Both Obama and congressional Democrats believe we can move to a new carbon-free future by "investing" in "green" technologies and infrastructure, while creating millions of new jobs.
As it stands, Obama is eyeing $100 billion in "green stimulus" as part of a much bigger package — as much as $700 billion or more — of conventional stimulus. He reckons this will create up to five million "green-collar jobs" and "jolt" the economy back to life.
"Clean energy is going to be a foundation for rebuilding the American economy," says Bracken Hendricks of the liberal Center for American Progress and a member of Obama's transition team.
How will the money be spent? "School repairs," according to a Bloomberg report, "could be required to meet green building standards, including low-energy boilers and weatherization. Transportation spending could emphasize public transit, and support for new power sources such as wind . . . could go hand in hand with spending on an efficient electricity superhighway."
Sounds great. But it'll take money — plus new regulations that will make it more expensive to do anything with oil, even if there are no reasonable alternatives.
Nowhere is it mentioned that these "green-collar jobs" would be terribly costly, and that the planned "investments" are really just subsidies. And, as we know, things that require subsidies aren't competitive in the market, and thus aren't profitable.
Claims that such "investments" will create five million jobs are false. It's likely more jobs will be killed than created due to higher costs and increased inefficiency of the U.S. economy. A recent report from the Center for Data Analysis at the Heritage Foundation found that limiting CO2 emissions under recent proposed legislation would destroy 900,000 net jobs.
Spending money on projects where costs exceed benefits simply to "create jobs" is a bad idea. Taking capital from productive uses and redeploying it to politically popular but nonproductive uses lowers productivity by paying those with "green jobs" more than their output is worth. It's not welfare, it's "greenfare."
This, by the way, was the make-work model followed during the Great Depression. It didn't work then, and it won't work now.
These ideas aren't new — they were thoroughly debunked 158 years ago by pioneering French economist Frederic Bastiat, who wrote about the "broken window fallacy."
It goes like this: Most people agree that when someone breaks a store window, it's a tragedy for the shopkeeper. But many also believe the overall economy actually benefits, because the shopkeeper now must buy a new window, a kind of "stimulus."
This logic, of course, makes no sense. Yet it's the basic idea behind all government stimulus plans. The money for the window comes out of the shopkeeper's pocket. Instead of carrying more stock in his store, or hiring a clerk, he must spend his money instead on a window. So the "stimulus" is really zero — or negative.
"The 'broken windows' in this case," notes American Enterprise Institute analyst Kenneth Green, "would be lost jobs and lost capital in the coal, oil, gas, nuclear and automobile industries." They together employ more than 1 million people. But millions of other jobs would also be at risk because, as with the shopkeeper, money spent on green projects can't be spent elsewhere.
What was true in Bastiat's time is certainly true today. The weak productivity report Wednesday, showing a tepid 1.3% gain in nonfarm output per hour, should be warning enough.
A couple things are worth pointing out here. First, that Obama and the current crop of Dems have absolutely nothing in the way of 'change'. They are simply recycling the same old liberal playbook with a new pretty face. What they're promising to do are the same things that were done in the late '20s and through the '30s that prolonged and deepened a recession into the Great Depression; there's no reason to think this time around will give us any different effect.
Second, what Obama is proposing is basically to 'create jobs' by breaking other jobs. He'll tax and regulate the oil industry (and others) into submission, forcing cutbacks and layoffs. Then, he'll whip out some new 'green' jobs that will have to be subsidized by the government (because, like ethanol, they won't be profitable on their own merits). The difference, of course, is that those 'green' jobs will be beholden to him and the federal government because they're footing the bill. Another difference is that those 'green' jobs will be based entirely on a political fad rather than any sort of provable evidence or real market demand.
Let's look at one example that I've put together in pieces from a number of sources. If I recall correctly, the amount of power currently generated by wind farms is something like 0.4% of the total power output in America. Essentially nothing, in other words. Obama is proposing to bring that up to about 20% of the total output. Okay, fine. First, you have the obvious cost of building the things, which are not cheap. Then you have the obvious cost of maintaining them, which would also not be cheap. Then you have the cost of gas-powered backup systems. Uh...what?? That's right. I read an illuminating article a while back (unfortunately, I don't have a link handy) saying that, because these windmills are so huge, the amount of energy required to get them spinning is huge, so they have to be kept running all the time to minimize that expenditure. Obviously, the wind is not constant -- even in places like western Kansas -- so that means they have to have a backup system to keep them going on still days. So, moving on. Once you have the windmills up, maintained, and backed up, you have another massive problem: infrastructure. You can generate enough power to run a city, but if you can't get it to the city, it does no good. America does not have anything remotely resembling a centralized power distribution network. That's why local outages are so devastating - there's no way to ship in power from other areas (it's also one reason power grids are likely to be the target of a future terrorist attack). The infrastructure is just not there, so it would have to be built from scratch. I wish I had some concrete numbers to pass along to you on this, but I don't. I'll be certain to do so if I ever find them.
The point is that to accomplish all of this would most certainly take many, many billions of dollars (one report I heard on the radio not too long ago said as much at $3-4 trillion) to get it done. All to get wind power up to 20%, thereby removing the need for fossil fuels (ignore the gas backup systems, please). And all because some wacko nutjobs think (yes, they think, but can't prove) that the naturally occurring substance oil is destroying the planet.
Now, why would we do that, when we could instead spend those many, many billions of dollars exploring for and drilling more oil (which is plentiful, by the way), refining the clean coal process (we're the 'Saudi Arabia of coal', by the way), digging up the monstrous domestic oil shale deposits we're sitting on, or mining and developing the copious natural gas deposits which always accompany oil? All of these resources, by the way, have a fully functional and efficient infrastructure already built and distribution networks to send them where they need to go. As an added economic bonus, we would also bring hundreds of billions of dollars back into our own coffers by replacing foreign oil from hostile nations with our own, and we would also have the obvious national security bonus that goes along with that, too.
See why this is stupid?
If we want to go for wind power or other 'green' energy sources, great. Have at it. But don't subsidize it - make industries like wind power find a way to get efficient on their own, and let the market determine just how much of them the country really wants to buy. There could be some really great regional benefits to wind power or other 'green' energy in some areas, but the idea that it's going to entirely replace fossil fuels is ludicrous.
Obama's plan for 'green' jobs is going to destroy our economy while accomplishing nothing. It's just plain stupid.
There's my two cents.
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