The mirage of “green jobs”

Barack Obama promised that his cap-and-trade energy policies would fund an explosion of “green jobs” as government pushes for mass-production-capable alternative energy sources.  Spain used to think the same thing, but Bloomberg reports that the explosion turned into an implosion (via Barcepundit):

Subsidizing renewable energy in the U.S. may destroy two jobs for every one created if Spain’s experience with windmills and solar farms is any guide.

For every new position that depends on energy price supports, at least 2.2 jobs in other industries will disappear, according to a study from King Juan Carlos University in Madrid.

U.S. President Barack Obama’s 2010 budget proposal contains about $20 billion in tax incentives for clean-energy programs. In Spain, where wind turbines provided 11 percent of power demand last year, generators earn rates as much as 11 times more for renewable energy compared with burning fossil fuels.

Spain wound up paying $775,000 for every green job they created through subsidies since 2000.  That’s almost $100,000 per year per job, and that cost only includes the created jobs.  The cost of the 2.2 jobs lost would hike that cost considerably, as well as the lost tax revenues, the increased government assistance, and the opportunity costs for pulling capital out of the markets.

Why did the jobs disappear?  In part because of the higher capital confiscation of the government, and in part because the green policies pushed industry out of Spain.  Actually, the study didn’t count jobs lost through “industrial relocation”, which in this case amounts to capital flight.  The largest stainless-steel producer in Spain directly linked its decision to move operations to South America to the higher energy costs imposed by the government.

In the US, we could see a massive flight, and not just in manufacturing.  High-tech industries that rely on cheap energy could be forced to find less expensive environments.  Bloomberg’s economist notes that Microsoft and Google have already relocated their servers once to get cheaper energy.  The Internet is flexible enough to allow employers to go almost anywhere in the world to host their servers, and in this economy, there will be plenty of competition for them.

Before we buy into the “green jobs” argument, we’d better make sure existing jobs don’t disappear into a wormhole at a faster rate.

Update: I forgot to hat-tip Barcepundit.  My apologies — I thought I had included his link originally.  Be sure to visit his site for his thoughts.

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