Green workersThe phrase “green jobs” started as a kind of sloganized shorthand for a broader argument about clean technology as a source of economic growth and competitiveness in the 21st century. For some reason, it ended up being taken far too literally by both advocates and detractors, leading to a series of bean-counting skirmishes that cast more heat than light.

I’ve generally not gotten involved, but I confess I am weary of posts like this one from Stephen Gordon in The Globe and Mail that presume to lecture greens as though they are slow-witted children. If you will indulge me in some nitpicking.

First, this:

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.

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Ya think? This is a rather bloodless way of acknowledging 30 years of aggressive right-wing propaganda behind the notion that any and all environmental policy amounts to a net loss for economic growth. If anyone is “overselling” their case, it’s conservatives and industry — they’ve been consistently wrong for decades! And they remain wrong today. Perhaps they’ve earned a few lectures.

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Then this:

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.

Economists are always saying this, but it never gets any less baffling. It evinces a disdain for political economies so thoroughgoing I have to assume it’s a point of pride in the profession. What exactly is the argument against co-benefits supposed to be, anyway? That clean, single-purpose policies are easier to model?

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This is not an academic exercise: The first goal of policy is to pass and become law. Otherwise the other goals don’t matter. If the job-creating — or at least non-job-destroying — features of a policy can make the difference between passage and failure, then there is a perfectly rational bias in favor of environmental policies that create jobs.

What about the health benefits of environmental policy? Gordon would doubtless say health benefits should not be a goal of environmental policy. Perhaps he’d also say that environmental remediation shouldn’t be a goal of health policy. But why on earth not? If we face a choice between two environmental policies, and one does more for health, why not prefer it, even if, theoretically, it creates less environmental value? The idea that policymaking should be cleanly issue-siloed is just a bean counter’s fantasy. In the real world, policymakers are always and everywhere under intense pressure, with limited time and resources, desperate to satisfice, not optimize. A policy that balances environmental, health, and job benefits is a practical strength, not an analytic error.

Then out comes the old chestnut, Bastiat’s parable of the broken window, otherwise known as the broken-window fallacy. Every economist who writes one of these articles poo-pooing green jobs is convinced he’s the first to share this bit of wisdom with environmentalists.

The idea is that it wouldn’t be a good idea to break windows just to create window-repairing jobs. You’d be destroying value to create value and the result would be a wash. Gordon says renewable energy jobs are the same thing:

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.

Golly, Mr. Gordon, you mean “more jobs per kilowatt hour” implies “lower labor productivity”? Shucks, I bet none of the dozens of economists who have written about this ever thought of that!

There are two flaws in the broken-windows critique.

First, breaking windows will not create economic growth in a full-employment economy. In those circumstances, any resources devoted to repairing windows are drawn from other productive uses, for no net gain. As it happens, though, we’re not in a full-employment economy. (It’s true. Look it up.) We’re in a recession, in which productive resources are sitting idle due to lack of demand. In that kind of economy, makework jobs engage resources not otherwise engaged and prompt an increase in total demand. Like ol’ Keynes said, in a demand recession, burying money in holes and paying people dig it up would be better than nothing.

Now, economists frequently seem to forget it, but environmental policy isn’t like breaking windows or burying money in holes. It’s not a pure economic drain. It actually creates social and health benefits, usually vastly in excess of its costs. But even if it were, it would be a bit of welcome economic stimulus during a recession. (Among the few economists who analyze green policy with the actual state of the economy in mind, see Trevor Houser on cap-and-trade and Josh Bivens on EPA mercury regulations.)

Second, there’s more to an energy economy than the present-day “jobs per kilowatt hour.” If that’s our metric, we’d keep all our resources in mature industries like coal mining in West Virginia. Lots of coal and very few jobs, woo!

In actual fact, all countries do, and should, invest in fledgling industries that are not yet as efficient as mature industries. (As economist Dani Rodrik says, industrial policy has been out of favor in neoliberal circles, but it never really went away in practice.) Labor productivity is naturally lower in upcoming industries, the ones challenging the status quo. It takes time and economies of scale to wring the most out of every unit of work. But by the same token, upcoming industries generate technological innovation and economic growth. Only a bean counter would say we should invest public resources purely on the basis of labor productivity. In fact, healthy nations invest in their future, in R&D and infrastructure and competitive industries. (For more on this, read about the rationale behind Germany’s renewable energy law.)

Yes, jobs are “a cost” in pure productivity terms, but it is in the nature of wise investing to accept temporary costs in the name of lasting gains. Here’s
the pitch greens are making: We will invest lots of money in renewables. There will be a ton of new jobs created, thanks to low initial labor productivity. As the industry scales up and becomes more efficient in coming decades, the industry job count will eventually peak and decline. In the meantime, we will have generated a flurry of innovation and established a foothold in global markets that are likely to expand as far as the eye can see. Getting from here to there will be good for everyone!

And then we’ll need some new source of innovation and growth. No one is pretending the job surge will last forever. But it’s been a long time since the U.S. economy had any source of growth beyond housing and financial bubbles. It would be nice to invest in something real again.

Gordon says, like a catechism, that environmental policy “involves diverting productive resources away from alternative uses,” so environmental advocates are only allowed to talk about environmental benefits. But with all due respect to Mr. Gordon: no thanks. I’m not an environmental advocate or a jobs advocate or a health advocate but an advocate for human wellbeing and sustainable prosperity. Building a clean economy is about the clean part, but it’s also about the building part. It’s an enormous undertaking, possibly the biggest thing human beings have ever tried to do collectively, and whatever else you might say about it, it won’t lack for work! There will be plenty of jobs. There’s no sense suppressing that important message just because it makes economists grumpy.