The intellectual bankruptcy of conservatism: Heritage even opposes energy efficiency
Conservative think tanks remain oblivious and impervious to the facts. They cling to global warming denial and delay even in the face of the remarkable advances both in scientific understanding about global warming and in clean technology solutions. They provide the foundational misanalysis (disanalysis?) for the entire conservative movement — although “movement” must be the wrong word for immovable ideologues who oppose any motion whatsoever on the central problems facing the nation and the planet.
We have seen that the Cato Institute remains intellectually bankrupt on both the urgency of the climate problem and the availability of cost-effective solutions. The Competitive Enterprise Institute actually runs ad campaigns aimed at destroying the climate for centuries. Kenneth Green, resident scholar of the American Enterprise Institute, gave a recent speech betraying a willful ignorance of climate science and energy technology.
Now the grand-daddy of them all, the Heritage Foundation, reveals it is not aging gracefully. It launched an absurd website and an even more ridiculous video in a bizarre effort to fight the Supreme-Court mandated effort to reduce global warming pollution.
Not content to merely oppose vital greenhouse gas regulation, Heritage recently published a rant and an analytical screed against even the idea of investing in clean technology as a dual strategy to help get us out of this economic mess while jumpstarting the national effort to avoid catastrophic global warming. First, Heritage blogger Nick Loris responded to the U.N.’s Green Economy Initiative and the Center for American Progress’s Green Recovery program with this absurd rant comparing those strategies to what the Nazis and Soviets did:
The United Nations is proposing an environmental ‘New Deal’ that would “be similar to Franklin D Roosevelt’s New Deal which helped the US recover from the Great Depression of the 1930s.”
First, the reality is that FDR’s New Deal did not help the U.S. recover from the Great Depression but simply made things worse. Second, the only thing a green ‘New Deal’ will do is lead us down a Green Road to Serfdom. (Nobel Laureate Friedrich Hayek’s The Road to Serfdom is a telling portrayal of what collectivism in the Soviet Union and Nazi Germany can lead to: impoverishment and oppression of freedom.)
The Wonk Room debunked this hysterical and a historical nonsense, then went on to note:
Loris’s charge of Nazi-Soviet “collectivism” is utterly bizarre. The U.N.’s Green Economic Initiative is a mainstream capitalist effort, with research overseen by Pavan Sukdhev, a top investment banker and self-described “total capitalist.” Its press release celebrates venture capital firm Kleiner Perkins, public-private partnerships, and growth of international markets. CAP’s Green Recovery program primarily uses tax credits and federal loans to spur private investment, as well as investment in a 21st-century public infrastructure.
Finally, David Kreutzer, Senior Policy Analyst in Energy Economics and Climate Change, published a truly bizarre disanalysis that conflates greenhouse gas regulations with a green recovery or green economic stimulus, “Impact of CO2 Restrictions on Employment and Income: Green Jobs or Gone Jobs?” Let me review it in detail. He begins:
The clear political failure of the Lieberman-Warner bill last spring shows that support for global-warming legislation wanes considerably when the extraordinary costs are compared to the almost insignificant benefits.
The failure of L-W shows 1) it is very hard to get serious bargaining on a climate bill that everybody knows is going nowhere in Congress and would in any case be vetoed by the President, and 2) conservatives won’t ever support a serious global warming bill until Miami is underwater, if then.
In response, those pushing restrictions on carbon dioxide (CO2) have tried to repackage global-warming legislation as jobs bills.
This is where reality hangs a left turn, and Heritage veers sharp right. I don’t know anybody “repackaging” global warming legislation as jobs bills. I do know people, including the Center for American Progress, pushing a green recovery or stimulus bill prior to enactment of global warming legislation.
As appealing as the repackaging seems on the surface (lots of high-paid, high-tech workers in lab coats), the support for these claims collapses once it is examined. A little thought experiment helps give perspective.
Again, there’s been no repackaging. The advocates for L-W always understood that pushing clean energy would create a high tech jobs, but the green recovery bills currently being discussed are completely different than carbon restrictions. Heck, even Heritage blogger Loris understands that distinction.
Suppose Jones used 1,000 kilowatt-hours (kW-h) when the price of electricity was $0.10 per kW-h. He spent $100 on electricity (1,000 kW-h x $0.10 = $100). Now suppose the price rises to $0.15 per kW-h. Responding to the higher price, Jones cuts his electricity consumption to 700 kW-h. How much better off is Jones with the higher price? Most would say, since he is now spending $105 for less electricity (700 kW-h x $0.15 = $105), he is worse off.
