Julian Morris: The Unseen Costs of "Green" Investments and Initiatives

Julian Morris is the Executive Director of International Policy Network, a London-based global think-tank which runs campaigns seeking to educate the public about the importance of markets and market institutions in the context of global policies relating to development, trade, health, accountability and the environment. Today the IPN has published Seven Myths About Green Jobs.

On August 19, Nick Clegg discussed the government's planned "Green Deal", announcing the launch of a low carbon business support programme which the Government hopes will lead to the creation of 10,000 new jobs and 1,000 firms. Maybe it will – but how many jobs will be lost, or not created? And what will all these “green” jobs cost our children?

In Seven Myths about Green Jobs - a new report written by Andrew P. Morriss, William T. Bogart, Andrew Dorchak and Roger E. Meiners and released by IPN today - the authors find that “green” investments by governments are often counterproductive, wasting resources, reducing productivity and harming future generations.

Like most governments in the developed world, Britain's Con-Lib coalition has seized on the seductive idea that subsidising green technology will pay for itself. It plans to pour taxpayers' money into a whole range of initiatives such as the "Green Deal", claiming that the high costs will be offset by long-term benefits to the economy and the environment. Not surprisingly, this turns out to be wishful thinking. Our report reveals the hidden costs that have to be ignored for such "win-win" scenarios to seem plausible.

Take one example from a United Nations study on green jobs, which calls for fruit to be picked by hand rather than machine. The Luddite premise behind such thinking is that machines are taking jobs away from people. What actually happens is that machines enable people to do jobs more efficiently. Yes, some human skills become redundant – but others are created. How many computer operators were there in the nineteenth century? And when was the last time you washed your clothes using a mangle?

Now, high end wine producers no doubt benefit from the trained human eye, which is capable of distinguishing between the best and the second best quality grapes. That’s why Domaine Romanee Conti wines retail at $15,000 a bottle. But while I’d love to be able to drink DRC every day, most of us are happy to settle for wine with a less personal touch – and price.

Eliminating machines from fruit picking, selection and processing would be a backwards step, driving up prices and harming consumers. And it is an illusion to think that net jobs are being created. By driving up the price of fruit, such policies mean people will likely buy less fresh fruit – which would be bad for their health – and have less money to spend on other things. This latter effect is especially important, because it means that the subsidy to these “green” fruit picking jobs results in fewer other jobs.

So you can see that rather than building a vibrant "green economy", such policies will adversely affect the economy and harm our quality of life. "Green" subsidies effectively pay companies to make everyday items more expensive and scarce, taxing the public twice over.

While our bills go up, the only people who are likely to see a boom in "green jobs" are bureaucrats. In practice, "green investments" get spent on red tape, pushing resources away from the productive sectors of the economy in the belief that green planners will be able to pick out winning technologies that the market has mysteriously failed to notice.

And all of this is to be done on the never-never. Today's "green investments" will be made by increasing Britain's colossal national debt, borrowing heavily in the hope of making future generations richer. When this green gamble fails, our children and grandchildren will be left with the bill.

There isn't even much hope that such runaway spending will improve the environment. Like most bureaucratic decisions, what counts as a "green job" will be determined not by objective assessment but through a blend of political calculation, lobbying from special interests and the inevitable confusion of imperfect individuals trying to be all-wise planners. For instance, steel is one of the world's most carbon-intensive industries, yet the United Nations Environment Programme counts steelworkers as having "green jobs", apparently because steel is needed to make wind turbines.

Over the past two hundred years, life for people in rich countries has become immeasurably better as innovations have led to better, less expensive goods, more efficient use of resources and less pollution. These innovations are the outcome of individuals and companies specializing in production and trading with one another. And in the past thirty years, removal of barriers to trade and investment means the same benefits have increasingly been experienced by people in poorer countries.

But the advocates of "green" jobs reject the proven benefits of a free economy achieved through trade and specialization in favour of a wasteful, dirty "green economy" directed by bureaucrats-at tremendous cost. Even the UN admits that a "full-fledged [global] green transition" could cost trillions of pounds. This study shows the money would be wasted, with future generations facing a huge bill and leaving our countryside littered with white elephants.

In his remarks, Mr Clegg said that "all governments talk about leading the shift to a new green economy," and he is sadly right. But that is because governments overestimate their ability to plan the future and underestimate what their citizens can achieve through free association. When the real costs to the economy and the environment are considered, these proposals don't add up.

Ultimately, the "green" jobs ideology is predicated on a mistaken belief that the government can predict which technology will be efficient and green. It can't - and it won't. From the Soviet Union to British Leyland, the history of government direction of economic activity does not bode well.