 0

  2. Tsar Nicholas II says:

    When it comes to long-term job creation central government spending is at best a zero-sum game. The only exception is that of weapons and other instruments of war. Classical liberals (now known as conservatives) for 100+ years have known this to be true. Unfortunately, however, the new-age academe and the Democrat Party have yet to embrace reality.

    Like or Dislike: Thumb up 2 Thumb down 4

  3. john personna says:

    BTW, on the “green energy” side, the biggest division to be aware of is the split between R&D funding and production subsidies.

    R&D funding, at national labs or universities tends to be cheap, and when it works, will help us all.

    Production subsidies tend to be very large, and do distort the market, camouflaging failures.

    Whether you are talking ethanol or solar, it’s relatively cheap to fund university research, or even a university pilot plant. If that works, private industry can take it and run with it. It’s much more expensive to force those solutions into the market with subsidies.

    You probably can’t even find the cost of ethanol research. It’s too small to worry about. On the other hand, ethanol production subsidies are $5B+ per year.

    Like or Dislike: Thumb up 3 Thumb down 0

  4. BigFire says:

    Working as designed. Green job is a wonderful way to line the pocket of the well connected, be it campaign donor, labor union, environmentalists.

    Like or Dislike: Thumb up 3 Thumb down 1

  5. john personna says:

    @BigFire:

    As I said above, to an ideologue “green jobs” are a thing, and not separable into programs or projects.

    Like or Dislike: Thumb up 0 Thumb down 1

  6. Hey Norm says:

    Yes – I think Jennifer Rubin is an excellent choice for basing any opinion on. NOT. She couldn’t hit a nail on the head with an atom bomb.
    This gets back to same myopic idea you have that jobs created/saved by the stimulus cost a gazillion dollars apiece because the infrastructure built/repaired was absolutely free. There are benefits to green energy that far exceed the jobs created. Of course a faction that does not believe in science will never be able to comprehend that.
    One issue is that the private sector is not going to invest large amounts of money in research because fossil fuels are so heavily subsidized. In other words Rubin is expecting green energy to compete in the free market when carbon based energy is not required to. It’s total f’ing nonsense. Force fossil fuels to compete on a level playing field and sustainable energy will win out today. Right now.
    Two – nuclear energy grew out of the Governments nuclear weapons research at places like Los Alamos. Research from NASA and the Space Program touches almost every aspect of our lives. However the same faction that does not believe in science also believes in austerity – slashing government spending on things like scientific research – except for researching humans riding dinosaurs. So there is not going to be any large scale government funded research into sustainable technology – the only alternative is for the government to take risks in funding private sector research. Risk implies some level of failure. You seem to believe any failure condemns an entire area of enterprise.
    Three – there are succcess stories in Green Energy out there. Your ideology has you focused on Solyndra. The Stimulus included some $90 billion for clean-energy investments, including wind, solar and geothermal energy, biorefineries, the smart grid, electric vehicles, and factories to manufacture all that green stuff in the U.S. The most radical investment was probably a $2.4 billion grant program that helped finance 30 factories building advanced batteries and components, including $300 million for Johnson Controls, which had to match the government dollars with private dollars…yes public/private enterprise…the lack of a black and white answer probably has you spinning.
    Four – I can only imagine what you and Jennifer Rubin would have had to say about the Auto industry boondoggle when the Duryea brothers of Springfield, Massachusetts rolled out the first gas-powered American car in 1893. Your myopic short-sightedness, and that of the silly people with tea-bags dangling from their hats, would have killed an industry that now has 250,000,000 cars on American roads.
    Here’s hoping all you small-minded people aren’t successful in taking America back to the 18th century.

    Like or Dislike: Thumb up 3 Thumb down 3

  7. PD Shaw says:

    One of the things that gets overlooked on the topic of “green jobs,” is how many of them that are actualy created are by requiring state and local governments to comply with new federal regulations. I’m sure state/local sighed relief when Obama punted the new ozone standards; how many teachers and prison guards would those green jobs cost?

    Like or Dislike: Thumb up 0 Thumb down 0

  8. john personna says:

    @PD Shaw:

    Well JKB, the way to normalize it might be lives-saved/dollar.

