Saturday, May 30, 2009

The High Price of Green Jobs

The Obama Administration is moving fast towards green jobs that will have the economy bleeding red in lost revenues and employment. This is not merely the rants of the President's political opponents, but an assessment by Dr. Gabriel Calzada, an economics professor at Juan Carlos University in Madrid and his team in their report "Study of the Effects on Employment of Public Aid to Renewable Energy Sources."

The report provides an insightful view of the negative impact the pursuit of green jobs have had on the economies of Europe. The chasing of "green jobs" is nothing new, according to Calzada. He points out that European countries have lived under regulations and subsides for the development of such industries since 1997, and the economic impact has been both impressive and very negative.

According to Calzada, Obama's "model country" of Spain has lost 2.2 jobs for every job created. That translates to 9 jobs lost for every four new jobs provided. Calzada goes on to extrapolate the numbers and points out that, if the US was "fortunate" enough to create 3 to 5 million green jobs, it would do so at the lost of at least 6.6 to 11 million jobs that already existed. For most Americans, this is simply too big of a price to pay.

What is also disturbing is how much these green jobs cost. According to the study, each job cost an incredible $800,000 each. This for jobs that often only pay approximately $15 an hour. In a situation where the US unemployment rate is growing at a rapid pace, this type of cost for employment and the trade off of pre-existing jobs is a difficult sale.

Some other facts, according to the study, about green jobs:

  • The cost of these type of jobs goes across many energy alternatives, according to the study. 8.99 jobs are lost in photovoltaics, 4.27 by wind energy, and 5.05 in mini-hydro.

  • The problem is not a "Spain" problem, but has to do with the energy alternatives. The costs are the same through out Europe whenever such policies are pursued. Therefore, we can expect the same challenges here.

  • The cost to taxpayers of renewable energy is enormous, including 4.35% of all value added tax, 3.45% of income tax, and 5.6 percent of all corporate income taxes.

  • According to Spain's energy regulator, Spain's electricity rate would have to increase by 31% in order to pay for the cost of government subsidies to start this industry.

The value and wisdom of "green jobs" is suspect in a perfect economy. The "science" behind it is more religious than factual, and the market simply doesn't seem very interested in pursuing such on its own (the best test if something will work in the "real world"). In our current economy, with the massive loss in jobs we have already experienced and the high cost of inflation that should follow our government expenditures and inflationary policies, this is a complete nightmare.

Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. Eric Bolling of Fox News and Fox Business says that Price’s Blog “is very influential and moves the blogosphere.” Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.

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