Green Jobs Campaign Is Nonsense Anyway

September 7, 2009

The entire flap over White House green jobs “czar” Van Jones is a political one, but there is the more important economic question of why there is such an emphasis on “green jobs” in the first place.

“Green jobs” are not a benefit from fighting climate change; they are actually a cost. If it takes 20 people to produce a given amount of energy in a green manner whereas it took only 2 people to produce a given amount of energy in a dirty manner, society is worse off, not better off (if you ignore the benefits to the environment).

The benefits to the environment is the real issue here, not some shuffling of jobs between “dirty” and “clean” industries. If global warming is truly a problem and there is a link between it and carbon emissions, then a carbon tax or a well-designed cap-and-trade system should be implemented to improve societal well-being. Otherwise, such policies would make society worse off even if jobs labeled green were created as substitutes for dirty jobs.

Green jobs are merely a means that self-interested economic actors would use as an input in maximizing their well-being subject to some new constraint (i.e. environmental policy) imposed by government. In other words, under a well-designed cap-and-trade policy or a carbon tax, profit-maximizing firms would be induced to produce products in a way that would impose a smaller carbon footprint (and in the process create “green jobs”).

Finally, some critics of cap-and-trade or carbon taxes argue that such a tax would decrease economic well-being. But that’s not the case if there is truly the negative externality from carbon emissions. That’s because the social costs of the current equilibrium exceed the private costs, and if a cap-and-trade system were well-designed or a pure carbon tax were imposed at the correct level, social welfare (broadly defined) would increase. It would not decrease despite what loss in GDP or jobs statistics are thrown out there.

The relevant issue is not jobs numbers (whether they come from supporters or critics of environmental policies). From a public interest perspective, it can be summed up in two general questions: (1) What are the external costs of carbon emissions imposed on society? (2) Can the U.S. government be trusted to improve social well-being (on net) given both the “global” free-riding problem and the problem with administrative costs?



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