Green jobs are bogus, cont.

From the comments section (#88 out of 89):

Now that we have dispatched with the nonsense of Green-jobs-are-bogus. ...

Huh? Who has dispacted with that?

Environmental policy can change the mix of jobs but not the overall number of jobs. An economy CAN become greener. This is implicit in my original post. I should have made it explicit and I will in the Env-Econ 101 piece but I didn't think that part of the message would be so easily overlooked.

Green jobs ARE bogus. At least in today's political climate where politicians are promising 5 million green jobs without mentioning the cost (i.e., the loss of jobs in other sectors).

Green government fiscal policy doesn't create jobs in the long run. I've yet to see any real empirical evidence (economic impact studies don't count) that it does. Those who advocate green jobs, in my opinion, are (1) naively hopeful about win-win government policies and will become disillusioned or (2) crass marketeers of government boondoggles or (3) somewhere in-between.

Any comment?

Comments

[Scott`]

John,

"The problem is it won't kick in until the economy is already in recovery."

Very frankly I hope you are right. However, I think there is a very real possibility that you are wrong, and if you are, and if we took your advice, we would be 5-10 years from now, wishing we had not.

[Pete]

John wrote this:

"Ecological Economics 101: Preserving natural capital with environmental policy keeps the long run aggregate supply (LRAS) curve from shifting left. An already degraded environment has the LRAS curve to the left of where it would be. Improving the environment with environmental policy would increase labor productivity and shift the LRAS back to where it should be."

OK, fine. Let's assume that the AS curve is really far to the left of where it "should be", and has been that way for a few decades. At some point in the past, the AS curve was in the right spot, but at that time employment was relatively low for a bunch of reasons (lack of technology, education, etc much lower than today).

Moving spending toward clean-up kicks the AS curve back in the right direction, displacing brown jobs with green ones. But once the productivity gains from enhanced natural capital are realized (again, where they should be) and for the first time in history are coupled with other great stuff (technology, education and human capital) how will this not create new jobs?

Are you just saying that these new jobs *could* have been there a long time ago and so they're not "new"?

[odograph]

L, can we do two bogosities at once?

Peak oil, as defined by M. King Hubbart, has been a useful tool. It has successfully predicted the production curve (over time) in a number of countries.

The thing is, it isn't 100% accurate, and many in the "peak oil" movement take it to be so. They may even build vast century-spanning narratives of industrial collapse, based in part on that predictor.

So at this point in time I give peak oil a 4 out of 10 on the bogosity scale. Not so much for Hubbert, but for those who write science-fiction declines based on his work.

[John Whitehead]

Scott,

I think we can happily agree to disagree at this point. Once it comes down to differing macroeconomic forecasts we can call it quits!

[John Whitehead]

Pete,

My opinion is that in the U.S. the environment is relatively clean and the degraded natural capital has been replaced by technology to a large extent. The marginal product of improved natural capital is positive but relatively low.

That is not to say I don't think there are enormous microeconomic benefits (i.e., consumer surplus) for a cleaner environment. I simply think that the macroeconomic impacts are overblown (in the U.S.).

I'm also a little quesy about the "green fiscal policy will shift the aggregate demand curve to the right and also shift the long run aggregate supply curve to the right." This became the dual rationale for tax cuts in 2000-whatever and the only lasting result after the mini-expansion is a big government debt.

I'd rather that environmental policy be judged on its own microeconomic merits instead of whatever macroeconomic result is in store for us 6-9 years after this recession is over.

[odograph]

Well, I think there is an argument for engaging, and incorporating, uncertainty in both forecast and prescription.

[Hydra]

"For me, if it takes telling people that we get 5 million jobs for free to invest heavily in conservation - I'm all for it."

Oh good. conservationists are in favor of lying to get their way.

That's good PR.

Hydra

[hydra]

What if I put solar panels on my home and the folks over at Dominion Power have to lay off a worker, but fabrication, deployment, and maintenance of my system creates three jobs?

Well, then the new flow of income is going to come out of YOUR pocket, becausse it is YOUR solar system.

You might need to take those other three jobs just topay for it,and then the dominion Power guy is still out of work.

