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Smashing Glass at the Power Plant


There may be good reasons to switch from existing energy sources to renewable. But President-elect Barack Obama's energy plans have significant costs. His energy promises rely on questionable science and even more questionable economics. Creating "green jobs" would kill other jobs.

We are to believe that replacing conventional energy sources (especially coal) with renewables (especially wind) will create 5 million new "green jobs." The hope is that armies of workers will be enlisted to build tens of thousands of windmills; to manufacture and deploy solar-power installations; to harvest, transport, and process huge amounts of biofuel feedstock; and to string the power lines that will allow the U.S. power grid to incorporate a major expansion of intermittent energy.

Unfortunately, the idea of government "job creation" is a classic example of the broken window fallacy, which was explained by French economist Frederic Bastiat way back in 1850. It is discouraging to think that nearly 160 years later, politicians still do not understand Bastiat's basic economic insight.

Now consider Obama's "green jobs" plan, which includes regulations, subsidies, and renewable-power mandates. The “broken windows” in this case would be lost jobs and lost capital in the coal, oil, gas, nuclear, and automobile industries. Currently, these industries directly employ more than 1 million people. Conventional power plants would be closed, and massive amounts of energy infrastructure would be dismantled. After breaking these windows, the Obama plan would then create new jobs in the renewable energy sector. The costs of replacing those windows would ultimately be passed on to taxpayers and energy consumers.

In short, the Obama plan reflects fallacious thinking of the first order. There may be sound reasons to switch from existing energy sources to renewables, including the need to slash greenhouse gas emissions, the need to reduce our dependence on Middle Eastern oil, and the need to meet growing energy demand. If Americans wish to pay for a wholesale transformation of the energy industry, that is their choice. But let us not lie about the costs, and let us not espouse an economic fallacy that is nearly 160 years old. Obama's "green jobs" plan would indeed create jobs, but it would do so by killing other jobs. Is that really the type of energy policy Americans want?

H/T: Coyote