General Motors announced yesterday that it is closing 4 pickup truck and SUV factories as it tries to accommodate rising demand for smaller cars caused by $4/gallon gas. In fact, GM’s cost cutting measures demonstrate that “green jobs” are a crock.
GM is responding to high energy prices by altering its production schedule to make “greener” (ie, smaller, more fuel efficient) cars. GM might expand its small car plants, and thereby create green jobs (making more fuel efficient cars), but that is of little use to the 10,000 workers that lost their jobs at the big car plants. So for every “green” job created at a small car plant there is a “brown” job lost at a big car plant.
The same dynamic is at work with a cap and trade scheme, which is designed to make energy more expensive so that businesses are encouraged to make changes that reduce CO2 emissions. In turn, a green economic sector would grow to provide businesses with climate friendly technologies and services. But as the GM example shows, one man’s green job is another man’s pink slip.
The tradeoff between green jobs and brown jobs is known among economists as the “broken window fallacy.” At first glance, smashing a window might seem as though it adds to economic growth, because it results in the employment of a window repairman. But the proprietor of the window must pay for the damage, which comes out of his or her profits, so there is in fact no net gain to the economy.