Thursday, June 25, 2009

Tilting at green windmills

I have not read as much of George Will's writings as used to in the old days. Mainly because he has become just a token conservative in the raging leftest world of Washington D.C. But I like his column today and in particular I borrowed his title for my post here. I have not, and I am sure a good portion of American people have not either, ever heard the Spanish economics professor Gabriel Calzada, who has produced an important report that in George Will's word is "inconvenient for the Obama's administration's green agenda." The report can be read here.

Perhaps the essense of the report can be seen by the following interview segment by eenews:

Monica Trauzzi: Dr. Calzada, this new report focuses on the impact of government subsidies on the creation of new green jobs and the subsequent effects that these subsidies have on the economy. What are the bottom-line numbers coming out this report that you've seen in Spain as a result of the government's program to create green jobs?

Gabriel Calzada: Well, the bottom-line number is that in order to sustain these jobs, since you have really a sort of bubble, because you are creating jobs that can be only maintained in case you continue putting money into the bubble. And on top of this, many of these jobs, most of the jobs are in installation of new fields. So in case you want to maintain them, you have to, again, increase the size of the money you put inside this scheme to increase the number of plans you are starting. This produced that we have spent and committed $37 billion in the subsidies and that the yearly subsidy has been growing until this point where we have spent, until the end of 2008, 37 billion and we have created 50,200 jobs. So you do the math and you have that every green job has cost around $770,000 per job. Then all these resources that have been taken from other parts of the economy and put into the creation of these jobs or into the subsidy of renewable energies, if you look at how many jobs this amount of money creates in the rest of the economy you see that for every job that you have been creating, subsidizing, you would have created 2.2 jobs in the rest of the economy. And these are probably the most important numbers. Also this is not a number of our study, but we took the number of the government, the government is recognizing now in Spain that if we want to pay for the debt that we have accumulated because of this feeding tariff or these subsidies we would have to increase the electricity bill to the consumers by 31 percent.

And George Will's conclusion is not encouraging and only in his style of writing that has to scolding both sides that turned me off some time ago:

. . . while being dismayed by the frequency with which such findings are ignored simply because they question policies that are so invested with righteousness that methodical economic reasoning about their costs and benefits seems unimportant. When the president speaks of "new green energy economies" creating "countless well-paying jobs," perhaps they really are countless, meaning incapable of being counted.

For fervent believers in governments' abilities to control the climate and in the urgent need for them to do so, believing is seeing: They see, through their ideological lenses, governments' green spending as always paying for itself. This is a free-lunch faith comparable to that of those few conservatives who believe that tax cuts always completely pay for themselves by stimulating compensating revenues from economic growth.

Anyway, I still like the poetic title!

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