Around this time last year, President Obama unveiled a program as part of the stimulus bill to provide $2.3 billion in tax credits for the clean energy manufacturing sector with the expectation that this would create 17,000 jobs. This put each job created under the program at a price tag to taxpayers of $135,294. Ouch!
Are green jobs really worth this much taxpayer money?
Edward L. Glaeser writes in the New York Times this Tuesday about the closing of a solar energy company that had received $40 million in subsidies, and he explains Why Green Energy Can’t Power a Job Engine:
Evergreen Solar announced last week that it was closing its plant in Devens, Mass., laying off 800 workers, and moving production to China.
Evergreen’s factory had received more than $40 million in subsidies, which led many to see the plant closing as lesson in the futility of green energy and industrial policy. …
Evergreen Solar’s move to China was supported by a $33 million loan from the Chinese government, and it has suggested that the Chinese production was cheaper because “solar manufacturers in China have received considerable government and financial support.”
But surely China’s skilled, low-wage labor force is a far more important source of its low costs. Japan’s success in the 1980s was also attributed to its activist industrial policy, but subsequent research found that government subsidies backed losers more often than winners.
Joshua Lerner’s superb book “Boulevard of Broken Dreams” (Princeton University Press, 2009) reviews public efforts to support start-ups and entrepreneurship worldwide and reminds us that “for each effective government intervention, there have been dozens, even hundreds, of failures, where public expenditures bore no fruit.”
I suspect few readers will really think that Evergreen Solar was shortchanged by American governments. The National Renewable Energy Laboratory contracted with the company in its early days. More recently, Massachusetts agencies gave tens of millions of dollars to the company.
Despite all of the subsidies and government support Evergreen Solar received, the company re-located overseas. What does this tell us? Stop throwing hard-earned taxpayer money at uneconomical “green” projects. Evergreen realized it would be more economical for them to produce their solar panels in China, and rightly so. Political considerations of claiming to have created oh-so-valuable (!) green energy jobs within the country, in defiance of the laws of economics and by ignoring the benefits which arise from international trade, may be a short-term win for politicians, but they are a long-term loss to taxpayers.
If you are interested in learning more about the green jobs boondoggle, check out this Heartland Institute Publication: 7 Green Jobs Myths.