Friday, November 07, 2008

"Green Recovery" Report Author Responds To Critic

Nov 7: On September 9, The Center for American Progress (CAP) and the Political Economy Research Institute (PERI) released a 42-page report entitled, Green Recovery: A Program to Create Good Jobs and Start Building a Low-Carbon Economy [See WIMS 9/10/08]. According to the organizations, "The report outlines a green economic recovery program to strengthen the U.S. economy over the next two years and leave it in a better position for sustainable prosperity." CAP is headed by John Podesta, former chief of staff to President Bill Clinton and professor at the Georgetown University Center of Law, who is now co-chairman of President-elect Barack Obama’s transition team.

On November 5, in a "WebMemo" entitled, Impact of CO2 Restrictions on Employment and Income: Green Jobs or Gone Jobs?, David Kreutzer, Ph.D., with the Heritage Foundation criticized the report and two others claiming that policy initiatives to advance a green investment agenda necessarily hurt economic growth and employment. Kreutzer said, "The clear political failure of the Lieberman–Warner bill last spring shows that support for global–warming legislation wanes considerably when the extraordinary costs are compared to the almost insignificant benefits. In response, those pushing restrictions on carbon dioxide (CO2) have tried to repackage global warming legislation as jobs bills. As appealing as the repackaging seems on the surface (lots of high–paid, high–tech workers in lab coats), the support for these claims collapses once it is examined."

Kreutzer concludes, "When all is said and done, restricting CO2 cuts energy, income, and jobs. Pretending that breaking windows creates employment may make choosing among alternatives easier, but it leads to bad policy."

Robert Pollin of CAP and a co-author of the Green Recovery report has responded to the critique with a detailed response. According to Pollin, "Kreutzer claims that 'Green Recovery' is able to show that green investments produce positive job effects only by making an elementary error in logic. He claims we count the jobs that are created by spending a given amount of money, for example, $100, on green investments, but we ignore the jobs that are lost when $100 in new taxes have to be raised to pay for the green investments.

"Kreutzer reaches this conclusion by ignoring all the basic arguments in 'Green Recovery.' Spending $1 million on green investments, for example, will create about 17 jobs within the U.S. economy, while spending that same amount within the oil industry will create about 4.5 jobs. As a short-term stimulus program -- in which an increase in spending is not offset by any corresponding rise in taxes -- a $1 million increase in spending on green investments will therefore produce 17 new jobs, with no job losses elsewhere in the economy.

"Over the longer term, a $1 million increase in green investment spending that is offset by a $1 million reduction in spending within the oil industry will still produce a net increase of 12.5 jobs. Investments in energy efficiency will also reduce energy costs now. Investments in renewable energy are bringing these energy sources into cost competitiveness with fossil fuels. Continued investments in conventional fossil fuels also neglect the economic costs of global warming." Pollin then summarizes the six basic arguments in Green Recovery that underpin the report findings.

The Green Recovery report includes individual state supplements for: AK, AZ, AR, CA, CO, FL, IL, IN, IA, KS, ME, MD, MA, MI, MN, MO, MT, NE, NV, NH, NJ, NM, NY, NC, ND, OH, OR, PA, SC, TN, VA, WA, WV, and WI.

Access the Heritage Foundation critique (
click here). Access the critique response from CAP (click here). Access an overview from CAP and link to the complete report and state reports (click here). Access more information from PERI (click here). [*Energy, *Climate]