    I don’t know about ozone, but the California requirements which moved our buses and trash trucks from diesel to natural gas might have saved lives, while making the urban environment better, and while moving to a cheaper fuel!

    Like or Dislike: Thumb up 0 Thumb down 0

  9. john personna says:

    @Hey Norm:

    We might ask why Texas is #1 for wind energy.

    Texas, with 10,085 MW of capacity, has the most installed wind power capacity of any U.S. state, followed by Iowa with 3,675 MW.

    Probably this week “wind good, solar bad.”

    Like or Dislike: Thumb up 0 Thumb down 0

  10. anjin-san says:

    I don’t know about ozone, but the California requirements which moved our buses and trash trucks from diesel to natural gas might have saved lives, while making the urban environment better, and while moving to a cheaper fuel!

    Have you always been a communist?

    Like or Dislike: Thumb up 0 Thumb down 1

  11. steve says:

    Yes Doug. The government cannot do anything right. Let’s give back the Internet. While we are at it, I heard that a private corporation somewhere went bankrupt. That also, by your state.cards, proves that private enterprise is a failure. Why not change your standard and evaluate based upon the merits?

    Query- Were the private investors in Solyndra stupid? Most of them are in line behind the federal investment.

    Steve

    Like or Dislike: Thumb up 0 Thumb down 2

  12. john personna says:

    @anjin-san:

    Heh, are you saying I should breathe the diesel like a good Republican?

    Like or Dislike: Thumb up 0 Thumb down 0

  13. ponce says:

    The fringe right is pushing this “”there are no green job” meme pretty hard this week for some reason, and their cronies in the innumerate press are complying.

    Probably something the Koch brothers are pushing.

    Anyhoooo, back on planet Earth:

    Jobs created per $1,000,000 invested:

    Solar Power – 13.72
    Wind Power – 13.3
    Coal Power – 6.86
    Oil and Gas – 5.18
    Nuclear – 4.2

    http://www.leg.state.or.us/comm/commsrvs/sip.pdf

    Like or Dislike: Thumb up 0 Thumb down 3

  14. steve says:

    Just to be a bit more serious, if the US were a closed market, I would prefer much less government involvement. Given the short life cycle of many products and technologies, in an international market we may not have the luxury of no inter mention.

    Steve

    Like or Dislike: Thumb up 0 Thumb down 0

  15. john personna says:

    @ponce:

    I would only add, from my ‘good projects’ perspective, that it matters what you are left with, after those jobs complete. Wind technology has advanced far enough that it does return positive ROI, and EROEI.

    Some solar does that, but not all. Importantly, “solar roofs” usually fail that test, whereas “solar farms” usually win.

    Like or Dislike: Thumb up 0 Thumb down 0

  16. Eric Florack says:

    Four – I can only imagine what you and Jennifer Rubin would have had to say about the Auto industry boondoggle when the Duryea brothers of Springfield, Massachusetts rolled out the first gas-powered American car in 1893. Your myopic short-sightedness, and that of the silly people with tea-bags dangling from their hats, would have killed an industry that now has 250,000,000 cars on American roads.

    Snicker….. Well, lets see, here. Does illegally taking control of General Motors and forcing it to build the Volt, qualify as a green boondoggle?

    I suggest it does.

    Like or Dislike: Thumb up 2 Thumb down 0

  17. Eric Florack says:

    Jobs created per $1,000,000 invested:

    Sourcing this info from a state government in one of the more left leaning states doesn’t bolster your argument. Just for future reference.

    Like or Dislike: Thumb up 1 Thumb down 0

  18. CB says:

    @john personna:

    So … beware both ends of the spectrum. That is, those who would fund anything, and those who would seek to block everything.

    but that requires nuance and critical thinking. i demand slogans!

    Like or Dislike: Thumb up 0 Thumb down 0

  19. Hey Norm says:

    Maybe Eric…except that

    “… illegally taking control of General Motors and forcing it to build the Volt…”

    is just another of your ridiculous fantasies. If you have to make sh** up to support your argument you really don’t have a viable argument.