Truly bizarre. First off, the green jobs bills don’t even raise carbon prices — so they don’t lead to higher electricity prices, only lower electricity bills. Second, even if we were talking about a combination of CO2 restrictions and a green jobs bill, it is only conservative think tanks, who oppose aggressive efforts to push energy efficiency, that posit Jones acts only because he is “responding to the higher price.” In fact, wherever the government embraces smart utility regulations and incentives that finally put efficiency on a level playing field with increased supply, people invariably embracing energy-saving strategies.
However, those promoting restrictions on CO2 turn economics, logic, and math upside down. In their world, the answer is: Jones consumes 300 kW-h less and, at $0.15 per kW-h, he saves $45 (300 kW-h x $0.15 = $45). Then he spends this “extra” money and creates jobs.
Uhh, no. Those promoting restrictions on CO2 coupled with smart energy policies believe that Jones and his utility make use of a variety of high-tech and low-tech energy-saving strategies with a demonstrated net cost of $0.02 to $0.03 per kW-h. Thus some of Jones’ money goes to employ people who make energy-efficient appliances, some of it goes to people who insulate homes, and some of it goes into Jones’ pocket, which he spends. All those things create jobs.
Everybody else correctly thinks that since Jones now spends $105 for 30 percent less electricity, he is $5 poorer and has to get by with less energy. He has less to spend, not more. Thus there will be less employment, not more. This is especially true since one of the ways Jones cuts energy consumption is to use more expensive energy-conserving products, making his loss greater than $5.
Yes, I know that in neoclassical economics beloved of people like Kreutzer, it is not possible that Jones or anyone else could be wasting electricity, so any reduction in electricity is inherently an economic “cost.” On the other hand, the beliefs of people like Kreutzer have destroyed the US financial and credit system so much that even uber-neoclassicist Alan Greenspan was forced to admit that his anti-regulatory theory of the economy was wrong. We just can’t afford to wait until the climate is destroyed irreversibly for Heritage, Cato, CEI, and AEI scholars to admit that maybe their anti-regulatory theories are wrong too.
Now Kreutzer begins his wacky attack on energy-saving products that rapidly pay for themselves. I guess it is safe to say that he lives in a home without efficient lightbulbs, without insulation, without Energy Star products, and that he pretty much leaves the lights on, the doors and windows open, and the hot water running 24/7 since any effort whatsoever to save energy would obviously be an economic loss.
The topsy-turvy, we-save-with-higher-prices way of thinking undergirds a recent well-publicized University of California study that claims restricting access to energy creates more income and more employment. The study notes that per capita electricity use in California is 40 percent less than the national average and attributes this reduction to efficiencies brought on by state policies.
No, that isn’t what the study claims. The state never restricted access to energy. No credible, independent analyst would ever make such a claim. The study shows that a systematic multi-decade effort to promote “innovative energy efficiency policies created 1.5 million additional full-time jobs with a total payroll of over $45 billion.”
But Californians pay 36 percent more for their electricity, have watched manufacturing’s share of state output drop by 15 percent since 1980, need less electricity for heating and cooling than the rest of the nation, live in smaller houses than the national average, and pay billions of dollars to generate electricity using inefficient alternatives.
Kreutzer jumps the shark here. First off, the entire country has seen manufacturing’s share of output drop since 1980. California not only isn’t special in this regard, but the state has famously launched both the information technology and Internet revolutions, which are equally famous for requiring electricity-intensive manufacturing, massive amounts of computers, and large data centers — all of which overpopulate the state. Second, yes, Californians do pay more for their electricity — not because they use inefficient alternatives but because they demand a cleaner grid. The state’s electricity has half the carbon dioxide emissions per kilowatt hour of the U.S. grid and much lower emissions of the criteria air pollutants. Unlike Heritage economists, Californians recognize the value of improved health and reduced pollution.
I would note that the primary citation Kreutzer offers for most of the false or misleading claims in this paragraph is a study by the Competitive Enterprise Institute, an organization even more extreme than Heritage in its ideologically blinkered pursuit of the planet’s destruction. No serious independent energy or environmental analyst would ever cite a CEI analysis, except to mock it. This citation, by itself, pretty much invalidates Kreutzer’s entire analysis.
The 40 percent cut in per capita energy use is not free “efficiency,” but it is treated as such. And it is projected to get 1 percent more “efficient” every year without cost. The job creation in this study is as fallacious as the reasoning on which it is based. But the silliness does not end there.
No and No. Because California has a three-decade history of successfully advancing energy efficiency, the California Energy Commission has perhaps the best data in the country on the effectiveness of efficiency programs. The programs aren’t “free” or “without cost,” but they are five times cheaper than new generation. Indeed, efficiency costs far less than electricity prices in every state in the country.
Another much-publicized study, done for the Center for American Progress, makes an even more fundamental error. The authors of this study fall prey to the classic “broken windows” fallacy whereby spending money creates jobs as the expenditure multiplies throughout the economy. The fallacy comes from ignoring the equally large destruction of jobs (actually larger because of something called “deadweight loss”) from taxing the $100 billion, which eliminates a similar cascade of job creation elsewhere.