Hydra

[dancing carpenter]

Why do we want to create jobs? Technology is all about labor saving devices. We want leisure time. Don't we? When we say we want to create jobs doesn't that mean we want to create income for the working class?

**Sorry about the double post but this comment fits in this string better

[Scott]

John,

"I think we can happily agree to disagree at this point. Once it comes down to differing macroeconomic forecasts we can call it quits!"

Do we disagree on the point of the economic forecasts? While I think there is significant risk of this downturn being protracted, I have little certainty that it will be. We disagree if you think there is a negligible risk of a protracted recession, but I would find that very surprising. By protracted I mean years rather than months in duration.

The problem I have with the "public works stimulus only works with protracted downturns" argument is that by the time we are "certain" that the downturn is protracted and that we really needed that public works stimulus, it's probably too late. In my opinion, if there is significant risk of a protracted downturn, then it's unwise not to act now.

I think you have agreed that if the downturn is sufficiently protracted that jobs would really be created by green subsidies.

Implicitly you seem to agree that subsidies would add stimulus to the transition from brown to green energy.

I think time is growing desperately short and we need to respond to climate change ASAP, so any accelerator is welcome.

Thus, I favor subsidies, not as a replacement for Ctax or capNtrade, but as a supplementary double insurance policy, both to jump start green energy, and to jump start the economy.

Perfect? No. Wise? Yes.

[John Whitehead]

Microeconomists (and lay people) debating macro policy makes me more than quesy so I finally went to Econbrowser to see if macroeconomist James Hamilton (the winner of the Env-Econ NCAA pool) had anything to see about green jobs. While Hamilton suggests government investment in infrastructure, there is no mention of green jobs anywhere (after the conduct of a hasty google search).

[odograph]

So would solar farms and the necessary grid interconnects be infrastructure?

[John Whitehead]

Scott,

I can't disagree with any of this:

Implicitly you seem to agree that subsidies would add stimulus to the transition from brown to green energy.

I think time is growing desperately short and we need to respond to climate change ASAP, so any accelerator is welcome.

Thus, I favor subsidies, not as a replacement for Ctax or capNtrade, but as a supplementary double insurance policy, both to jump start green energy, and to jump start the economy.

But note that a stimulus from a brown to a green economy is different than a macroeconomic stimulus in the Keynesian sense of the word.

[John Whitehead]

Odo,

So would solar farms and the necessary grid interconnects be infrastructure?

The point is that it does not matter for the macroeconomic impact.

[odograph]

That's the acknowledgment I was looking for, thank you.

[Matt D.]

Basing a website off of writing trollish posts.... I don't think there is any real empirical evidence that your model works, but that hasn't stopped you.

[John Whitehead]

Matt D:

From Wiki:

An Internet troll, or simply troll in Internet slang, is someone who posts controversial, inflammatory, irrelevant or off-topic messages in an online community, such as an online discussion forum or chat room, with the intention of provoking other users into an emotional response or to generally disrupt normal on-topic discussion.

Green jobs are entirely on-topic. I've been posting on this topic for some time. The emotional responses from the green jobs believers has been a surprise to me. Those responses have led us to where we are this week.

As for no real evidence that demand and supply analysis is correct, or that environmental policy doesn't create net jobs? I'm guessing that you are overlooking some of the economic literature.

For the jobs discussion, see: Palmer et al. (1995) “Tightening Environmental Standards: The Benefit-Cost or the No-Cost Paradigm?” Journal of Economic Perspectives.

[John Whitehead]

Odo,

No, thank you. The point is that invoking the green jobs rhetoric in macroeconomics is a distraction, the selling of fiscal policy as environmentally friendly is an economic mistake and it doesn't matter if a job is green or brown.

What matters is environmental quality. The way to measure environmental quality is with air and water quality monitors and scientists in the field. The mix of green and brown jobs in an economy is largely irrelevant. What matters is the labor productivity in those sectors and how those jobs translate into environmental quality measures.

[odograph]

John, your argument is seeming more semantic again.

If economists like Prof. Hamilton can make cases for infrastructure spending, I don't know why that should not apply to green(ish) infrastructure.

