Bjorn Channels Bastiat to Expose the "Green Jobs" Myth

Bjorn Lomborg, "the skeptical environmentalist," has a good piece in Slate taking on the myth of the "green energy" economy -- which should be required reading for all those who are still drinking the "new energy economy" Kool-aid peddled by one former Colorado governor. The claimed economic benefits are largely an illusion, Lomborg explains, which results from studying only one side of the ledger, a common mistake among economic illiterates.

Lomborg's analysis is straight out of Bastiat, the free-market pamphleteer and popularizer who explained this oft-made mistake in a famous essay, "What is seen and what is not seen." Wikipedia explains Bastiat's point as follows, for those who aren't inclined to read the essay:

"One of Bastiat's most important contributions to the field of economics was his admonition to the effect that good economic decisions can only be made by taking into account the "full picture." That is, economic truths should be arrived at by observing not only the immediate consequences – that is, benefits or liabilities – of an economic decision, but also by examining the long-term consequences. Additionally, one must examine the decision's effect not only on a single group of people (say candlemakers) or a single industry (say candles), but on all people and all industries in the society as a whole. As Bastiat famously put it, an economist must take into account both "What is Seen and What is Not Seen." Bastiat's "rule" was later expounded and developed by Henry Hazlitt in his work Economics in One Lesson, in which Hazlitt borrowed Bastiat's trenchant "Broken Window Fallacy" and went on to demonstrate how it applies to a wide variety of economic falsehoods."

The "green energy economy" is an illusion generated by looking at only one side of a multi-sided equation -- by focusing on the apparently-obvious benefits and beneficiaries, while ignoring the less-obvious costs and economic casualties that stem from a government-ordered reallocation of scarce resources. The economic illiterate applauds the new job being "created" in the wind turbine plant -- a job being subsidized by federal or state "incentives" -- but ignores the job that's destroyed at the coal mine or on the drilling rig, all because politicians decide that they know better than the market does about how to organize the energy sector.

True "economic literacy" requires an ability to see not just what seems obvious, but what is harder to see but is just as consequential. When you see the picture in totality, the "green jobs" delusion disappears.

Star Struck or Struck Dumb?

If there's anything worse than jumping on a bandwagon, it's jumping on a bandwagon after everyone else and their cousins are aboard and it's broken down in a ditch with two flat tires and a shattered axle.

Handing-out tax "incentives" (read bribes) to filmmakers was quite the fad a few years back. A bunch of states, all dreaming of becoming "another Hollywood," jumped aboard the bandwagon, each trying to outdo the other in throwing taxpayer money at television and movie producers. And this seemed to "work" well enough for some of the star-struck states, at least from the filmmaker's vantage point, since most people are more than happy to take money that's thrown their way.

But regular readers of this blog know that Hollywood handouts have been a losing long-term proposition for most states, generating little lasting return on investment and only a short-term economic bump, while lending themselves to abuse and fraud. Most "studies" commissioned by handout backers show benefits; but more objective research indicates that the primary beneficiaries are those getting the subsidies, not those giving them. Why Colorado would want to jump aboard this broken-down old bandwagon is a mystery, at a time when many states that pioneered this new kind of corporate welfare are having second thoughts and backing away. And why two Colorado Republicans would be pushing this is even more baffling, if they're hoping to rehabilitate the party's reputation for fiscal responsibility.

Proponents of the idea want to slap a tax on movie tickets to fund the subsidies, which seems self-defeating, given that higher ticket prices are likely to result in lower attendance and reduced profits for some of the same filmmakers these "incentives" are supposed to help. Filmmakers may shrewdly prefer to get some cash up-front, given the box-office bombs so many of them bring to the big screen, but forcing all movie fans to bankroll the select few production companies that would get the subsidies is unfair and counterproductive.

Even The Denver Post recognized this as a dumb idea. Let's hope a majority of legislators will too.

Test of Resolve

The rubber is about to meet the road on the GOP's budget promises, which could result in the first government shutdown showdown since the mid-1990s, when Newt Gingrich blinked first and the "Republican revolution" hit the rocks. The only question is, will Barack Obama be the windshield, or will he be the bug?

