Debunking the Notion that Creating Green Jobs is Bad for the Economy
A newly released study suggested that upholding the new, stricter EPA Clean Air Act rules would create a slew of new jobs — something along the order of 1.5 million of them. On the face of it, it’s a win-win: Cleaner air for the nation, and jobs for construction workers, engineers, and pipefitters in the short term. But detractors were quick to label the concept a victim of the broken window fallacy — essentially arguing that such jobs required to install pollution controls are costing utilities and energy companies resources that they could have more efficiently dedicated to productive, job-creating ventures elsewhere. We’re not creating jobs here, we’re just inefficiently moving them around. Or so the argument goes — and it’s one that’s often lobbed at the concept of green job creation. Here’s why it’s wrong.
The Broken Window Fallacy
First, a quick recap of the Broken Window Fallacy: A boy breaks the window in his dad’s store. The dad must then hire someone to fix the window, giving the window-fixer some dough, and providing an ostensible benefit to the local economy in the process. In a way, the broken window was a good thing, at least for the benefit of the town economy right?
Not so, sayeth the BWF — you see, had the boy not broken the window, and forced the expense upon his pops, shopkeeper dad would have been able to use his resources elsewhere, buying stuff he really needed, like a better neon-lit beer sign for his store or something. What’s more, is that the repairman might have had a bunch of other work to do too, which he wasn’t able to get to because of that damn kid. In other words, the broken window created a bunch of unintended consequences that force a net negative impact on the economy.
So the thinking here is that by implementing strict clean air regulations, and forcing polluting companies to adhere to them, we’re breaking a big window in every coal plant and oil refinery across the nation. But there are two crucial differences between forcing polluting industries nationwide to clean up their operations in the middle of a recession, and the boy breaking papa’s storefront window.
A Broken Window Can Be Good News, Sometimes
First, the part about the repairman being overworked, and sacrificing work elsewhere to fix the window is rendered moot by the economic slump. Right now, there’s a glut of capital on the capacity side, and millions of people (many of them in the construction industry) remain jobless on the other. Think of it this way — despite hard times for most folks, the shopkeeper is doing quite alright for himself (most energy companies have weathered the recession with high profits), but he’s afraid to buy anything or invest anywhere because he wants to save his dough in case the economy tanks further.
Meanwhile, the repairman can’t find a job for the life of him. At the moment, somebody breaking that window would really help him out. There are hundreds of thousands of construction workers who may not work at all without the new projects like the pollution control upgrades.
The Bigger Picture
Which brings us to numero two — in this case, ‘breaking that window’ is providing a massive benefit to society at large that the fallacy scenario has no way to accommodate. Fixing up polluting power plants will reduce air pollution and help prevent the buildup of greenhouse gases in the atmosphere. Air pollution, while controlled better now than the pre-Clean Air Act era, continues to cause asthma and contributes to the health woes of the general populace. Further tightening the screws will save millions of lives in the long run and lead to a whole lot of healthier lungs. The point of the study that suggested doing so will create 1.5 million jobs wasn’t to suggest that these would be created out of thin air — just that doing something that needs to be done for the betterment of human health will have some economic benefit as well.