Sunday, February 21, 2010
Thought of the Day
Showering government largess on an industry will certainly increase employment in that industry. It’s much less clear that such subsidies will produce more jobs on balance. Kerry thinks it will, claiming that when Germany enacted “strong policy mechanisms to drive investment in solar power and other renewable energy sources,” the result supposedly was employment growth: “Renewable energy usage has tripled to 16 percent, creating 1.7 million jobs. By 2020, Germany’s clean energy sector will be the biggest contributor to the nation’s economy.”
An October 2009 study by RWI, a nonprofit German economic think tank, however, concluded that policies pushing renewable energy end up producing “job losses from crowding out of cheaper forms of conventional energy generation, indirect impacts on upstream industries, additional job losses from the drain on economic activity precipitated by higher electricity prices, private consumers’ overall loss of purchasing power due to higher electricity prices, and diverting funds from other, possibly more beneficial investment.” The report called Germany’s experience “a cautionary tale of massively expensive environmental and energy policy that is devoid of economic and environmental benefits.”
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