"Our greatest responsibility is to be good ancestors."

-Jonas Salk

Thursday, April 16, 2009

Gunther: "Phony Green Jobs Debate"

Marc Gunther at The Energy Collective pretty much agrees with me on the "green jobs" thing.
Let’s get real: We can’t predict oil prices 12 months out. Last spring, virtually no one anticipated the global financial crisis of last fall. And we are projecting the number of green jobs that will be created or lost on a state-by-state basis by a law that won’t take effect until 2012? Who are we kidding?
I called Russ Roberts, an economist at George Mason University who hosts the fine EconTalk podcast, for some guidance on how to think about green jobs and the economics of climate regulation. “Creating green jobs is easy,” he told me. “We could employ millions of people picking up litter, and we could make them very good-paying jobs if we want. But of course that would make us poorer as a nation. There’s a cost to providing those jobs that would have to be borne by other people in the economy.”

It’s not just the cost of higher taxes that needs to be factored into the equation, he noted. To the degree that the government makes policy that favors, say, vast construction of wind turbines throughout the upper Midwest, the people doing those jobs will be drawn from somewhere else, maybe even from more productive work. If policy leads to the hiring of thousands of contractors to do energy efficiency, the cost of building a new home or renovating your basement may go up because many of the good construction workers are busy.
“As voters and citizens and readers, what we want to think about is the big picture—are we moving in the right direction when it comes to environmental policy?” Roberts says. Put another way, are we spending enough money today to head off the threat of global warming in the future? Because if anyone tells you that we can deal with climate change at no cost, they probably shouldn’t be trusted.
Maybe that’s what bothers me about the green jobs ads. They’re like political campaign ads. They promise something for nothing. They treat the voters like children. They’re emotional and not educational. And they’re not helping to build a movement around climate change.
Other than that, they’re fine.
It is certainly good to have worthwhile projects to employ people doing, while we reconsider how to arrange things so that having a job stays rewarding while not having one gets a lot less punishing. And unless we get very lucky, this carbon thing is going to cost us plenty, no matter how we approach it. But the issue is not jobs. That just reinforces people's confusion. 

The environment is not a subsidiary of the economy. It is the other way around.

Something called the Sustainable Development Commission in the UK, which appears to have some sort of government charter, issued a report called Prosperity Without Growth which is on the whole a worthwhile read for people unfamiliar with the idea of a steady-state economy. There are lots of good quotes in there that will be showing up here.

It also talks about the confusion in the relationship between "green jobs" and the redesign of the economy. They point out that the natural inclination of politicians is to just treat the "green jobs" thing as an ordinary Keynesian stimulus, to get the economy "back on track". I believe Prof. Obama is doing an astonishingly good job at this goal, actually, which is unfortunate given that it is the wrong goal.  

The report hits on the awkwardness of the Keynesian strategy at this juncture at several points. For instance, while we see this on p.69:
By early 2009, a strong international consensus had emerged in support of a very simple idea. Economic recovery demands investment. Targeting that investment towards energy security, low carbon infrastructures and ecological protection offers multiple benefits. These benefits include:
  • freeing up resources for household spending and productive investment by reducing energy and material costs
  • reducing our reliance on imports and our exposure to the fragile geopolitics of energy supply
  • providing a much-needed boost to jobs in the expanding 'environmental industries' sector
  • making progress towards the demanding carbon emission reduction targets needed to stabilize the global atmosphere
  • protecting valuable ecological assets and imporving the quality of our living environment for generations to come
which is all true and very compelling, but on the other hand, from p. 71:
it is difficult to escape the conclusion that in the longer term, we're going to need something more than this. Returning the economy to a condition of continual consumption growth is the default assumption of Keynesianism. ... the systemic drivers of growth push us relentlessly towards ever more unsutainable resource throughput. A different way of ensuring stability and maintaining employment is essential. 
A great deal depends on how these policies are sold and implemented. Were it not for the financial crisis, it might be better to wait until the public gained a better grip on the issues. There is a real risk that supporters will end up as confused about the fundamental purpose of these initiatives as its opponents. 

