Much fuss has been made about green jobs. Do they exist,
and are more “brown” jobs displaced for every green one? Given all the
political rhetoric, it’s not surprising that there is also considerable
confusion about green jobs.
There should not be. While pinpointing the actual number of jobs created or destroyed by any particular policy will always be fraught, the underlying microeconomics are rather simple, and understanding those microeconomics can make it clear if a given policy will be a net creator or destroyer of jobs.
While there are many considerations that should be taken into account when forming policy, such as encouraging new technology which may allow future growth, and improving the health and well-being of citizens, I am going to restrict myself to the goal of promoting job creation and economic activity in this article in order to keep the discussion relatively simple.
Re-framing the Question
In order to avoid the rather pointless debate about the definition of a “green job” I will re-frame the question to one that I believe both sides would agree is more important (at least if they were able to put aside partisan bickering):
Which Policies are Net Job Creators?
I’m aware of two mechanisms by which a policy can increase or decrease economic activity and hence number of jobs.
A basic tenet of microeconomics says that there is a tradeoff between
capital, labor and natural resources such as energy in the production function.
In particular, you can substitute capital for labor (by mechanization)
or labor for capital (by using shovels and picks instead of bulldozers.)
Now add energy into the mix, and you can substitute fossil energy for
either capital or labor to attain the same production.
For example, a hybrid vehicle substitutes capital and resources (in the form of an electric motor and batteries) for energy (less fuel consumed to do the same work.) A bus substitutes labor (the bus driver) for capital, resources and energy (lots of cars and fuel consumed.) A green building substitutes labor (better architecture/construction) and some resources (extra insulation) for energy.
From this perspective, any policy that promotes the substitution of labor for energy will create green jobs, since you get more work and less energy consumed. Shifting people out of their cars and onto mass transit will create jobs because there will have to be drivers and people managing the transit system, where before no one was paid to drive. To the extent that the transit system can be paid for out of the reduced fuel costs and car ownership costs of the former drivers turned riders, the number of jobs created will be a pure economic gain.
Multiplier Effects
That brings us to the other major potential source of jobs from green policies: economic multiplier effects.
To the extent that green policies improve economic efficiency by overcoming economic barriers to cost effective green solutions, these policies will result in greater economic activity, and hence more jobs. The strongest critique of “green jobs” initiatives is that they simply shift economic activity from out-of-favor “brown” sectors to more politically correct green ones. Yet when a policy improves economic efficiency, it does not just shift jobs and capital around in the economy: it creates economic activity and jobs.
Not all green policies improve economic efficiency. For example, subsidies for not-yet-economic types of renewable energy such as wave power and solar installations may be justifiable on the grounds that they are helping to promote needed future technologies, but they probably come at a net cost to near-term jobs (even if they may create more jobs in the long term by allowing the creation of new types of businesses.)
On the other hand, policies to promote energy efficiency will be strong net creators of jobs, because the cost of energy efficiency is typically only a fraction of the cost of the energy saved. The very existence of opportunities to save significantly on energy bills at modest cost is proof that the energy market is inefficient. In an efficient market, all such opportunities would have already been taken.
After the energy efficiency measure has been installed, the cost savings can be used for useful economic activity, rather than wasted on unneeded fuel. This money will then spur additional activity and stimulate jobs.
Using Fossil Resources to Stimulate Growth is Like Stimulating Growth With Debt
Short term jobs (green or otherwise) should not be the only consideration when forming policy. A short term focus on jobs today can end up doing long term economic harm. For instance, if we spend too much borrowed money to create jobs today, the long term drag on the economy caused by paying back the debt will leave everyone worse off.
Economic growth fueled by the extraction of non-renewable resources is very similar to economic growth fueled by debt. When we extract these resources and use them, we increase economic activity today, but their non-renewable nature means that we lose the opportunity to extract and use them tomorrow. Hence, the economic stimulus today comes at the cost of an economic drag tomorrow, and the future economic drag will generally be larger than today’s stimulus, since improving technology should allow us to get more benefit from each unit of resource in the future.
