Guest essay by Eric Worrall
When is job creation a bad thing? The answer of course is when the new jobs make something more expensive. Economic growth occurs when efficiency improves – when a good or service becomes available at a reduced price. But this simple economic reality seems beyond the grasp of journalists who promote the “Green Job” narrative.
Clinton says the ‘clean energy economy’ will create millions of jobs. Can it?
Job growth is a prime topic in the U.S. presidential race, but Donald Trump and Hillary Clinton have very different takes on the role clean energy could play in creating employment.
Democratic hopeful Hillary Clinton says the U.S. can be the world’s “clean energy superpower.” Her plan, spelled out in detail online, would create millions of jobs and spur billions of dollars in public and private investment, while making infrastructure more resilient and lowering emissions.
Republican candidate Donald Trump says he’s a “great believer in all forms of energy” but that the country’s energy policies are a “disaster.” In a 2015 interview with CNN, Trump said policies to support clean energy and reduce carbon emissions would “imperil jobs” and “the middle class and lower classes.”
Like many critics of the federal government’s efforts to promote clean energy, he points to the failure of Solyndra as a waste of taxpayer money. Solyndra, you may recall, was a solar company that received a partial loan guarantee from the U.S. government but went bankrupt in 2011, defaulting on a US$535 million loan.
According to an energy.gov report, around 3.64 million Americans work in “traditional” energy industries, while around 600,000 Americans work in low carbon energy.
With the combination of EEI survey data and existing BLS surveys, the USEER finds that Electric Power Generation and Fuel technologies directly employ 1.6 million workers, almost double the 935,000 covered in the BLS direct industry classifications. Within this traditional energy sector, nearly 63% of employees work with fossil fuel technologies. This approach also identifies an additional 280,000 workers across Transmission, Wholesale Trade and Distribution, and Storage technologies, for a total of more than one million jobs. Retail sales and distribution in this sector—primarily gasoline stations— employ another 990,000 individuals. In total, approximately 3.64 million Americans work in our traditional energy industries, when including the 990,000 working in retail sales and distribution.
Today, 600,000 workers are employed within the Electric Power Generation and Fuels sector in low carbon emission generation technologies, including renewables, nuclear, and advanced/low emission natural gas. Just under 300,000 individuals work, in whole or in part, for solar firms, with over 200,000 of those employees spending the majority of their time on solar. There are an additional 77,000 workers employed at wind firms across the nation.
Transforming the US energy system to 100% renewables (assuming this is possible) would create a tremendous number of jobs, to build the infrastructure, followed by an unknown number of jobs to maintain the infrastructure. Probably significantly more jobs than the number of people currently employed in the energy industry, due if nothing else to the need to build and maintain more transmission cables to remote wind farm sites.
But these jobs wouldn’t deliver any value in the short term. Existing infrastructure already supplies all the energy we need – all those new jobs would be replacing infrastructure which doesn’t require replacement. The switchover to renewable infrastructure would not improve anyone’s life – electricity is electricity, regardless of its source. Even if you believe we are on the brink of a climate emergency, the full force of the predicted disasters won’t strike for decades. So in terms of the value those jobs are providing to the economy, at least in the short term, all those extra workers might as well be digging ditches and filling them in again. Or breaking windows and replacing them. Activity without benefit to the people paying for that activity.
The broken window fallacy, as originally described by Frédéric Bastiat in 1850;
Have you ever witnessed the anger of the good shopkeeper, James Goodfellow, when his careless son has happened to break a pane of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation – “It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?”
Now, this form of condolence contains an entire theory, which it will be well to show up in this simple case, seeing that it is precisely the same as that which, unhappily, regulates the greater part of our economical institutions.
Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier’s trade – that it encourages that trade to the amount of six francs – I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.
But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, “Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen.”
It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.
As Bastiat explains, there is no benefit from stimulating an activity which does not product a good or service which people want. There would be no short term benefit to the economy from creating green jobs. Everyone would suffer the loss of money spent to pay the salaries of those green workers, cash which could have been spent on stuff which would have improved the lives of the people who earned that money.
If a future climate disaster is averted, then there is a future benefit to investing in green infrastructure. But there is no near term stimulus benefit to the economy from the creation of green jobs.
Of course a future Clinton administration might intend to pay for the plan with borrowed money, to push most of the cost of creating more green jobs into the future. This might force the people who would allegedly benefit from green infrastructure to pay the price of building that infrastructure. But previous wastrel Federal US administrations have already sipped deeply from that poisoned chalice. If US public debt rises much higher, America will shortly begin to experience the very real problems which occur when governments run out of money.