Some of us are eager to challenge the structure of society, and specifically of its economics. I myself am not so reckless as to look forward to it. I do understand that it is necessary. I wonder if those advocating "green jobs" while avoiding explaining how serious the underlying issues are might not be doing more harm than good.  If the economy can be rebooted, will people shrug off the idea of sustainability as some nice WPA-like project and get on with business?

Will people ever get the idea that the planet is full, and that consequently the basic idea of the invisible hand is broken? That nothing you do is only your own business anymore? That we're not on the lonesome prairie, we're on a leaky boat, and we'd better learn how to get along because there's no place further west to go? 

I don't know. Not if we don't try to explain it, I reckon.

Update: See also John Whitehead on the Environmental Economics blog, who doesn't think that "green jobs" necessarily will have a net positive impact on employment. 

Image from Sunwize.com


Arthur said...

Actually, not that I have a handy reference on this, but I believe the job creation estimates for the administration's recovery plan were based on economic estimates of the actual value to the future economy (i.e. translated into GDP growth) of the stuff being invested in, not on some make-work jobs-per-dollar calculation. Could be wrong on that though.

I'm a little troubled by your sustainability = no growth assumption here - maybe I should read the report you're referencing first but I haven't had a chance to do that yet.

But *if* economic growth can be accomplished with no additional damage to the environment, what's the harm in it? In purely physical terms, say, *if* we can have continued access to more and more useful energy per capita with no additional emissions of CO2 (or other pollutants, damage, etc), what's wrong with growth under those terms?

I think a world of 8 billion people all living at 20th century US levels with energy coming from solar power, wind, hydro and geothermal would be great, I don't see the downside at all. What downside do you see in this?

Michael Tobis said...
This comment has been removed by the author.
Michael Tobis said...

It's more of a polemic than a report I'm afraid, but it pretty much lays out a position that I share.

Regarding the vision of a 100% renewable, sane and happy future, there is no serious downside if it is actually possible.

It's a matter of equity. People seem to be conveniently forgetting that the ideology of American progress has been that we are the pioneers, not the exploiters, and that everybody can follow in our footsteps.

I myself cannot tolerate the exploitation view on moral grounds, but it's also politically untenable anyway. I'd hope that would be obvious, though some Americans are terribly confused these days.

So, we have to assume that everybody might be able to catch up.

So, now look at the figure in this posting. Now this is a graph of carbon emissions, but the graph of economic activity is not much different. Imagine zero growth in the US, and imagine the rest of the world catching up to the level set by the US.

To make matters a 50% worse, stretch the horizontal axis to 9.5 billion. You will see that the world's economy has to grow some 40-fold in order to maintain 1) non-decline in the US 2) equity elsewhere.

Nothing is wrong with "growth" that is cancelled out by decreasing environmental impact per unit of activity. I would love to see that. I really doubt it will emerge by itself, though. It must be a designed and imposed constraint. It's hard for me to envision a political process that would succeed in implementing such a constraint quickly enough, but the politics of survival are hard to imagine in any scenario. So I am totally with you on this, provided you agree that it's not something the invisible hand will come up with by itself. Indeed, that is what I was trying to say here.

I suppose if there is no environmental limit to growth, the moral question mostly goes away. At some time in the distant future we will be "rich enough", presumably as measured in licenses to listen to rock n roll and watch science-fiction movies, that we can be more generous in" lending a hand" to people without water or plumbing or shelter or food.

Maybe. The whole prospect has sort of a delusional character as far as I am concerned, and I speak as someone who takes a back seat to nobody in appreciation of rock n roll and science fiction movies. But it may be the right way to patch the system anyway.

It's immensely frustrating. The technical means to have everybody be perfectly comfortable and indeed much happier than they are today obviously exists. The political and social mechanisms to get from here to there don't.

There is no downside to your happy ending and no technical reason we can't get there. There is also no sign that we will manage it in time before a very serious decline in social competence sets in (if it hasn't already). It's the path from here to there that is the issue.

Hydro already lost its green status decades ago, and around here the wind backlash has started. (Of course windmills, like people, are attracted to hilltops.) It is very difficult to do anything at scale.

The best bet is the smallest change. I'd rather have windmills and solar panels than coal plants and CO2 pipelines, and nuclear plants and nuclear waste. And I am convinced it is technically feasible.