Using renewable resources to stimulate growth does not have this problem: Tapping the wind or the sun for energy today does nothing to diminish the wind or sun tomorrow. Hence, to the extent a green job relies on renewable resources and a brown job relies on fossil resources, the green job should be preferred, even before taking the environmental benefits into account.
Policy Implications
If we only consider job creation, the focus on policy should be on creating jobs and economic activity, with a preference for green jobs, since those impose less of a cost on future economic activity than jobs based on extractive industries.
Green jobs can be created either by substituting labor for energy and capital, or by reducing energy waste so that the money previously wasted on energy can be put to more productive uses. For policy makers who wish to create green jobs, the implications are clear.
Green job programs should focus on two types of opportunities:
The most cost effective policies for creating jobs will be those that break down the barriers to the adoption of cost-effective green technologies, especially energy efficiency. Ironically, most energy subsidies have gone into capital intensive sectors such as nuclear and extractive sectors such as oil and gas.
A very cost effective way to produce jobs would then simply be to remove subsidies from fossil fuels and nuclear energy and redirect them towards the most cost effective clean technologies.
Increased support for and promotion of public transit could do much more to reduce our dependence on imported oil than support for domestic drilling (which will only make us more dependent on imported oil in the future by using up domestic resources sooner) while also creating jobs.
Meanwhile, energy efficiency programs such as cash for caulkers can cost-effectively reduce energy bills and free up money for other sorts of consumption while also creating jobs in the depressed housing sector.
(originally published in Forbes)
Image by Getty Images via @daylife
There should not be. While pinpointing the actual number of jobs created or destroyed by any particular policy will always be fraught, the underlying microeconomics are rather simple, and understanding those microeconomics can make it clear if a given policy will be a net creator or destroyer of jobs.
While there are many considerations that should be taken into account when forming policy, such as encouraging new technology which may allow future growth, and improving the health and well-being of citizens, I am going to restrict myself to the goal of promoting job creation and economic activity in this article in order to keep the discussion relatively simple.
Re-framing the Question
In order to avoid the rather pointless debate about the definition of a “green job” I will re-frame the question to one that I believe both sides would agree is more important (at least if they were able to put aside partisan bickering):
Does a particular green policy create more jobs than it destroys?
If a policy is both green (which I define as lowering our use of
resources and/or environmental impact) and is a net creator of jobs, all
parties should agree that it is a good policy. Green policies which
destroy jobs, on the other hand will require further analysis as to
whether the environmental and health benefits outweigh the economic
losses, a question which requires putting relative value on various
benefits, and cannot be resolved purely by economic reasoning.Which Policies are Net Job Creators?
I’m aware of two mechanisms by which a policy can increase or decrease economic activity and hence number of jobs.
- Jobs can be created or destroyed by substituting labor for capital, energy, and/or other resources in production.
- If a policy increases economic efficiency, it will increase economic activity and create jobs. If it decreases economic efficiency, it will reduce economic activity and destroy jobs.
Image Source: Wikipedia
For example, a hybrid vehicle substitutes capital and resources (in the form of an electric motor and batteries) for energy (less fuel consumed to do the same work.) A bus substitutes labor (the bus driver) for capital, resources and energy (lots of cars and fuel consumed.) A green building substitutes labor (better architecture/construction) and some resources (extra insulation) for energy.
From this perspective, any policy that promotes the substitution of labor for energy will create green jobs, since you get more work and less energy consumed. Shifting people out of their cars and onto mass transit will create jobs because there will have to be drivers and people managing the transit system, where before no one was paid to drive. To the extent that the transit system can be paid for out of the reduced fuel costs and car ownership costs of the former drivers turned riders, the number of jobs created will be a pure economic gain.
Multiplier Effects
That brings us to the other major potential source of jobs from green policies: economic multiplier effects.
