Green Jobs the Renewable Quandary

Green Jobs the Renewable Quandary

The recent article on green jobs from the Wall Street Journal ends very well:

“Green energy is a future for all communities we should embrace,” he said. “But they shouldn’t tell us it is for jobs.”

Let me first start out and say I believe in renewable energy  that there is a place for it in our portfolio of energy choices.   In addition, it can survive without subsidies as I noted in my previous blog.   The focus on jobs is a red herring.   The issue is not job, but it is our commitment and our ability to be competitive and productive.   Jobs are a symptom for the poor capital allocation in our economy.   If the number of jobs itself was so important, there is no way renewables can compete with fossil fuel on a net basis.   To prove this point, think about the massive supply chain requirements of finding, mining, and delivering coal.  Each component of the supply chain has their ancillary needs, requiring merchants to support.  In addition, the safety concerns and incidents occurring in fossil fuel support jobs from lawyers, doctors, to safety inspectors.  If we examine renewables, particularly wind, once the structure is in place; God/nature is in charge of the supply chain.

The anti-renewables can use this logic to bash renewables.  However, I would counter by saying renewables will be freeing up human resources to be more productive for society.   This is true as I have been espousing;  energy is just a means to an end.   We can now allocate people to actually use the energy to advance society.  Increasing a work force to support energy production, ultimately does not lead to productive advancements; unless increasing the workforce actually reduces the cost of energy in order to allow more productive advancements.  When we have an underemployed society, it is reasonable to want to search for places for jobs in order to maintain order.  In the long-run, we must not just focus on the number of jobs, but on the complete equation: productivity = jobs X [(value-add )– (cost of jobs)].   A Milton Friedman story I read, points out the fallacy of focusing on the number of jobs:

Milton recalled traveling to an Asian country in the 1960s. and visiting a worksite, where a new canal was being built. He was shocked to see that, instead of modern tractors and earth movers, the workers had shovels. He asked why there were so few machines. The government bureaucrat explained: “You don’t understand. This is a jobs program.” To which Milton replied: “Oh, I thought you were trying to build a canal. If it’s jobs you want, then you should give these workers spoons, not shovels.”

We must not lose sight that we want to have jobs that are productive.  Jobs delivering less productivity should be less costly – this applies to all spectrum, from Executives to Assembly line jobs.  Energy is just a means to an end.   Using energy efficiently to produce and make things to enhance our lives, and advancing society, will lead to positive growth to the economy.  There is no doubt we cannot simply be a service economy, at the same time, we cannot just be a manufacturing economy.  We need a balance economy focused on the productivity equation above.  There are sacrifices which must occur in both ends of the economic spectrum to support a growing economy.

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David K. Bellman

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