But I think people underestimate the disruption and blight, as well as the effort, of doing these things at scale. Concentrated energy is cheaper than distributed energy for a reason.

I think we have to take the least disruptive path. Anything else underestimates the seriousness of our plight and the consequences of our starting the adaptation at least twenty years too late.

tidal said...

My neighbour, Peter Victor, is one of the key authors of the SDC report. I have the report in a "to be read" pile at home, but to Arthur's point: I think the section on the "Myth of Decoupling" addresses some of your argument.

Just a quick clip from that section:
It’s clear from this that history provides little support for the plausibility of decoupling as a sufficient solution to the dilemma of growth. But neither does it rule out the possibility entirely.

The message here is not that decoupling is unnecessary. On the contrary, absolute reductions in throughput are essential. The question is, how much is achievable? How much decoupling is technologically and economically viable? With the right political will, could relative decoupling really proceed fast enough to achieve real reductions in emissions and throughput, and allow for continued economic growth? These critical questions remain unanswered by those who propose decoupling as the solution to the dilemma of growth. More often than not, the crucial distinction between relative and absolute decoupling isn’t even elucidated.

It’s far too easy to get lost in general declarations of principle: growing economies tend to become more resource efficient; efficiency allows us to decouple emissions from growth; so the best way to achieve targets is to keep growing the economy.

This argument is not at all uncommon in the tangled debates about environmental quality and economic growth. It contains some partial truths – for example, that some efficiency improvements occur in some advanced economies.14 It draws some support from some limited evidence on air pollutants such as sulphur dioxide and particulates. These emissions sometimes show an inverted-U shaped relationship with economic growth: emissions grow in the early stage of growth but then peak and decline.15

But this relationship only holds, according to ecological economist Douglas Booth, for local, visible environmental effects like smoke, river water quality and acid pollutants. It isn’t uniformly true even for these pollutants. And it simply doesn’t exist at all for key indicators of environmental quality such as carbon emissions, resource extraction, municipal waste generation and species loss.16

As an escape from the dilemma of growth it is fundamentally flawed. Ever greater consumption of resources is a driver of growth. As industrial ecologist Robert Ayres has pointed out: ‘consumption
(leading to investment and technological progress) drives growth, just as growth and technological progress drives consumption.’17 Protagonists of growth seldom compute the consequences of this relationship.
I think I have some other charts, data, etc., from Peter that I will see if I can dig up.

LC said...

This in not intended as full response to your very thought provoking post, but I am not so disturbed by the "green jobs" push. First, part of the point is that it will be utilizing largely unemployed or underemployed resources - hence, the risk that resources will be artificially pulled from more productive uses seems relatively minimal. Second, the argument that a focus on green jobs is silly because we can't accurately forecast oil prices or other economic conditions seems to me to be exactly backwards -- we need to put a major, major push on all the stuff that green jobs represent (energy efficiency, more deployment of renewable energy, electrification of the transport sector, creation of a new grid, etc.) precisely because of the volatility in the energy and commodity markets and, therefore, on the broader economy. Without a much broader, more stable infrastructure base for carbon reduced, energy efficient society we as a society are going to get our economic brains beaten out by increasing price and resource availability volatility as the current system approaches its resource limits (since at the limits, one can expect bizarre fluctuations that simply don't match up with the expectations of classical economics). Hence, the green jobs emphasis (even if imperfect and inefficient in some ways) at least represents an intentional and controlled push moving us in the direction that we need to move, in order to dampen some of the risk posed by likely future volatility. Indeed if we simply fail to act, we will eventually be impelled by the press of events to respond in an even less efficient and less effective crisis mode. What I don't see, however, is the capacity of green jobs and renewables to restore us to the previous "go-go", "nothing but up" growth economy of the past - in retrospect, it more likely will be seen as representing the beginning of the effort to maintain ourselves and our society on a more realistic, resource constrained basis.

Michael Tobis said...

Trivial side point: Tidal, how did you manage to copy and paste the text form the commission report? I retyped it, as was obvious from typos. (I fixed two this morning.)

I hate 2-column PDFs. Grumble. If there's a way to do this properly without digging through the source I'd like to know it.

Michael Tobis said...

