The details of President-elect Barack Obama's stimulus plan for early next year are not yet drafted, but one thing is clear: Obama wants a lot of the stimulus focused on creating "green jobs."
A supposed benefit of technology like wind power and solar power is that it creates more jobs per kilowatt hour than investments in other industries. So if you want to tackle the environment and unemployment, why not plow money into whichever green technology creates the most jobs per kilowatt hour?
A recent report from the Center for American Progress, the liberal Washington think tank with many of its scholars now helping develop policy for the Obama administration, cites this as one of the most compelling reasons for a "Green Recovery." CAP claims that its $100 billion plan would "create nearly four times more jobs than spending the same amount of money within the oil industry and 300,000 more jobs than a similar amount of spending directed toward household consumption."
The American Wind Energy Association claims it is wind power that creates the most jobs per kilowatt hour. One oft-cited statistic is that there are 27% more jobs per kilowatt-hour from wind than from coal, and 66% more from wind than from natural gas.
Is that true? And does that make it good policy?
"I'm not sure how clearly it's been empirically demonstrated," says Kenneth Green, a resident scholar at the conservative American Enterprise Institute. "To the extent it's true, it illustrates these technologies aren't that efficient."
Green says this focus looks an awful lot like the "broken window fallacy." The fallacy is this: A kid throws a rock through a shopkeeper's window and therefore has helped the economy by creating work for window makers. If he breaks windows every night, he might even create a job for a janitor to clean up the shards.
The broken window fallacy ignores what would have happened to the money otherwise, namely that the shopkeeper would have spent it elsewhere.
So it is with energy. If the demand for kilowatt hours stays the same, then every five wind workers could be displacing four coal workers or three natural gas workers. And if the price per kilowatt hour is higher, it might be more jobs per kilowatt, but not more jobs per dollar.
Indeed, if maximum employment were the goal of energy policy then having humans push turbines, a la Conan the Barbarian, would create far more jobs per kilowatt hour.