Newt fancied himself the windshield back in 1995, still dizzy-drunk from his ascent to power. But Bill Clinton played his cards perfectly and Gingrich became the bug. That, in my opinion, marked the beginning of the end for the so-called "Republic revolution" of 1994.

Will history repeat itself?

Stay tuned.

Business is Booming

I just returned from a few days of family time in Washington, D.C., and what a scene it was.

The place is booming! No sign of recession can be found. Shiny glass towers are springing-up everywhere; major road projects too; all the fancy restaurants were packed; empty storefronts and the otherwise-ubiquitous "Space for Lease" signs were rare. It felt a bit like it must have in Moscow during the Soviet era, when the elite nomenklatura lived like royalty and everyone else, out in the provinces, served as vassals.

Government is the only industry left in America. And it's booming.

Blocking the Exits

The Airport Advisory Board, in a memo responding to my questions about exploring a private option for handling passenger screenings at Colorado Springs Airport, recently recommended against replacing TSA. The costs and complications of making the change far outweigh any tangible benefits, in terms of improved service, according to the board. Relatively few passenger complaints have been heard at COS. And relations between TSA and airport managers have been good, according to the memo.

Fair enough. That no doubt will please those on council who do everything possible to not rock the boat. I still think the question was worth asking. I fear the situation will deteriorate once TSA screeners gain collective bargaining rights and the union ethos -- which I know first-hand thanks to nearly two years as a card-carrying member of the United Auto Workers -- seeps deep into the bureaucracy's pores. Airports should at least have an option regarding TSA, in my opinion, even if they don't take it, this being a free country and all.

Such discussions just became completely irrelevant, however, because Moscow .. . . sorry, I meant Washington . . . last week slammed the door on the option, by declaring that no more airports will be allowed to go private. That doesn't sit well with certain members of Congress, including the chairman of the House Transportation Committee, who say Congress wrote an opt-out clause into the original legislation for a reason, so the last word on this has not been heard. Maybe a sharp reduction in TSA funding will lead to a change of heart. But the move drew loud cheers from the National Treasury Employees Union, which hates private sector competition and wants to turn every airport screening station in America into a union shop. Just think of the efficiency and improvement in work ethic and service that will bring.

There's no evidence that private screeners are less competent than federal screeners. I'm aware of no security breaches linked to airports opting-out. The 16 airports that contract-out these services (which suggests to me that there must be some benefit) seem perfectly happy with the choice they made. So why wouldn't Moscow . . . . there I go again, sorry . . . permit the expansion of a program that seems to be working well?

That could be the first problem: It's working well. Or this could just be another case of heavy-handed Washington lording it over the peons beyond the beltway. A third possibility suggests itself, however -- that this union-friendly White House fears a stampede of airports to the exits once collective bargaining rights are finally granted TSA workers, which could really put a dent in the union dues collected by organizations that gave (and will give) a lot of campaign money to Barack Obama

Could this administration's motives for slamming the door on the private option really be that base, that tawdry, that self-serving? Could this really be just another way for the White House to throw Big Labor a bone? With no better explanation to offer, that's the one I'm going with for now.

Houston, You Have a Problem

Houston is showing us how not to run a teacher performance pay program. When 92 percent of the teachers qualify for the bonuses, something is wrong. This type of incentive pay system is just a phony and cynical way of boosting everyone's salary.

The March of Folly

I can recall -- and it doesn't seem that long ago, really -- when the "b" word -- billion -- was still something of a novelty in Washington. I was working there in those days and even we Washingtonians had to have it explained to us: a billion is a thousand million dollars, which was one way of helping get our minds around it. Carl Sagan used the word in his PBS "Cosmos" series, sometimes ad nauseum, to illustrate the incomprehensible vastness of space. But it was still a very big number even by Washington standards.

I think I can also recall when annual budget deficits, which had been counted in hundreds of millions of dollars, began being counted in billions of dollars, and then billions and billions of dollars, as Sagan would say. Trillion (which I think is a thousand billion dollars) was still a word rarely used. It began being applied to the national debt at some point -- which is the accumulation of deficits, plus the cost of borrowing money to finance it -- but it was never imagined that it would one day be applied to the deficit. And that just wasn't that long ago.

What comes after a trillion? Maybe a zillion? Or a bazillion? I guess I'll have to Google it and find out. Whether I want to accept it or not, it's probably a number that's in our fiscal future.