L. Carey, I hope you are right.

My key concern, and if I understand correctly, Gunther's, is not with the strategy itself but with the way it is being portrayed by its advocates.

It's not the jobs that are phony, it's not the actions that are phony, it is the arguments that are phony, and to many people, transparently so.

This does not set up the conditions for long-term support of the strategy. The population in most countries is unprepared for the huge scope of the future endeavors that appear necessary if we want to keep things going more or less smoothly.

tidal said...

w.r.t. to copying, I just use the "text select" tool that appears when my browser opens pdf files. Then I just copy one column at a time, and cut and paste. I have to manually edit out all the line breaks. (I see I missed at least one!)

Sometimes when I copy from pdf's, I can't get readable text, but this one seems fine.

Anonymous said...

Btw Michael, did you read on Krugman's latest agreeing Keynesian quotings.. I hadn't realized Keynes was such an extremist - saying how excavating and filling holes just for nothing would somehow create prosperity.

I'm certainly no Keynesian in that case.

I think the governments have to do infrastructure updates, and by changing the timing (do them during recessions), they can even a lot of things which is good for everyone.

David B. Benson said...

Grow algae in open ponds or in tanks where it is warm and sunny. Dry and pyrolysize algae into biochar; compress biochar into bricks or pellets. Ship same to coal reactor (typically electric power generating stations); burn in place of fossil coal. The biochar is a superior fuel and, having done the numbers, all this appears to be price competative with the current spot prices of coal.

Green jobs?

Michael Tobis said...

Where did you get that price?

That is not what I heard from the expert recently; as I recall they had something like eight major hurdles ahead to be competitive at scale, five conventional engineering and three genetic engineering.

Michael Tobis said...

PS - If it were that simple someone would already be doing it.

David B. Benson said...

I may be underestimating the costs.

But it doesn't seem that anybody is even considering simply producing biochar as a fossil coal replacement. Almost everybody seems to want to try for biodiesel and bio-jet-fuel, for which there are indeed obstacles. I've found one paper which studies slow pyrolysis of algae with the idea of producing heating oils and using the biochar in soils, not for its heating value.

I'll work a bit more on the cost estimates, but with some sort of "carbon incentive" it surely can be done.

Unknown said...

Green jobs are a bunch of bull. You should check out some of the salaries of green jobs, it's nothing that you would expect from something that has as much hype as "Green" stuff does. On well, lets see what comes of all this in the next decade or so/

Anonymous said...

Apologies if you've seen this already- haven't had time to look at it myself or check on the .org that produced it*:


*I imagine it's either a market fundamentalist think tank (Heritage or the like) spin off or a dedicated fossil industry front. From their About: IER maintains that freely-functioning energy markets provide the most efficient and effective solutions to today’s global energy and environmental challenges and, as such, are critical to the well-being of individuals and society...

ER has earned a solid reputation for its scholarly approach to energy analysis and free-market energy and environmental policy. IER’s perspective is based on the following tenets:

Free markets: History shows that private property rights, market exchange, and the rule of law have resulted in affordable energy, improved living standards and a cleaner environment.

Objective science: Public policy, particularly in the environmental area, should be based on objective science, not emotion or improbable scenarios that invite wealth-reducing government activism, which often impairs society’s resilience to change...

Michael Tobis said...

TB, I'm not sure what your point is.

Well, sure, that's what they say, and naturally, they have their heads up their rears. Life is so easy for the market libertarian: simply ignore any evidence not consistent with your view.

This is the amazing part of the whole philosophy: their refusal to deal with probable scenarios that invite government activism. They simply declare them all improbable. Case closed.

Nevertheless, one is not consequently obligated to say the exact polar opposite of what they say on every single point.

Anonymous said...

TB, I'm not sure what your point is.No point per se. I just thought I'd provide an additional source of information (while drawing attention to a probable ideological/funding bias)- for all I know, their take is 100% correct.

If I saw something similar coming out of a union front group or lefty think tank like CAP I would have done the same.

I just thought you may be on the look out for more information re: the subject of green jobs.

Michael Tobis said...

Ah, but since one could have predicted with great confidence what they would say, it adds little information to note that they did say it.

Man bites dog, and all that...