To the extent that green policies improve economic efficiency by overcoming economic barriers to cost effective green solutions, these policies will result in greater economic activity, and hence more jobs. The strongest critique of “green jobs” initiatives is that they simply shift economic activity from out-of-favor “brown” sectors to more politically correct green ones. Yet when a policy improves economic efficiency, it does not just shift jobs and capital around in the economy: it creates economic activity and jobs.
Not all green policies improve economic efficiency. For example, subsidies for not-yet-economic types of renewable energy such as wave power and solar installations may be justifiable on the grounds that they are helping to promote needed future technologies, but they probably come at a net cost to near-term jobs (even if they may create more jobs in the long term by allowing the creation of new types of businesses.)
On the other hand, policies to promote energy efficiency will be strong net creators of jobs, because the cost of energy efficiency is typically only a fraction of the cost of the energy saved. The very existence of opportunities to save significantly on energy bills at modest cost is proof that the energy market is inefficient. In an efficient market, all such opportunities would have already been taken.
After the energy efficiency measure has been installed, the cost savings can be used for useful economic activity, rather than wasted on unneeded fuel. This money will then spur additional activity and stimulate jobs.
Using Fossil Resources to Stimulate Growth is Like Stimulating Growth With Debt
Short term jobs (green or otherwise) should not be the only consideration when forming policy. A short term focus on jobs today can end up doing long term economic harm. For instance, if we spend too much borrowed money to create jobs today, the long term drag on the economy caused by paying back the debt will leave everyone worse off.
Economic growth fueled by the extraction of non-renewable resources is very similar to economic growth fueled by debt. When we extract these resources and use them, we increase economic activity today, but their non-renewable nature means that we lose the opportunity to extract and use them tomorrow. Hence, the economic stimulus today comes at the cost of an economic drag tomorrow, and the future economic drag will generally be larger than today’s stimulus, since improving technology should allow us to get more benefit from each unit of resource in the future.
Using renewable resources to stimulate growth does not have this problem: Tapping the wind or the sun for energy today does nothing to diminish the wind or sun tomorrow. Hence, to the extent a green job relies on renewable resources and a brown job relies on fossil resources, the green job should be preferred, even before taking the environmental benefits into account.
Policy Implications
If we only consider job creation, the focus on policy should be on creating jobs and economic activity, with a preference for green jobs, since those impose less of a cost on future economic activity than jobs based on extractive industries.
Green jobs can be created either by substituting labor for energy and capital, or by reducing energy waste so that the money previously wasted on energy can be put to more productive uses. For policy makers who wish to create green jobs, the implications are clear.
Green job programs should focus on two types of opportunities:
- Industries where labor can usefully be substituted for energy or capital, such as mass transit.
- Breaking down the barriers to energy efficiency which can stimulate economic activity by allowing money that would otherwise have been wasted.
The most cost effective policies for creating jobs will be those that break down the barriers to the adoption of cost-effective green technologies, especially energy efficiency. Ironically, most energy subsidies have gone into capital intensive sectors such as nuclear and extractive sectors such as oil and gas.
A very cost effective way to produce jobs would then simply be to remove subsidies from fossil fuels and nuclear energy and redirect them towards the most cost effective clean technologies.
Increased support for and promotion of public transit could do much more to reduce our dependence on imported oil than support for domestic drilling (which will only make us more dependent on imported oil in the future by using up domestic resources sooner) while also creating jobs.
Meanwhile, energy efficiency programs such as cash for caulkers can cost-effectively reduce energy bills and free up money for other sorts of consumption while also creating jobs in the depressed housing sector.
