Gov. Jennifer Granholm has been drinking the “green jobs” Kool-aid, recently announcing that she is creating an energy department and naming an energy czar to pursue “alternative” energy and “create thousands of jobs.” Yet in these times of economic distress, the governor’s priorities are misplaced.
Environmental protection comes at a price—after all, someone has to pay to keep air and water clean. However, politicians like Granholm claim that clever government policies can result in environmental protections that simultaneously grow the economy.
If something sounds too good to be true, it is. Environmental protection still comes at a price, and Granholm’s green jobs initiative threatens Michigan’s ailing economy.
The governor claims that “progressive policies that encourage renewable energy development” would boost Michigan’s green economy. And she’s partly right: Regulations that force green energy on consumers and producers would boost business for politically favored alternative energy companies, such as manufacturers of wind turbines and solar panels. Increased demand, in turn, would create jobs at these green companies.
But at the same time, businesses that supply or use large amounts of conventional energy—such as traditional manufacturers—would face decreased demand for their products and would therefore lose employees. Indeed, more jobs would be lost at these firms than would be “created” at the environmentally correct ones. Granholm’s “progressive” energy policy might create a net gain for Michigan’s green economic sector, but it would create a net loss for the economy.
Granholm promises that Michigan will “celebrate job announcements,” if it “continues to provide workers with the training they need” in environmentally friendly services. Again, she is partly right: Government can create green jobs by spending taxpayer money on training people to install light bulbs and solar panels so that consumers can meet energy efficiency regulations.
What the governor really wants is for the state government to pick winners and losers in Michigan’s energy market. This will not yield efficient outcomes. Taxpayer money spent on creating “green jobs” comes out of the market economy, which otherwise would have allocated those resources more efficiently to produce goods and services that consumers actually want. Government pushing “green” goods and services on consumers carries a direct cost, which can be measured in taxpayer dollars, as well as an indirect cost, in forgone economic productivity.
Finally, Granholm argues that Michigan must “expand the funding available for research and development” in environmentally friendly energy technologies in order to capitalize on the green economic revolution.
Again, she is mistaken, because government has never been good at choosing the most promising emerging technologies. Government is run by bureaucrats and regulators, not venture capitalists. That’s why the federal government has wasted so much money in the past on failed energy initiatives, like hydrogen fuel cells and synfuels.
Rather than produce a clean energy technology breakthrough, Granholm’s clean energy initiative is more likely to become a pork barrel fund for Michigan legislators to have at their disposal to reward constituent schools and companies.
William Yeatman is an energy policy analyst at the Competitive Enterprise Institute, a free-market research center in Washington, D.C.
11/11/08 William Yeatman