Green Job Destruction: The Spain Study (Netting to negative via government)
As many of us have argued for some time, simple economic theory suggests that the government’s push to create “green jobs” will ultimately kill more jobs on net. While the theoretical argument is fully compelling, however, it’s nice to have hard data to show people that this particular theory plays out in reality.
That’s why this study, from the Universidad Rey Juan Carlos in Spain should be kept handy (the report is in English).
After examining Spain’s experience with an aggressive wind-power program, the researchers concluded:
1. As President Obama correctly remarked, Spain provides a reference for the establishment of government aid to renewable energy. No other country has given such broad support to the construction and production of electricity through renewable sources. The arguments for Spain’s and Europe’s “green jobs” schemes are the same arguments now made in the U.S., principally that massive public support would produce large numbers of green jobs. The question that this paper answers is “at what price?”
2. Optimistically treating European Commission partially funded data, we find that for every renewable energy job that the State manages to finance, the Spanish experience cited by President Obama as a model reveals with high confidence, by two different methods, that the U.S. should expect a loss of at least 2.2 jobs on average, or about 9 jobs lost for every 4 created, to which we have to add those jobs that non-subsidized investments with the same resources would have created.
3. Therefore, while it is not possible to directly translate Spain’s experience with exactitude to claim that the U.S. could lose at least 6.6 million to 11 million jobs, as a direct consequence were it to actually create 3 to 5 million “green jobs” as promised (in addition to the jobs lost due to the opportunity cost of private capital employed in renewable energy), the study clearly reveals a tendency that means the U.S. should expect such an outcome.
The study has other fascinating facts, including the cost of creating a green job (571,000 Euros each!), and how many jobs are lost in the economy as a result of putting on more renewable power.
Donald Hertzmark at MasterResource, putting the pencil to government-side costs as well as private costs, and evaluating the Spain study, concluded:
The arithmetic of green jobs is ineluctable and grim. For each utility worker who moves from conventional electricity generation to renewable generation, two jobs at a similar rate of pay must be foregone elsewhere in the economy, otherwise the funds to pay for the excess costs of renewable generation cannot be provided. Moreover, by raising costs throughout the economy, high cost green energy will reduce the competitiveness of US exporters, thereby destroying (presumably well-paying) jobs in such industries.
Basically, those of us who have been arguing against the “Green Job” and wind-power boondoggles have, if anything, understated how absolutely dreadful these ideas are!