In 1845, the French economist Frederic Bastiat published a satirical petition from the “Manufacturers of Candles” to the French Chamber of Deputies that ridiculed the arguments made on behalf of inefficient industries to protect them from more efficient producers.
“We are suffering from the ruinous competition of a rival who apparently works under conditions so far superior to our own for the production of light that he is flooding the domestic market with it at an incredibly low price; for the moment he appears, our sales cease, all the consumers turn to him, and a branch of French industry whose ramifications are innumerable is all at once reduced to complete stagnation. This rival, which is none other than the sun, is waging war on us….
“We ask you to be so good as to pass a law requiring the closing of all windows, dormers, skylights, inside and outside shutters, curtains, casements, bull’s-eyes, deadlights, and blinds - in short, all openings, holes, chinks, and fissures through which the light of the sun is wont to enter houses, to the detriment of the fair industries with which, we are proud to say, we have endowed the country… .”
This famous put-down highlights the problem of claiming that protecting inefficient producers creates good jobs. Obviously, the money the French would waste on unneeded candles could be spent on needed products and services - to the increased prosperity of the French economy.
I mention this in the context of the Obama administration’s assertion that subsidizing alternative energy sources will create 5 million green jobs. To that end, Congress passed in the stimulus bill $110 billion to subsidize and otherwise support such green efforts. In addition, in conceptual support of that argument, the administration has referred to “what’s happening in countries like Spain, Germany and Japan, where they’re making real investments in renewable energy.”
Well, last month, one of Spain’s leading universities - Universidad Rey Juan Carlos - published an authoritative “Study of the Effects on Employment of Public Aid to Renewable Energy Sources.” The report notes: “This study is important for several reasons. First is that the Spanish experience is considered a leading example to be followed by many policy advocates and politicians. This study marks the very first time a critical analysis of the actual performance and impact has been made. Most important, it demonstrates that the Spanish/European Union-style ‘green jobs’ agenda now promoted in the United States in fact destroys jobs, detailing this in terms of jobs destroyed per job created… .”
The central finding of the study is that - treating the data optimistically - for every renewable-energy job the government finances, “Spain’s experience … reveals with high confidence, by two different methods, that the U.S. should expect a loss of at least 2.2 jobs on average, or about 9 jobs lost for every 4 jobs created.”
Despite expensive and extensive green-job policies, a surprisingly low number of jobs were created. In addition, about two-thirds of those “green” jobs were just to set up the energy source in construction, fabrication, installation, marketing and administration. Only 1 in 10 of the green jobs created was a permanent job operating and maintaining the renewable sources of energy.
Each wind-industry job created in Spain required a subsidy of about $1.4 million. Overall, the average subsidy cost for each green job was about $800,000 (571,138 euros). And to create about 50,000 green jobs, Spain lost 110,000 jobs elsewhere, principally in metallurgy, nonmetallic mining, food processing and beverage and tobacco jobs.
Each green megawatt brought on line destroyed 5.28 jobs elsewhere in the economy (8.99 by photovoltaics, 4.27 from wind energy, 5.05 by minihydro power.) The total higher energy cost - the amount renewable energy cost more than available, conventional market-price energy - between 2000 and 2008 was about $10 billion. Moreover, the report concludes, “These costs do not appear to be unique to Spain’s approach but instead are largely inherent in schemes to promote renewable energy sources.”
The high cost of green energy predictably drove energy-intensive Spanish companies and industries out of Spain to countries with cheaper carbon-based energy, while the cost to Spanish taxpayers of renewable-energy subsidies was “enormous … 4.35 percent of all value added taxes collected, 3.45 percent of household income tax or 5.6 percent of the corporate tax.”
There is much more in the report, which at less than 50 pages would make useful reading for our elected representatives. Those who are worried about global warming may, after studying this report, still want to subsidize renewable-energy production. But it will be hard for such people to honestly continue believing they are addressing global warming while creating millions of net new jobs.
Tony Blankley is the author of “American Grit: What It Will Take to Survive and Win in the 21st Century” and executive vice president for global affairs of the Edelman public relations firm in Washington.