(originally published in Forbes)
14 comments:
If we limit our scope to the question "Do green policies destroy jobs?", then the article clearly dispels the myth that you can't create jobs and be green. As the article said, if you switch people from cars to buses, it would require the hiring of more bus drivers to support that dramatic increase of passengers. The article also uses the example of getting rid of bulldozers to hire many construction workers to use shovels or pickaxes to replace the environmentally-unfriendly bulldozer. However, that question isn't the only important one to ask as it pertains to this subject as a whole. we also have to discuss how green policies affect overall production. To stay with the articles example of comparing shovels or pickaxes to bulldozers, a bulldozer would get the job done much faster than using shovels or pickaxes, even if you have dozens of shovels or pickaxes being used. Since production would be taking longer, we would be producing far less. With much lower production comes a much lower GDP, and thats not much better than a high unemployment rate. There is also the question of how general comfort will be affected. The article mentions getting rid of privately-owned cars and switching over to buses. Buses are far less private and far less comfortable than most cars. As a result, most people would not be supportive of such a switch. Which means that the political element would impede progress if that is the type of policy we were to promote. Limiting your scope can help you pinpoint individual issues but you cant forget that there is a much larger subject as a whole that also must be considered. In addition, theres always a catch. In this case, the catch is that if you increase employment using green methods, you also cut down on production which is equally as bad. You should always strive to improve methods, but you also have to ensure that the experimental methods are not more harmful than the current ones.
In recent years, “going green” has become increasingly popular. However, the definition of Green Jobs can be controversial especially from the perspective of environmental activists and politicians. As proved in the article, there are many benefits in green jobs both for the environment and the economy. The most important question is whether the benefits of green jobs exceed the cost of going green. I believe that green jobs will benefit jobs more than destroy them. Currently, we are struggling with issues of global warming, oil, water, food and land shortages. Meanwhile populations are growing and economies around the world are struggling. Therefore, we need people who are educated in green jobs to find solutions to a healthier environment and in return that will help the economy. For example, the Forbes article stated “…energy efficiency programs such as cash for caulkers can cost-effectively reduce energy bills and free up money for other sorts of consumption while also creating jobs in the depressed housing sector.” This is only one of the many examples how green jobs can benefit us. The Obama campaign in 2012 had also endorsed green jobs, they claim that there are many benefits for the environment and it will help create new jobs that will boost the economy. Universities around America have helped skilled workers and professionals to alter their skills towards the green industry. Lastly, green jobs encourage the use of renewable energy sources rather than relying on fossil fuels, which are costly and pollute the atmosphere with carbon dioxide. Iseekgreen.org said it perfectly, “green jobs make us part of the solution rather than part of the problem.”
To be honest I don’t like these so called “green” power sources such as wind power, which has had the biggest push in the last couple of years. The reason for this is because I feel like they are actually less efficient to our economy than say coal plants. In order to replace one coal plant, a wind farm would have to stretch 300 square miles (Price). To put 300 square miles into perspective, it is roughly the entire size of New York City (NYC Statics). To me this is a waste of space and creates an enormous opportunity cost because we could be using that space to be doing something much more effective. Money is also an issue pertaining to wind power. If our nation wanted to generate twenty-percent of our nation’s electricity supply on wind power it would cost an estimated 200 billion dollars. Nonetheless, companies creating and putting up the machinery to provide renewable energy do not have the money to do so and continue to ask for tax breaks and additional subsidies. Daniel Simmons, director of state and regulatory affairs at the Institute for Energy Research states “The government has been subsidizing wind and other renewables for 30 years, and they're still not cost-effective” (Hosansky). Not to mention that these so called “green” renewable energy sources are not so green. The energy source that they are tapping is green like the sun and wind but it takes a lot of fossil fuels and space in order to get the machinery to harvest this energy up. So in my opinion I believe that renewable energy right now is a bust and is not effective our nation. When technology improves maybe then we could switch over but as of now it is less efficient for our nation than coal and oil.
Works cited
Hosansky, David. Wind Power. CQ Researcher 1 Apr. 2011: 289-312 Web. 14 Nov. 2012.
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"NYC Statics." NYCGO.com. NYC & Company, Inc., 2011. Web. 14 Nov. 2012.
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Price, Tom. The New Environmentalism. CQ Researcher 1 Dec. Web. 14 Nov. 2012. 2006: 985-
1008..
