An Atlantic article by Jim Tankersley, on the subject of job creation, illustrates the way in which bad economic ideas drive bad policy choices. I have in mind specifically Tankersley’s item #5, “Unleash energy companies’ spending power,” in which he proposes
…a “Clean-Energy Standard”–a mandate that a certain percentage of each utility’s power generation come from low-carbon-emission sources. The percentage would ramp up over time. Under current technology, clean energy is often more expensive than, say, coal-fired electricity, but a phased-in standard would allow utilities time to increase electric prices incrementally; a well-designed standard with flexibility (for regions most dependent on fossil fuels today) could blunt much of the long-term impact on consumers. Meanwhile, the new construction could start right away. Such a federal mandate, says Joshua Freed, vice president for clean energy at the centrist Democratic think tank Third Way, “would provide a clear signal, without costing any money, to the private sector to invest in wind, solar, or any of the other technologies that are coming on line today.” Several large utilities say that the resulting certainty would spur billions of dollars of investment and drive job growth.
Note that assertion that this policy could be implemented without costing any money. Perhaps it wouldn’t cost the government any money, in the short term, but it would certainly cost American consumers and businesses plenty of money…after all, if these generation technologies were more economical than the current ones, they would have been implemented without the need for government force. In addition to directly increasing electricity bills, it would represent yet another blow against American manufacturing companies, many of which are highly energy-intensive. Indeed, there are also plenty of non-manufacturing companies, such as operators of large data centers, which would be harmed by government-mandated increases in the price of electricity.. And the resulting decreases in business activity, and reduced ability of consumers to spend money on things other tha electricity, would certainly cost the government money in the future, in the form of reduced tax collections. Not to mention the costs of unemployment among coal miners.
More than 150 years ago, the French economist Frederic Bastiat wrote about the broken-window fallacy, and explained why the breakage of windows does not really provide a net economic gain, despite the fact that such breakage provides jobs for glaziers and glass-manufacturing workers. Apparently, after all this time Bastiat’s insight is still not well-understood. Democrats, in particular, continue to believe that they can push an endless number of “cost-free” mandates on the producers of goods and services, even in the midst of an ongoing economic disaster that has been largely caused by exactly that kind of thinking. And despite all the talk about “conserving resources,” they generally seem to have no compunction about writing off and destroying human-created resources (such as coal-burning power plants) which represent vast amounts of human labor and intelligence.
Atlantic link via Instapundit