From: Professor Mark J. Perry's Blog for Economics and Finance
Matt Ridley masterfully applies Bastiat's "broken-window fallacy" to green energy jobs, writing last December in City AM, a UK financial newspaper:
"When
is a job not a job? Answer: when it is a green job. Jobs in an
industry that raises the price of energy effectively destroy jobs
elsewhere; jobs in an industry that cuts the cost of energy create extra
jobs elsewhere.
The
entire argument for green jobs is a version of Frederic Bastiat’s
broken-window fallacy. The great nineteenth century French economist
pointed out that breaking a window may provide work for the glazier, but
takes work from the tailor, because the window owner has to postpone
ordering a new suit because he has to pay for the window.
You
will hear claims from Chris Huhne, the U.K.'s anti-energy secretary [he
was recently forced to resign and faces criminal charges], and the
green-greed brigade that trousers his subsidies for their wind and
solar farms, about how many jobs they are creating in renewable energy.
But since every one of these jobs is subsidized by higher electricity
bills and extra taxes, the creation of those jobs is a cost to the rest
of us. The anti-carbon and renewable agenda is not only killing jobs by
closing steel mills, aluminium smelters and power stations, but
preventing the creation of new jobs at hairdressers, restaurants and
electricians by putting up their costs and taking money from their
customers’ pockets.
Contrast
that with news from the United States that, according to a report from
IHS Global Insight, the cheap shale gas revolution now in full flow
has created 148,000 jobs directly within the gas industry and – by
making energy cheaper – has created at least another 450,000 jobs
elsewhere in the economy. By 2015, the total impact of shale gas will be
870,000 new jobs, says the report.
Back
in 1800, Britain was becoming the richest country in the world with
the fastest economic growth and the fastest job creation – the China of
its day. That was not because we had suddenly become cleverer than
everybody else at inventing things. It was because we had stumbled upon
limitless, dense and above all cheap energy in the form of coal, and
harnessed it to mechanize industry, cheaply amplifying the labor
productivity of each person so much that he could be paid high wages.
That
lesson – that cheap energy is an employment multiplier, while costly
energy is an employment divider – has been forgotten. Please let us
recall it before the green jobs myth causes more unemployment."
HT: Warren Smith
