Economics, Energy and the Environment

More hot air on green jobs in Iowa

Image: U.S. Army (Flickr) (CC BY 2.0)

Image: U.S. Army (Flickr) (CC BY 2.0)

President Obama is playing the green-jobs card again, this time in Iowa (which, between wind and ethanol, is rapidly earning the moniker “the subsidy state”), where he’s accusing Mitt Romney of wanting to kill jobs because he opposes the continuous subsidization of wind power:

In a state where wind turbines are almost as common as corn fields, President Barack Obama unleashed a fury of criticism at GOP opponents Mitt Romney and Paul Ryan over their energy policy in Iowa this week, underscoring the importance of “homegrown” energy in a state that relies on wind power for almost 7,000 jobs, according to the administration.

The thorny debate between the two camps centers partly on a 2.2-cent tax credit given to wind energy companies for every kilowatt hour of energy they produce. Critics of the tax credit, including Romney who has said he’ll let the tax credit expire, argue that the government should reduce regulations and take a more free-market approach. Proponents say the credit helps create jobs and diversifies the country’s energy supply.

But as we know, government subsidies don’t create jobs: They simply move job-creating capital around, and ultimately produce fewer jobs on net, as I point out in this study of green jobs in Europe.

As I observed in that study, researchers in Spain, Italy, and the UK all demonstrated that taking the money to create “green jobs” out of other sectors of the economy resulted in fewer jobs, because the green-power jobs are bloody expensive.

In the case of Spain, the cost of creating a green-energy job came at the expense of two jobs that would have been created elsewhere in the economy with the same capital. In Italy, you could have created between five and seven jobs with the “investment” needed to create one green-energy job. In the UK, the lost-job number was about four. If we take the average of these (4), and apply it to the wind-power jobs quoted in this article, for the 7,000 jobs created in Iowa with wind-power subsidies, we could have created 28,000 jobs in other parts of the Iowa economy. For the 37,000 jobs (nation-wide) that the article attributes to wind-power subsidies, we could have created 148,000 jobs elsewhere in the economy.

So who’s the job killer, again?

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