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May 21st, 2022

Insight

We need green energy. We don't need green jobs

Tyler Cowen

By Tyler Cowen Bloomberg View

Published April 19, 2021

One of the most disturbing trends in recent economic thought is the view that green energy should be viewed as a source of good jobs. Such attitudes are bad for our polity and for our economy.

To be clear, the need for greener energy policies is imperative. Honest observers may disagree about the best paths forward, but a simple example illustrates the point about jobs.

Let's say America's energy supply was composed primarily of solar, wind, hydroelectric and nuclear power, mostly automated with a few workers for oversight and a dog to guard the factory gate.

That would be close to ideal, even if it involved fewer jobs on net than the current energy infrastructure. Ideally, we should be striving for an energy network that hardly provides any jobs at all. That would be a sign that we truly have produced affordable and indeed very cheap alternatives to energy produced by fossil fuels.

The biggest obstacle to green energy is not that American voters love pollution and carbon emissions, but rather people do not wish to pay more for their gasoline and their home heating bills. If we insist that green energy create a lot of good jobs, in essence we are insisting that it have high labor costs, and thus we are producing a version of it that will meet consumer and also voter resistance.

The issue of cost is all the more urgent because climate change is a global problem, not just a national one. We could make North America entirely green, but climate change would proceed apace, due to carbon emissions from other countries, most of all China and eventually India.

So what we need to produce are very cheap renewable technologies, ones so cheap that the poorer countries of the world will adopt them as well. If we insist on packing a lot of labor costs ("good jobs") into our energy technologies, we will not come close to achieving that end.

I was disappointed and unnerved by recent comments from Brian Deese, President Joe Biden's top economic adviser, who in the context of climate change remarked that "… investing in infrastructure can be one of the most effective ways to do that in a way that creates lots of jobs." The correct Econ 101 answer, of course, is that a low-jobs energy infrastructure liberates labor to produce other goods and services for us, leading to higher overall output.

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One argument, indeed the major riposte, may be that green energy policy has to be associated with new jobs for it to stand a political chance.

First, we do not know if this is true. Electric cars appear set to take over American vehicular transportation over the next 10 to 15 years, and with very favorable results for climate change. That is likely to happen even though they will likely eliminate many thousands of jobs in the current automobile supply chain. So it could well be that the mix of government support for R&D, combined with a tolerable climate for innovation, are what will account for green energy progress, not the promise of new jobs.

Second, as already noted, politically feasible alternative energy probably has to be cheap. Many of the most important technologies appear to be not very labor-intensive by their very nature. You don't need workers out there, egging on the sun to shine more brightly. Installing solar panels is likely to be labor-intensive, but once they are up and running, the sector will be letting nature do most of the work.


Third, economists should speak the truth about jobs and green energy, even if politicians will not. There are plenty of people in politics, probably too many, worrying about what is going to be popular with voters. Economists do not typically have expertise in that area, but even if they understand that matter well, their voices are needed elsewhere, namely to identify what makes the best economic sense. If professional economists do not speak up for that, then exactly who will?

I was thus disappointed when Paul Krugman endorsed "making climate policy about job creation not just a carbon price." Such policies remind me of the "make-work" fallacy, namely the view that the deliberate creation of domestic jobs (for instance through tariffs) will lead to a better economy, a view he dismantled so convincingly in his 1997 book "Pop Internationalism." More accurately, we will wind up with more good jobs in total if we seek to lower green energy prices, not raise them.

Let us hope that Democratic economists do not continue down that same slippery path, for at the end of that road lies a tattered American economy that hardly anyone will speak up for, with climate change problems still up and running apace.

(COMMENT, BELOW)

Cowen is a Bloomberg View columnist. He is a professor of economics at George Mason University and writes for the blog Marginal Revolution. His books include "The Complacent Class: The Self-Defeating Quest for the American Dream."

Previously:
04/14/21 Libertarianism isn't dead. It's just reinventing itself
04/05/21 What does the world need? More humans
02/10/21 If Biden goes big now, he may have to go small later
01/12/21 Covid improved how the world does science
12/07/20 How to make sure your complaint is heard
10/27/20 It's getting better and worse at the same time
09/14/20 How to be happy during a pandemic
09/04/20 Trump is winning the vaccine debate with public health experts
07/01/20 Why Americans are having an emotional reaction to masks
05/20/20 Covid-19 will expose the ghosts in the U.S. economy
05/07/20 Are aliens visiting us? US military seems to think so
05/06/20 America's reopening will depend on one thing --- trust
04/22/20 How the covid-19 recession is like World War II
04/15/20 America is returning to 1781
04/08/20 Covid-19 is is upending everything for status seekers
03/17/20 The coronavirus will usher in a new era of entertainment
01/28/20 Social Security isn't doomed for younger generations
01/08/20 Why 2020 is harder to predict than 2019 was
12/02/19 Equality is a mediocre goal so aim for progress
11/25/19 Inflation inequality creates winners and losers
11/09/19 OK kids. This boomer has had enough
10/20/19 Would you bet against Trump in 2020?
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09/24/19 Harvard's legacies are nothing to be proud of
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