Really we want "good" infrastructure, and infrastructure that reduces future ecological damage at reasonable cost would seem to qualify.

[Scott]

John,

"But note that a stimulus from a brown to a green economy is different than a macroeconomic stimulus in the Keynesian sense of the word. "

Are you misreading me or are you agreeing that your column would be more accurately titled: "Green jobs might be bogus if the economic downturn is short ... in the Keynesian sense" ;-).

[John Whitehead]

Scott,

The official recession has already gone on for a long time, you goof! ;>

The mix of jobs doesn't matter for GDP, inflation and the unemployment rate. The mix of jobs doesn't matter for environmental quality either.

The combination of the mix of jobs, capital and technology matters for environmental quality.

And environmental quality is the only thing that matters ... in terms of the environment.

Considering an extreme example, suppose you could produce 75% of an enormous GDP per capita with 10 workers and a clean technology. in the rest of the economy there was 90 workers and a dirty technology. Most everyone agrees that the environment is clean. Is there a problem that only 10% of the workers are green?

[John Whitehead]

Odo,

Really we want "good" infrastructure, and infrastructure that reduces future ecological damage at reasonable cost would seem to qualify.

You've left out an important part -- the market benefits of infrastructure.

Suppose that during a downturn we could spend $100 on green infrastructure that generates $1000 in benefits (including environmental benefits) or $100 on dirty infrastructure that generates $1500 in benefits. The dirty infrastructure is preferred ... unless you choose to give more weight to a dollar of environmental benefits than anything else.

I'm not saying these are the actual tradeoffs, just that the analysis is important.

My opinion is that the best infrastructure generates the highest net benefits, where benefits include market values and nonmarket values (including environmental).

[Eric E]

Sniff, sniff... yes, that's it - I do smell reductionism. And packaged in an overly general assertion to boot - my, my!

Let's apply your point to highway construction. Are you really ready to defend your view that the massive investment the US government made in highways from the 50s onward did not contribute any net jobs to the economy, and that it only shifted the balance of jobs? Would you also be willing to say that there weren't jobs indirectly created by that investment? If so, why the hell are we building and maintaining so many roads? I'd argue the opposite: roads opened up a huge number of economic opportunities, and were a foundational investment that enables our current economy. And I say that as someone who thinks we ought to be focusing less on roads and more on railroads.

There's certainly ways to invest in apparently green business that don't create any net jobs, and there are plenty of public and private boondoggles to be financed; it's certainly foolish policy to invest in those. On the other hand, there's a huge number of examples readily observable outside your window where the government footed the bill for some kind of infrastructure improvement that allowed for all kinds new human activities, and in doing so opened massive economic opportunities to exploit new needs and new desires. If I were in the mood to overgeneralize, I'd argue that most of our economic titans are built on precisely such government investments, but that would be a tenuous argument.

There are more than a few such opportunities in our industrial infrastructure now, and many or most of them have to do with the generation and distribution of energy. Not only can short term jobs be created, but new activities we haven't yet thought of may well be enabled by such investments. Think, for example of individual energy production - life might well be very different when people are off grid, contribute to the grid, or can connect and disconnect as they please.

If you think there are no such opportunities, or if you think that the people who want to see green jobs don't have clear ideas of what they are, argue that. But your case as stated is too big to defend.

[Farrar]

I guess Mark Thoma cleaned your clock over at TPM Cafe

[odograph]

"Suppose that during a downturn we could spend $100 on green infrastructure that generates $1000 in benefits (including environmental benefits) or $100 on dirty infrastructure that generates $1500 in benefits. The dirty infrastructure is preferred ... unless you choose to give more weight to a dollar of environmental benefits than anything else."

What you are saying there not that green jobs are (always) bogus, but just that there may be better programs at certain times and in certain places.

I think I understood that from the beginning, and to me it is not an argument that "green jobs are bogus."

I don't think you've proved that all possible green projects are worse than all possible brown projects. (Or even that the "boondoggle ratio" would be higher in one than the other.)

I mean, we could build bridges to nowhere as infrastructure projects ... but I wouldn't stoop so low as to say that all highway infrastructure would be equivalent.