- The Washington Times - Wednesday, February 25, 2009

ANALYSIS/OPINION:

OP-ED:

Our new president is a careful orator. When he mentions the jobs his economic stimulus will produce, he does not promise to “create” millions of new jobs. He pledges to “create or save” jobs, and for very good reason.

The new jobs his bill pays for - especially the green jobs - will replace a lot of current jobs, not create brand new ones, and will actually kill some jobs down the road.

The Obama administration says it hopes to produce millions of new, nonexportable green jobs with the roughly $100 billion of “green investment” that’s embedded in the recently enacted stimulus package.

That sounds like a great idea: Who wouldn’t want a pristine environment unsullied by our society’s huge energy consumption?

But there are several things wrong with this “green stimulus.”

(1) First, as is widely understood by now, the package isn’t all stimulus. To stimulate the economy, the government would have to put money into play very quickly, generally within about a year.

Green energy initiatives take far too long to have any near-term impact on the economy. Imagine, for example, how long it will take to get permits to build the tens of thousands of windmills it would take to replace even a few coal power plants. That money won’t be spent anytime soon.

What’s more, getting these things built requires that public spending be matched with gobs of private capital, something that isn’t flowing much, and isn’t likely to for years.

(2) The “new green jobs” will stand on the graves of existing jobs that will be killed. Economists know government doesn’t “create” jobs in the private sector - all it can do is take money that’s in productive use elsewhere in the economy and direct it to some other use the private sector has already rejected as unprofitable.

In this case, the administration has made it clear it’s going to take money from wealthy individuals (by raising their taxes) and from fossil fuel companies (through various means), and give it to producers of wind and solar energy as well as the makers of high-mileage hybrid vehicles.

Will that create new “green jobs?” Sure, eventually. But it will also kill more jobs than it creates. Here’s why: Raising taxes on the fossil fuel sector (whether through a carbon tax or some other scheme) and mandating the use of alternative products, will destroy jobs in the fossil fuel sector. That’s Econ 101.

Taking money from the wealthy reduces their ability to pay for the jobs they’re already supporting with that money. Whether those jobs are cleaning giant houses, building luxury ships or slinging high-priced hash in upscale Manhattan restaurants, there’s no such thing as a free lunch.

If the government taxes the rich, the rich cut back on spending and investment just like everyone else. The people they employ lose jobs.

(3) By raising the cost of energy and transportation, the country will be less competitive in world markets compared to cheap-energy countries. In addition, the U.S. economy will be weaker than it would be with more affordable energy. Companies that become noncompetitive through high-priced energy will relocate to other countries: Capital is portable.

(4) Finally, experience shows that when governments turn to “job creation,” many (and often most) of the jobs created are government jobs that do little more than administer government programs. All that does is swell the size of government, divert people into government and out of the economically productive private sector and lead to less job-creating economic growth.

Will the stimulus “create” new green jobs? Certainly, after a while it will. Will it kill off a greater number of other jobs in doing so? Absolutely.

And that’s the problem.

Kenneth P. Green is on the advisory board of Washington Insight/Energy and is a resident scholar at the American Enterprise Institute.

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