With"going green" being such a hot topic these days, I do also agree with the fact that it is controversial. It is said to create jobs and in essence save money on electricity bills, etc. I think that is in economically inefficient because essentially we are using all this space to be enviromentally friendly but we are losing money when we could be making more money in making more businesses. Morally, green jobs/ policies would be the right thing to do. However, businesswise it is not a good idea.
I think that a responsible shift towards going "green" would be the most effective approach. With large wind farms and other types of alternative fuels there is usually a large amount of subsidizing done by the government to help ease the burden of going green. Also there is usually an opportunity cost associated too because these farms could be used in many other ways and potentially be more profitable economically than as a wind farm for example. Another factor that works against going green in some ways is efficiency. Essentially going back in time and using labor to replace polluting machines is not necessarily the best cause of action. Incentive to produce more efficient machines would likely be much more effective than more or less reverting to inefficient, old ways. I think that the most effective tool for going green would be full knowledge of the techniques, pros and cons. It may fall on deaf ears of some but it would probably mark a good change in attitude. Green has its long run benefits and needs risk takers to push the envelope to make going green more financially feasible. This will create more net jobs overall I believe in a longer time frame due to increased efficiencies and the chance to apply the savings elsewhere
In the article, the topic of "green jobs" does seem to be favorable. There are many benefits in going green. As the article explained, green jobs could be economically efficient and thus create more jobs for the work force. However, we must take into account the opportunity costs that come with the investment into green policies. For example, if more car drivers use mass transit as a means of transportation, there would be a decline in demand for gas/oil. In reality, there wouldn't be a significant change in demand. However, if we assume that there was a significant decrease in quantity demanded in gas/oil, the oil/gas industries would struggled economically. However, the benefits of the use of mass transit does include a healthier environment and more jobs. Yet, would those jobs and healthier environment compensate for jobs that are lost in the oil/gas industry, jobs that are lost in the car industry that run on gas/oil? I do agree that negative externalities, such as pollution, should be eliminated. However, there are both sides of the argument that can agree or disagree with the rise of green policy. I think it's always important to weigh the opportunity costs in both the long run and short run.
For every economic issue there are two sides, since for every action there is an opportunity cost which must be considered. In the short run there is a factor of how going green means less use of advanced machines which add to the externality of pollution, which means highering more workers to the the same job, which decreases unemployment, but then a job would take longer leading to less output and a smaller GDP, so there is a trade off of production for employment. If you factor in that cars also contribute to pollution and going green means to use more public transportation, people would not be in favor of this movement. There will be a negative effect on efficiency and comfort. However, due to the issue of pollution, global warming, and shortages of oil, water, food, and land green jobs are needed in the long run, since we have an ever growing population with a shortage of necessities. In the long run, we will see that going going green given the right methods will take care of all of this. This is why I believe going green is the right thing to do we just need intelligent people skilled in this new lifestyle having full knowledge about it to help us be effective in making this transition a profitable one.
Going green has been a hot topic over the past few years as more and more attention has been put towards the environment. The whole concept of green jobs has been quite controversial as the article pointed out. People are left to wonder whether having these green jobs is truly better not only for the environment but also the economy, or will it do more jar, than good? While creating more energy effiecint jobs is certainly not cheap, the government usually helps out with these costs to ease the burden on businesses and firms, which is the right thing to do because if we are all better of in the long-run then it is worth it. While finding more environmentally friendly ways of producing items and such is very time consuming and expensive, it is worth it. One of the issues is whether or not green jobs will destroy other jobs. The shift from the way things are now to more environmentally friendly means of production does come with it negatives like everything, and certain jobs will be lost, but new jobs will also be created. The question whether or not the new jobs will make up for the opportunity costs of the old ways. Would it be more economically efficient to go green or keep things the way they are?
