Wednesday, May 13, 2009

The Green Wind Of Destruction



Source: http://www.ibdeditorials.com/IBDArticles.aspx?id=327021397602200

By INVESTOR'S BUSINESS DAILY | Posted Tuesday, May 12, 2009 4:20 PM PT


Regulation: To say we're skeptical of the administration's claim that green jobs will bolster economic recovery is putting it mildly. It's much easier to believe that needless environmental rules will cause widespread job losses.



IBD Exclusive Series: The High Costs Of Carbon Caps





The White House has promised to create 5 million green-collar jobs over the next decade using the tax code to stimulate clean-energy programs. It's a proposal that has mass appeal, a hip idea from a cool president. Which should tell us a lot about its substance — or lack thereof.


Spain tried to green its economy and in the process lost jobs, according to Gabriel Calzada Alvarez, an economics professor at Juan Carlos University in Madrid, Spain. Alvarez, who authored a 41-page study on his country's experiment, said the U.S. should expect to lose nine jobs for every four that it creates through green stimulus programs.


That alone would be painful enough. But it's possible those job losses would be compounded by additional losses caused by regulation of carbon dioxide, a greenhouse gas that eco-activists and politically aligned scientists claim is causing the Earth to warm.


It's unfortunate but likely that carbon emissions will eventually be restricted in this country. It could happen through a cap-and-trade bill, which isn't even vaguely understood by 76% of the public, according to a Rasmussen poll, or carbon-tax legislation passed by Congress and signed by the president. Or it could simply be regulated through rules written by unelected functionaries at the Environmental Protection Agency.


In any event, there will be painful economic consequences, including the ruin of many a livelihood. Across the next two decades, annual job losses due to restrictions on CO2 emissions will exceed 800,000 in at least two years. Losses for most years will be more than 500,000.


Taking a big hit, says the Center for Data Analysis at the Heritage Foundation, are manufacturers. They are especially vulnerable to CO2 emissions limits for two reasons: The manufacturing process is energy-intensive, and the demand for the goods this sector makes will fall in an era of higher energy costs.


A CO2 regulation regime would begin eating away at the manufacturing employment base in about five years. By 2029, more than 3.5 million jobs will have been lost, according to Heritage's reckoning.


The machinery industry will lose more than 57% of its jobs, while jobs in plastic and rubber production will fall 54%. Other manufacturing areas in which employment will drop precipitously are paper and paper products (36%), durable goods (28%) and textiles (27.6%).


Bear in mind that these numbers, as staggering as they are, don't count the losses that would occur if companies moved operations offshore, rather than absorb the higher energy prices.


The manufacturing sector is also expected to lose jobs in coming years due to increased productivity. Workers will be displaced as fewer are needed to keep the factories turning out goods at an equivalent or faster pace.


That's part of the market process, the gales of creative destruction, in which innovation kills off archaic jobs and replaces them with better-paying jobs that are a boost for, not a drain on, the economy. A worker who makes tires is better off than the blacksmith, and the economy in which the tire maker lives is more prosperous than the less-advanced economy of the man who makes horseshoes.


Regulation on commerce, either through rules or taxation, is a destructive wind, too. But what it destroys it does not rebuild. Carbon regulation will only increase the number of job losses that would come naturally in an important sector of the U.S. economy.


Those positions won't be replaced by openings in the renewable energy industry. While Washington is eager to force the country into green programs, the market for this industry's products remains small because of costs and inefficiencies relative to conventional energy sources.


Sucking money out of the private sector, where it could be used for investment that creates real jobs and commerce that supports existing ones, to fund a politically correct program is counterproductive.


Despite rhetoric and propaganda to the contrary, the nation will not be better off under a carbon-cap regime. What the country needs is a force in Washington to derail the global warming and climate change nonsense. There are more important issues for policymakers to deal with.

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