Schwartz’ renewable energy policies – magic bullet?
October 19, 2010
I attended the debate between state Sen. Gail Schwartz and Bob Rankin at which Gail was continually asked to support her assertion that her policies are “growing clean tech jobs” in Colorado. After all, if it were so easy for the government to create jobs, wouldn’t the $862 billion stimulus be working by now?
Apart from mentioning tax credits/exemptions, Gail offered little specificity. She exhaled catch phrases like “invest in renewable energy,” “increase new clean jobs” and “grow our green economy” but without any details on how.
If only we could rely on these “magic bullets.” The policy panaceas of politicians sound so wonderful yet rarely consider unintended adverse consequences. Ultimately, these policies, however well intended or politically successful, end up hurting those they are meant to help. High minimum wages create unemployment, easy access to welfare promotes dependency, bailouts lead to moral hazards (which lead to more bailouts). Government-stimulated loans to low-income home buyers helped precipitate the current economic crisis.
Similarly, government policies to promote renewable energy, while potentially supportable on environmental grounds, have no merit from an economic point of view, and Gail should not assert them. Gail needs to learn the lessons of Germany, Spain and even California, which have pursued the same policies she trumpets. Yet, three different studies by respected think tanks conclude that government promotion of renewable energy has not achieved the stated goals of job creation, technological innovation or carbon footprint reduction. In Europe, they’re backing away from these economically destructive policies.
The Universidad Rey Juan Carlos 2009 study of Spain’s renewable energy policies concludes that the opportunity costs of public investment in renewable energy were unacceptably high, resulting not just in significant numbers of jobs destroyed or never created, but in unsustainable bubbles in the renewable sector. Since 2000, each “green job” cost $920,000 to create and “resulted in the destruction of 2.2 jobs elsewhere in the economy.” The report states that “these costs are inherent in schemes to promote renewable energy sources” and that the only way for the “renewables” sector to be viable is through continued government subsidies requiring the equivalent of a 4 to 7 percent tax, depending on whether it’s an individual or a business.
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To paraphrase Margaret Thatcher, the problem with these kinds of government policies is that “eventually you run out of other people’s money.”
If our elected representatives don’t think ahead, then as voters, we must do it for them. Sen. Schwartz, however beautiful the strategy, it’s important to occasionally look at the facts.