5.25.2009

Green Starting to Smell Funny


While I have written glowingly of the whole "green jobs" movement, I must say the whole movement is starting to smell a little funny. I looked back at my blog to find my earliest post on the subject. This excerpt is telling: "To the extent that this sort of initiative is public works-y, the fiscal conservative in me is queasy; but if it's about linking skills training for the underemployed and downsized with pursuits that are both environmentally and economically feasible, sign me up."

I admit that I've been a little caught up in all the euphoria. But when I'm using my head and not my heart, that quote above summarizes what I want from the green jobs movement: transitioning people who've been left behind by an accelerating economy so that their skills match what's now needed, and preparing for a world in which energy is more dear in terms of price and supply. That's consistent with a worldview that affirms that the free markets are the best way to mobilize labor, capital, and ingenuity for the betterment of all.

Unfortunately, it seems large swaths of the green jobs movement have been co-opted by special interest groups. Obamaniacs think government mandates are the path to desired outcomes. Big government folks see it as the ticket to, well, bigger government. The anti-trade crowd wants everything produced locally. Cities are angling for more federal funding to flow to them. And unions are pushing it because they’re more interested in maximizing labor than maximizing output.

Hey, it’s a free country, and times are tough, so it’s hard to blame each of these groups for doing what they can to push their agendas. But let’s take in turn why each of these pursuits, far from being net good or net neutral, is actually net bad for us all (shamelessly cribbed from a recent paper out of the University of Illinois):

• Government mandates are a lousy and inefficient substitute for the free market in moving us to desired outcomes. Mandates distort the landscape, rewarding technologies and processes that are represented by more the politically connected. The market rewards technologies and processes that result in the maximum gain to consumers. We may all be bashing capitalism now, but last I checked the history books, centrally planned economies didn’t do so hot.

• Government participation can squeeze out private sector participation, rather than stimulate it. There’s been a lot of talk about the stimulative effect of investing in green jobs and green technologies. Remember, though, that any time we move forward, we destroy the old as we bring in the new. At its best, this is what Austrian economist Josef Schumpeter called “creative destruction”: cars replacing horses and buggies, or modern medical advances replacing primitive methods. Free markets reward this sort of creative destruction. But when government expands, it eventually has to take from the private sector, either through taxes now or taxes later; and so when a claim is made that a public investment led to so many thousands of new jobs created, what is invisible but vitally important is that taxpayer dollars were allocated to that effort, which, if not allocated, could’ve created just as many jobs or more if put to use in the private sector.

• We can’t grow if we don’t trade. Local production may seem green because it involves less transportation of goods back and forth. But if that’s the problem, fuels should be priced more accurately (i.e. higher) to account for the environmental costs associated with burning them. But apparently that’s not the problem; trade is. Only trade is how hundreds of millions of people in the developing world get lifted out of crushing poverty, hundreds of millions of people in the developed world get to enjoy a wonderful mix of products and produce, and millions of businesses are able to grow.

• Cities aren’t entitled to federal investment; they have to earn it. Not surprisingly, this is the group I’m most sympathetic with. But for federal funds to flow to such a local level, there must be a national payoff at stake, such as world-renowned research centers being able to conduct the critical basic research needed to make the next breakthrough in energy efficiency. Otherwise, if it’s just about transferring money to the local level, why not lower federal taxes instead of going through the waste of collecting it and then redistributing it?

• Creating jobs for creating jobs’ sake is not a sustainable strategy in a global economy. I like the thought of retooling people with the skills that are needed in our modern, knowledge-based economy; there are far too many inefficiencies in our free market system, as people getting left behind as we progress over time in what we produce and how we produce it. But creating jobs that pay well is the happy by-product of a pursuit of businesses and processes that generate value to the customer; they are not the end product themselves. Ironically, the green jobs movement is all about maximizing the efficiency of natural resource input (the most output out of the least amount of resources) and yet it seems to intentionally wish for the inefficiency of human resource input (the most amount of labor, regardless of how much output it produces). (A recent report happily announced that the net effect of a carbon-constrained economy would be to create five jobs for every job lost and employ about one in four working Americans, apparently missing the fact that having five people tomorrow do the job of one person today is a huge step backwards, and that what we really want is to be able to produce the same amount of energy with fewer people, so that more people can be freed up to do other work that grows the economy, much in the same way that we are a far more prosperous world now that we don’t have to dedicate nearly as many people to things like agriculture and manufacturing as we once used to.)

I could not agree more with the passion and sentiment of the green jobs movement. We are not prepared for a post-petroleum world, we are behind other countries in energy efficiency, and too many of us are ill-prepared to hold down the kind of jobs tomorrow’s economy will demand. So we have some work to do. And I know that not everyone who's on the bandwagon fits into the archetypes or shares the agendas I've described above. So let me temper my comments above by simply saying that I am just trying to offer some healthy skepticism and counter-balance to what has become a tidal wave of enthusiasm and belief.

Nevertheless, I must express my chagrin at what is happening with what was once and still can be a promising trend. We need to go to a new place with our economy and with our environment. But mandating solutions from DC down, expanding government, squelching trade, asking for money to pour down to the local level, and maximizing job creation above all else is not going to get us there, and could in fact move us further away.

Better instead to price energy properly, thus restoring the profit motivation for both consumers and producers to figure out how to better conserve it. And better instead to shrink government, thus restoring the profit motivation for both individuals and businesses to move upstream towards higher value added activities that grow our economy and enrich our communities. In both cases, you’ll almost certainly find that there will many who are properly induced, motivated, and freed to work overtime to discover, bring to market, and profit from the next generation solutions that will improve our quality of life, consign current medical ailments to the history books, and even save our planet from degradation.

The green jobs movement can be part of that kind of worldview and that kind of solution. And so, to the extent that it is not evolving into that, I am concerned.
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