When asking oneself "Does a particular green policy create more jobs than it destroys?"; there are several points to consider. If the green policy decreases economic efficiency, it would reduce economic activity and reduce jobs. Therefore, if the 'green policy' would lower the use of resources and have less of an impact on the environment, it would also minimize GDP and output. However, if it were to increase economic efficiency , economic activity and number of jobs would increase. A green policy that is an example of this is the concept of solar panels. Green policies in general are a good idea because of the positive impact on the environment. However, if a business were to decide to go green, they wouldn't see profits until the maturity portion of the business life cycle.
In the long run, "green jobs" may be the best thing for the economy. Making expensive decisions now can save people money and make things operate more smoothly. Yes "brown jobs" are being cut back but this is happening to make room for a healthier world. The topic of being green is very controversial because there are so many different levels of the term. Going green makes sense for the environment and communities but the topic is controversial because it is not best for the business world.
As a country we need to do a much better job and fix our pollution problem as a whole. Even though some of us try to help the environment by recycling or driving a gas efficient car, there are other people that still drive their hummers and huge trucks for unpractical purposes. Like a mother buying a hummer for the simple use of taking her kids 3 kids to school and sports practice. This requires a lot of driving and extra space in the car, only having 3 kids. There are other practical ways of going about this, like carpooling or buying a car that does produce as many fossil fuels. The example used in the article describes taking away a bulldozer and replacing it with shovels and pic axes. The loss of the bulldozer, takes away the environmentally unfriendly aspect, but puts an extension on the time of production, slowing down or lowering our GDP. These are miniscule aspects that take part of the whole picture. We must be able to recognize these small attributes to see if we are making the right decisions. The other example tackled mass transit, asking people to give up the luxury of their own cars to switch to a bus. This is hard to convince people to switch to mass transit because a lot of people would rather not partake in this move towards going green solely based on the fact that they don’t want to give up their privacy and the convenience of their own cars. Even though going green is gaining popularity, some people feel the need to resist because there effort won’t be that big of a difference in the long run. You just simply cannot convince everyone without the use of enforced policies. For me I believe that the transformation of going green may be more of a cost to the environment, then it will helping the overall environment.
Going green has been a very big topic in the world. Global warming is a huge thing and people feel like we need to take care of the planet more. Even though this is true, we still need a strong economy. By going green, we cant lose out on the demands that we need for the economy to be successful. If going green can make the economy better, along with the world going green will be very efficient. In the long run, going green also helps the planet out too. That cuts back on pollution and other harmful things that happens to the evironment in which we live. Green jobs nee to make the unemployment rate to go down in order for them to be worht it. Going green is not cheap and the outcome needs to be greater and efficient.
"Going green" does sound like the politically correct thing to do. We do have a responsibility to future generations to protect our atmosphere and reduce toxic emissions to our environment. However, the article deals with the economic factors involved in creating green jobs. While it is true that the example the author gave about bulldozer vs. the pick and shovel, focuses on more than just efficiency,there are our factors to consider as well. The quality of production is also an important factor. People would need to drive the bulldozers but other less skilled laborers would lose their jobs. The point is, we need to put programs into place that are effective. I believe green jobs is an important issue but if the creation of jobs requires borrowing money to create than the cost of borrowing must be factored into the equation. Companies receiving economic incentives for the creation of green jobs can be a positive concept but often the programs for green energy are extremely costly and the companies cannot foot the bill. Needing the government's help in an already weakened economy further complicates the issue.
"Going green" is catching on more and more in the world today. There are many benifits that come along with green jobs, as the article states. For example, if bulldozers were eliminated from construction, more people could be hired with shovels and picks to get the job done and it would eliminate pollution in the air. However, not all green jobs are efficient, especially when you are talking about energy. For example, if you were to get solar panels on your roof to power your house it would cost roughly $30,000 and it would take many years for that investment to pay off. In the long term it would be good but in the short term its just not cost efficient. The only way that green jobs will be effective is if they substitute labor for energy, this way you get more work and less energy consumed. I think that if this type of policy can implemented, it just might be able to give the economy a push in the right direction.
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