The ‘green jobs’ fallacy
by Dan Hannan, Contributor | June 21,2021
Everyone is at it — Joe Biden, Boris Johnson, the G-7, the United Nations. All are in the business of “creating” green jobs. Johnson wants 250,000 of them, to be “created” by clean energy technologies. Biden promises no fewer than 10 million. Everything, I guess, is bigger in America.
Bigger still, though, is the logical flaw in their arguments. Indeed, it is so vast and so obvious that it is a wonder anyone takes them seriously. Do I really need to spell this out? Governments cannot “create” jobs — at least, not without destroying other jobs.
The state could, if it wanted, pay people to dig holes and fill them in again. But, to cover their wages, it would need to take the money from other people. Some of those people would have spent the cash on hiring others. All would have used it to buy things, thereby calling more jobs into existence. These jobs, not depending on state largesse but upon meeting spontaneous market demand, would have been more productive.
“There is only one difference between a bad economist and a good one,” wrote the great French economist Frederic Bastiat. “The bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.”
Bastiat illustrated his point by imagining the effects of smashing a shop window. The shopkeeper would have to pay a glazier to replace it. The glazier would then have extra money to buy a new pair of shoes, the cobbler would be better off, and so on. So why can’t a country make itself rich by hiring little boys to go around smashing shop windows? Because of the unseen costs. The shopkeeper would otherwise have had more money to invest in improving his shop, the glazier may have had to turn down another job, and so forth.
“Green jobs,” indeed, any jobs maintained by government intervention, necessarily work on the same principle. Each job is sustained with cash diverted from a more productive part of the economy. If this were not so, there would be no need for any legislation because investors would already be piling in.
Note that these costs are separate from the economic effects of more expensive energy. The fall in costs as we moved from candles through gas to electricity is arguably the single greatest factor in the increase of global living standards. As the science writer Matt Ridley puts it, “Energy is not just another sector of the economy, it is the thermodynamic lifeblood of prosperity.” Making people work longer hours to afford the same quantum of heat and light will leave them palpably poorer.
But let’s put all that to one side and concentrate on the basic fallacy of the green jobs argument. It is this: Jobs are not a benefit. They are a cost.
Suppose that instead of “creating” 10 million green jobs, we left it to the market to produce power as cheaply and efficiently as possible. Suppose that, in the absence of Biden’s regulations, a million people could generate the same amount of power from sources that have low labor requirements. Shale, for example, employs very few people once the initial drilling has been done. Can we all agree that it would be better for the economy if 1 million people generated the power, releasing the other 9 million to do other things?
But the idea that efficiencies raise living standards turns out to be very difficult to explain. When agriculture was being mechanized, our ancestors fretted that there would be mass unemployment. They did not foresee that, released from drudgery in the fields, farmhands would find better-paid jobs in factories. As Bastiat would put it, our ancestors confined themselves to the visible effect. When we moved from manufacturing to services, precisely the same fears were voiced. People did not see service-sector jobs as real or solid, and again, they worried about mass unemployment. Again, they were wrong. Released from the factories, people began to offer services that had never previously been imagined — as personal trainers, aromatherapists, and a million other things.
The story of human progress is the story of making more things with less labor. The easiest way to understand economic growth is that it means we can work shorter hours without any material loss. As stuff gets cheaper, we live better.
None of this is to say that we shouldn’t seek to mitigate climate change. It is perfectly reasonable to argue that we should spend money now to avoid greater costs, financial as well as environmental, later. But for heaven’s sake, let’s stop pretending, with fallacious ideas such as “green jobs” and the like, that taxation or regulation is a gain.
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