Not even close. First off, why don’t we ever see an analysis from Heritage on the devastating job impacts of, say, Bush spending $10 billion a month on the Iraq war. Oh wait. I know. Because Bush isn’t paying for any of that spending. So until we see such budgetary analysis from Heritage, I think we can safely ignore their disingenuous and hypocritical criticisms of much more modest spending to get us out of the massive economic hole that the Bush administration and its Heritage-inspired policies have put us in.
Also, the CAP authors don’t ignore the deficit implications of a $100 billion stimulus, they merely point out that “as the economy remains in a slump, the primary problem is not the size of the federal deficit but how money is being spent [PDF].” And they convincingly argue that spending on a green recovery program creates more jobs than spending on household consumption — and four times as many jobs as spending on the oil industry. I would add that one of the primary purposes of the green recovery is to jumpstart the effort to end our addiction to foreign oil. Clearly, spending money on American-made technologies that reduce the multi-hundred billion dollar outflow of money from Americans to oil producing nations is a job-creating economic win-win.
I’m afraid it’s Kreutzer who has fallen prey to the classic “leaky windows” fallacy whereby spending money on energy-saving windows can’t in fact save anybody money because wasting energy must be economically optimal since conservative economic theory says it is.
A third, less-well-publicized study from the University of Tennessee is also based on the broken-windows fallacy. Here the authors calculate the jobs created by forcing renewable energy to 25 percent of total energy nationwide. But they neglect to account for the cost (and lost jobs) of the taxes needed so the government could subsidize all that inefficient energy.
Here Kreutzer 1) assumes that it must cost more to use renewables instead of examining the myriad government subsidies and regulations that have entrenched fossil fuels in our energy system, 2) ignores the health and environmental benefits of clean energy, 3) ignores the importance of reestablishing US dominance in the primary job creating industries of this century [see below], and 4) embraces an endless addiction to foreign oil and multi-trillion dollar trade deficits every decade until the wells run dry.
For Kreutzer and Heritage, the only “efficient” energy is mass consumption of dirty, depletable resources that are consumed by wasteful end-use devices, since, after all, the more energy you waste, the more you must spend, boosting GDP. Heck, in Kreutzer’s economic accounting method, pollution is a win-win for economic growth since it leads to more demands on our health care system — and ultimately to enormous spending on levees, water purification, relocating people from spreading deserts and rising seas, and on and on. Yes, the ever more desperate efforts of future generations to adapt to catastrophic global warming will be a big boon for infrastructure spending and the GDP.
In a recent study of the economic impacts of restricting CO2 emissions, researchers at the Center for Data Analysis at The Heritage Foundation did not find an increase in employment; to the contrary, such restrictions resulted in rather significant job losses. In some years, employment losses from the Lieberman-Warner restrictions would be 900,000 jobs. These job losses are net of any “green” jobs that are created.
Back to the inexplicable conflation of green recovery efforts with climate legislation. Gosh, who ever would have guessed that a Heritage Foundation analysis of climate legislation would only show job losses. If your economic models assume the economy is operating at optimal efficiency and they never account for the cost of pollution or for the learning curves from deployment of clean energy technologies, then all action on climate is doomed to harm the economy. If all you’ve got is a hammer, everything looks like your thumb.
Energy is a valuable input to the modern economy. Cutting CO2 makes less energy available, and when the impacts are traced through the economy, some jobs are created but more are lost. Counting only the jobs that are created distorts the analysis and invalidates the conclusions.
When all is said and done, restricting CO2 cuts energy, income, and jobs. Pretending that breaking windows creates employment may make choosing among alternatives easier, but it leads to bad policy.
Cutting carbon dioxide makes polluting energy less available. And when the net impacts to the economy are calculated, the benefits outweigh the cost according to objective, independent analyses by McKinsey & Co., the National Academy of Science, the International Energy Agency — and even the review of the economic literature by IPCC scientists that was signed off by every member government, including the Bush administration (see links below).
Pretending that leaky windows don’t exist — or worse, using economic models that say leaky windows boost economic growth by forcing overconsumption of polluting energy — may make Heritage feel better in arguing for inaction, but it leads to catastrophic policy.
Finally, although Heritage and its conservative allies continue to deny the reality of global warming, all the rational business and political leaders in the world understand we need to replace our polluting energy infrastructure with clean, efficient infrastructure over the next few decades. So the choice isn’t between action on climate and clean energy versus inaction, as Heritage posits. The choice is between action now and action later. Action now is not only cheaper, but it creates the real possibility that we will be a leader and exporter (not a follower and importer) in what is sure to be the largest job creating industry of the century — clean energy.