Economics 101 vs. “Green Jobs”

"The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups."- Henry Hazlitt, "The Lesson," Economics in One Lesson (1946).

"The lesson" of Henry Hazlitt's 1946 classic, Economics in One Lesson (one million copies sold in 12 languages--and sales still going strong), is that scarce means toward competing ends create an opportunity cost for each course of action. In other words, resources spent here are resources that are not spent there. And since government does not create but redistributes resources, a government-created job must come at the expense of other economic activity. "Either immediately or ultimately every dollar of government spending must be raised through a dollar of taxation," Hazlitt explains. "Once we look at the matter in this way, the supposed miracles of government spending will appear in another light."

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The aphorism"there is no such thing as a free lunch," often attributed to Milton Friedman (though he did not coin it), makes this same point. Someone is paying for that lunch, even if it is the restaurant itself offering a teaser or a comp. Not dissimilar is the saying: money doesn't grow on trees.

Half-Truth Economics: Caveat Emptor

Half-truth economics occurs when a visible outcome is trumpeted but a secondary, less visible (or invisible) effect is ignored. It occurs when one says that he is $500 richer because he moved that amount from savings to checking. Enter so-called green jobs, which are advertised by the Obama Administration and other supporters as adding to the total number of jobs. Hazlitt exposes the underlying fallacy: They are speaking only of the immediate effect of a proposed policy or its effect upon a single group. As far as they go they may often be right. In these cases the answer consists in showing that the proposed policy would also have longer and less desirable effects, or that it could benefit one group only at the expense of all other groups. The answer consists in supplementing and correcting the half-truth with the other half. Hazlitt noticed the wider fallacy, the stock-and-trade of Keynesian economics,which is the something-for-nothing mentality: Everything we get, outside of the free gifts of nature, must in some way be paid for. The world is full of so-called economists who in turn are full of schemes for getting something for nothing. They tell us that the government can spend and spend without taxing at all; that it can continue to pile up debt without ever paying it off, because "we owe it to ourselves".

The Political Winners--at Our Expense

In the government-subsidy game, some benefit at the expense of others. The political "some," with concentrated benefits, will work to justify eating at the public trough. Stated Hazlitt a half century before the term "green jobs" was born: The group that would benefit by such policies, having such a direct interest in them, will argue for them plausibly and persistently. It will hire the best buyable minds to devote their whole time to presenting its case. And it will finally either convince the general public that its case is sound, or so befuddle it that clear thinking on the subject becomes next to impossible. Think American Wind Energy Association, Solar Energy Industries Association, and Renewable Fuels Association. And regarding a specific project, think Solyndra.

Conclusion

It would be far more honest for green-job supporters to say that they are not increasing overall employment but just creating what in their minds are "right" jobs in the place of "wrong" ones. That would replace a half-truth with a fuller truth. But are so-called green energy jobs really right when consumers continually chose oil, gas, and coal? This issue is a separate one, but its answer cements the case against government picking energy winners and losers in a free society.