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'Green' jobs: Shrewd PR, bad economics

A common feature of many environmental programs is the idea of “green jobs”: the employment opportunities generated by a given set of proposals are presented as an additional benefit of the policy agenda. This is also a common mistake.

This emphasis on green jobs may simply be a reasonable response to concerns about the employment effects of environmental policy. The net employment effects of most economic policy initiatives will be roughly zero: jobs lost in one sector will be made up in another. (See also this previous Economy Lab post and this one.) If people’s attention is focused on the job destruction aspect of an environmental agenda, then it makes sense to direct attention to the new jobs that will also be part of the adjustment process.

But it is possible to oversell the green jobs theme. Job creation should not be a goal of environmental policy, no more than it should be a policy goal in the fields of health or national security. If, instead of hiring people, we could use magic to stop disease, crime and environmental degradation, we would. Pointing to jobs ‘created’ to fix these problems is an error that Frédéric Bastiat identified in his ‘parable of the broken window’. Broken windows generate work for glaziers, but that doesn’t mean that breaking windows will increase national income.

An often-quoted statistic goes something like this: “wind energy produces 27 per cent more jobs per kilowatt hour than coal plants and 66 per cent more jobs than natural gas plants”. This could well be true, but it is hardly a strong argument in favour of the employment opportunities that would be generated by investing in wind energy: hiring more people to produce less energy is not a strategy for prosperity. Similar gains in employment could be obtained by outlawing mechanical excavators so that all digging must be done by hand. It may make sense to encourage the development of wind power, but increased employment is most emphatically not one of the reasons for doing so.

The goal of environmental policy is to address environmental problems; doing so involves diverting productive resources away from alternative uses. When it comes to policy evaluation, jobs are costs. Portraying “green jobs” as a benefit of an environmental policy may be a shrewd communications strategy, but it is bad economics.