    Like or Dislike: Thumb up 0 Thumb down 2

  20. Hey Norm says:

    @ John Personna…

    “…We might ask why Texas is #1 for wind energy…”

    Judging by Perry – Texas has an over-abundance of hot wind.
    Seriously though – Texas is an interesting place…yes it has low wages and tons of uninsured and mediocre education and shitty air quality…but it also has a strong history and record on sustainability. They have water issues so they are forced to conserve water…while much of the rest of the nation laughs at the idea. But before long we will all be forced to examine our water usage. And I’m sure Doug will see it as a boondoggle for someone.

    Like or Dislike: Thumb up 0 Thumb down 1

  21. ponce says:

    Sourcing this info from a state government in one of the more left leaning states doesn’t bolster your argument. Just for future reference.

    Haha, wrong link, try this one:

    adpartners.org/tables/Job_Creation_for_Investment_-_Garrett-Peltier.pdf

    Like or Dislike: Thumb up 0 Thumb down 1

  22. mantis says:

    How about we stop the massive giveaways to the fossil fuel energy industry, which completely dwarf the money going toward renewable energy? Oh no, we can’t have that.

    Like or Dislike: Thumb up 0 Thumb down 1

  23. Hey Norm says:

    the military just committed $1B to the largest solar panel installation in history – equal to the last 30 years of solar installation. it will create 750 construction jobs over five years and 28 permanent operating jobs.
    question – why doesn’t OTB support the military?

    Like or Dislike: Thumb up 0 Thumb down 1

  24. Ron Beasley says:

    Doug
    I’m sure that if you had been writing 50 years ago you would have been talking about how there was no future in semiconductors. And yes, it was the federal government that drove much of that development. We need green energy because the we have picked most of the low hanging carbon fruit and even though there is plenty left it’s too expensive. We keep hearing about all the oil in the arctic but it’s going to cost $300 dollars a barrel to develop and produce it – look what happened when oil approached $200 a bbl a few short years ago. If “green energy” won’t make up the difference then we are really screwed.

    Like or Dislike: Thumb up 0 Thumb down 0

  25. Ben Wolf says:

    Doug, your own links demonstrate green energy companies can’t compete in a market where the Chinese government subsidizes its clean energy industry to the tune of twenty times the subsidies provided by our government. The playing field isn’t level.

    Like or Dislike: Thumb up 0 Thumb down 0

  26. Racehorse says:

    We have had “green” jobs and technology around for quite a while and just didn’t realize it. Here are a few examples that come to mind:
    New roofing materials made of fiber glass or other – forget the smelly, messy tar roof of the past
    Plumbers install tankless water heaters – saving energy; and water saving fixtures that still supply plenty of water
    Heating/ac people can add synthetic refrigerant that makes systems more efficient – one is “Ice Cold” – check it out
    Schools are switching to netbooks and tablets to replace textbooks and paper. Their Smartboards save using dry erase markers (plastics)
    Car mechanics are installing high tech spark plugs that improve gas mileage and give more power
    Fighter jets are made with composite materials – saving fuel
    Car racing teams are improving gas mileage to decrease pit stops – and win races. This technology winds up in the show room.
    Appliances are much more efficient – my new refrigerator paid for itself in less than two years through lower electrical bills.
    Large screen tvs operate much cooler – helping save on cooling costs
    Many people are building their own hydrogen systems that improve their gas mileage. The government tries to suppress this technology because it can’t put a tax on it.
    All of these involve green workers in some way or another – from manufacture to sales to installation.
    Going green does not always translate into a 50 foot solar panel or “green” cars that look like golf carts.
    The best “green” is being accomplished through the free enterprise system. Heavy government “green” requirements such as gas mileage will actually backfire. Look at the ethanol disaster as an example.

    Like or Dislike: Thumb up 0 Thumb down 0

  27. Eric Florack says:

    @Hey Norm:

    is just another of your ridiculous fantasies. If you have to make sh** up to support your argument you really don’t have a viable argument.

    Um, no.
    The action was illegal in the extreme. Also, absent governmental …. “suggestion”…. the volt would never have been built, becauyse even GM knows it’ll never sell… and in case you’ve not noticed, it hasn’t been.

    Like or Dislike: Thumb up 0 Thumb down 0