The key is in creating cheap renewable expertise - GulfToday

The key is in creating cheap renewable expertise

Green Energy

An aerial view shows power-generating windmill turbines in a wind farm in Graincourt-les-Havrincourt, France. Reuters

Tyler Cowen, Tribune News Service

One of the most disturbing trends in recent economic thought is the view that green energy should be viewed as a source of good jobs. Such attitudes are bad for our polity and for our economy.

To be clear, the need for greener energy policies is imperative. Honest observers may disagree about the best paths forward, but a simple example illustrates the point about jobs.

Let’s say America’s energy supply was composed primarily of solar, wind, hydroelectric and nuclear power, mostly automated with a few workers for oversight and a dog to guard the factory gate.

That would be close to ideal, even if it involved fewer jobs on net than the current energy infrastructure. Ideally, we should be striving for an energy network that hardly provides any jobs at all. That would be a sign that we truly have produced affordable and indeed very cheap alternatives to energy produced by fossil fuels.

The biggest obstacle to green energy is not that American voters love pollution and carbon emissions, but rather people do not wish to pay more for their gasoline and their home heating bills. If we insist that green energy create a lot of good jobs, in essence we are insisting that it have high labour costs, and thus we are producing a version of it that will meet consumer and also voter resistance.

The issue of cost is all the more urgent because climate change is a global problem, not just a national one. We could make North America entirely green, but climate change would proceed apace, due to carbon emissions from other countries, most of all China and eventually India.

So what we need to produce are very cheap renewable technologies, ones so cheap that the poorer countries of the world will adopt them as well. If we insist on packing a lot of labour costs (“good jobs”) into our energy technologies, we will not come close to achieving that end.

I was disappointed and unnerved by recent comments from Brian Deese, President Joe Biden’s top economic adviser, who in the context of climate change remarked that “… investing in infrastructure can be one of the most effective ways to do that in a way that creates lots of jobs.” The correct Econ 101 answer, of course, is that a low-jobs energy infrastructure liberates labour to produce other goods and services for us, leading to higher overall output.

One argument, indeed the major riposte, may be that green energy policy has to be associated with new jobs for it to stand a political chance.

First, we do not know if this is true. Electric cars appear set to take over American vehicular transportation over the next 10 to 15 years, and with very favourable results for climate change. That is likely to happen even though they will likely eliminate many thousands of jobs in the current automobile supply chain.

Second, as already noted, politically feasible alternative energy probably has to be cheap. Many of the most important technologies appear to be not very labour-intensive by their very nature. You don’t need workers out there, egging on the sun to shine more brightly. Installing solar panels is likely to be labour-intensive, but once they are up and running, the sector will be letting nature do most of the work.

Third, economists should speak the truth about jobs and green energy, even if politicians will not. There are plenty of people in politics, probably too many, worrying about what is going to be popular with voters. Economists do not typically have expertise in that area, but even if they understand that matter well, their voices are needed elsewhere, namely to identify what makes the best economic sense. If professional economists do not speak up for that, then exactly who will?

I was thus disappointed when Paul Krugman endorsed “making climate policy about job creation not just a carbon price.” Such policies remind me of the “make-work” fallacy, namely the view that the deliberate creation of domestic jobs (for instance through tariffs) will lead to a better economy, a view he dismantled so convincingly in his 1997 book “Pop Internationalism.” More accurately, we will wind up with more good jobs in total if we seek to lower green energy prices, not raise them.

Too many Republican economists endorsed or at least tolerated Trump administration policies for reasons of political exigency. Let us hope that Democratic economists do not continue down that same slippery path, for at the end of that road lies a tattered American economy that hardly anyone will speak up for, with climate change problems still up and running apace.

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