"System change is now inevitable. Either because we do something about it, or because we will be hit by climate change. '...

"We need to develop economic models that are fit for purpose. The current economic frameworks, the ones that dominate our governments, these frameworks... the current economic frameworks, the neoclassical, the market frameworks, can deal with small changes. It can tell you the difference, if a sock company puts up the price of socks, what the demand for socks will be. It cannot tell you about the sorts of system level changes we are talking about here. We would not use an understanding of laminar flow in fluid dynamics to understand turbulent flow. So why is it we are using marginal economics, small incremental change economics, to understand system level changes?"

Monday, April 6, 2009

The Red Herring of Green Jobs

Among economists who sort of seem to me to make sense, Jeffrey Sachs seems to me to hold as prominent a place as Krugman and DeLong. Sachs has an interesting and straightforward article about American macroeconomics and tax avoidance in the Scientific American. (hat tip to Dennis at Samadhisoft who, like Sachs, should be held blameless for the following.) 

Sachs says things like:
The stimulus debate has centered heavily around the question of “bang for the buck,” that is, whether tax cuts or spending increases would produce more jobs. This perspective is very limited and misleading, however: the implications of tax cuts, for example, depend importantly on whether they are perceived to be temporary or permanent. A temporary tax cut is more likely to be saved, or used to pay down credit-card debt, than consumed, a lesson demonstrated by the failed $100 billion tax-rebate stimulus last spring.

There is a far more important point, however. The choice of spending versus taxes should turn first and foremost on the purposes of government, or on what economists quaintly call “the allocation of resources.”
It’s silly to debate whether investing in a $100 million bridge creates more jobs than a $100 million tax cut if we really need the bridge! The American Society of Civil Engineers has credibly documented for years the crumbling state of U.S. infrastructure—roads, bridges, water supply, waste treatment, mass transit, toxic waste cleanup, dams and levees—and the urgent need for more than $2.2 trillion of investments for our wellbeing and competitiveness.
Whoa! Making sense! How strange!

The argument over whether "green jobs" will do the "economy" more good than loss of non-green, especially coal sector jobs will cost it, strikes me as ill-advised for a number of reasons. First of all, note that the the guy with a coal sector job is a real guy with an actual income stream to protect; politically his interests count for more than all the folks with hypothetical jobs making windmills, or whatever other thing is considered green right now.

(Note that green really is the new black: to some extent it is a fashion industry. What is or isn't sustainable is a real question, but what is or isn't green is a matter of perception as much as of fact.)

Note that the amount of employment and amount of resulting personal income is in no way guaranteed to be directly in excess of the income generated by the coal sector. Note especially, though, that the whole idea of promoting jobs is and has always been to celebrate inefficiency on one hand as much as the idea of stimulating the already sufficient economy has been about excess on the other. If it takes more people to produce the same amount of energy, the total wealth goes down, and something somewhere else has to get less "prosperous" at least in the way we have been defining prosperity.

Yes, of course I know about externalities. I am all about externalities. That is not a counterargument to what I am saying. That is my point! 

The economic argument for green energy doesn't work without the externalities. It would be amazing and bizarre if it did. Even if it just barely does, what wouldn't justify the associated risk and disruption. 

This brings us directly to Sachs' point. "It’s silly to debate whether investing in a $100 million bridge creates more jobs than a $100 million tax cut if we really need the bridge!" Yes, and it's profoundly silly to debate whether the shift to green is going to "save the economy". It is not the economy that needs saving. We have to do it whatever it costs. That's the argument.

We should minimize costs and maximize benefits (duh) but first we have to decide to do it. 

I don't really know whether the advocates for sustainability are marching into a trap. I think so.

What would have to be happening for it not to be a trap? How could this "green jobs" spin really be a good idea the way it is coming out?

The argument that this approach is sophisticated rather than unsophisticated is that the forces of decency, honor and respect for future generations understand these issues but feel incapable of selling them to the public. Americans will never willingly vote for a new tax. Maybe so; this recent "tea party" nonsense shows that many Americans have a desperately confused idea of the relationship between patriotism and taxation.

In other words, those arguing for replacing coal feel ethically compelled to misrepresent a tax as a benefit.

I suppose there may be rare cases when such a thing is advisable, but they must be very extraordinary. It's true, that our circumstances are indeed extraordinary, but nobody has made a case that I have seen that they are extraordinary in a way that calls for twisting the truth so far out of line.

The problem is that the resulting twisted discourse  feeds the cynicism and distrust that is at the root of the problem in the first place. People may not know exactly why their BS detectors are going off, but they are firing left and right. 

The great thing about Obama, the thing that enrages and confuses the right, is that he actually tells the truth. Maybe not the whole truth, but enough of it that his behavior starts to look sensible. He is working, little by little, to restore trust. It's absolutely crucial that the rest of us take his lesson.

Winning one legislative vote is worthless. These things can be overturned with the next shift of the tides. What we have to do is prevent the tides from ever shifting back. It is a very tall order, but it's the mission we are faced with. Without honesty, and truth, and respect for the public, there may be battles won but the campaign will never reach its objectives. 

The playing field is stacked against the forces of sustainability: we have to win consistently, not just sporadically. We have to be compelling, while our opponents merely need to be seen as credible. The only advantage we have is truth, a weapon which is sometimes frustratingly slow to take effect.

But we have to use it; otherwise the odds against us are overwhelming. Fighting fire with fire is actually possible in some situations, but if you follow your local fire truck around you won't see it stocked with blow torches. 

A win here and there on points won't do. The whole society has to get behind the shift. That means everybody has to line up behind what is true. Packaging the truth in what at best are palatable half-truths is not the path to winning this thing. 

Don't get me wrong. The economy needs stimulating, in the short run at least, and the green jobs need doing. It actually is an opportunity to kill two birds with one stone. But we are not doing this as an employment program. In the end, presumably, public efforts on such a scale do have net costs. We should do this carbon replacement because we have to do it, and not for any other reason. 

There will be large costs and large ancillary benefits but none of these are the point. Arguing as if they were the point will backfire.

Emphasis in the Sachs quote added.

The red herring plus pink slip image, which I take to be composed clip art, is from
a comparable argument at Higher Ed Watch, a site of the centrist New America Foundation.

Green Steve shows up on Google Image search for "green jobs" but doesn't appear on the linked Digg page or its Dugg page.


Michael Tobis said...

Interesting that nobody cares so far.

Was this just boring, or are people really not all that interested in articles that don't slot neatly into one camp or the other? I think it's the latter.

thingsbreak said...

Interesting that nobody cares so far.

Was this just boring, or are people really not all that interested in articles that don't slot neatly into one camp or the other? I think it's the latter.

I've been swamped lately, but I'll be commenting on this. Have some initial thoughts, but I'd like to go over them before posting.

silburnl said...

I also have been busy.

It's an interesting post and I pretty much agree with the points you make. Two things give me pause however:

1) If 'truth will overcome, given time' is correct, then how do we account for the depressing litany of success for the various forms of lying that are out there? Is it just that truth hasn't had enough time to grind these particular lies down?

2) If truth actually will overcome, then do we have enough time?

Not that these caveats change my (and your) conclusion that the communication strategy has to be fixed around being upfront about unpalatable truths rather than sugar-coating them with 'white lies'. The recent experience of (for example) the way that the EU constitution was voted down everywhere it was put up for popular ratification is an example of how this sort of sugar-coating (done during various EU/EEC accession campaigns in the 70s and 80s) can blow-back on your position in the longer term.


thingsbreak said...

I somewhat addressed what I was going to say here in your most recent thread instead.