Suppose President Barack Obama had appeared on television to give an energy speech and had declared the following:
My fellow Americans, we are going to provide sustainable energy and lots of jobs for you by junking the automobile and all other fossil-fueled engines and going back to animal power. We also are going to make all coal-fired electric power plants illegal, so if you want electricity, you are going to have to depend on windmills or just live in the dark.
Needless to say, the speech would be greeted by something other than thunderous applause (except from Al Gore and the Sierra Club headquarters), and the Obama’s presidential career would be quite short. However, the policies coming from Washington these days, while not quite as draconian as what I described, nonetheless are bad and are going to make us poorer.
For years we have been bombarded with the “clean energy” line, the idea being that electricity that comes from burning of fossil fuels is “dirty,” while electricity that comes from windmills, solar, or “geothermal” sources or anything else that meets with Gore’s approval is “clean.”
(Gore has a website that claims that in the next decade, the United States can switch entirely to what he calls “clean energy.” This is sheer fantasy made worse only because the President seems to believe it, or at least wants that to be our energy future.)
Unfortunately, the government does seem to be pushing hard to force Americans to accept energy sources that are going to make us much poorer, retard (if not eliminate) the economic recovery, and make our lives much more difficult. Let me count the ways.
First and most important, it is true that switching to windmills will “create” jobs in that particular industry. No one is denying that. However, there is this little problem that occurs whenever government destroys wealth: It also destroys meaningful employment opportunities.
What the government is going to do is to count every job in an “alternative energy” field as proof that its energy policies are “creating jobs.” What the government won’t do, however, is report the employment opportunities that are lost because the authorities have artificially forced up the costs of efficient energy sources. In other words, in net terms, this whole thing is a loser.
Second, the issue is not jobs per se but rather economic growth. The government could give us all “jobs” tomorrow by telling us we had to scratch out a living by hand. For that matter, one can argue that Pol Pot and the Khmer Rouge created “full employment” in Cambodia during their murderous regime three decades ago, but the “employment” was not particularly desirable.
The real problem is that the energy proposals this administration is demanding, from “clean” (and extremely inefficient and costly) energy to ramping up the corn-based ethanol fraud, will make fuel and electricity much more expensive, which is going to result in much slower – or even negative – economic growth.
To put it another way, this country cannot have both enactment of these energy proposals and a robust economic recovery. They are mutually exclusive, and there is no way around this point, no matter how much rhetoric President Obama and his supporters may use.
The great Henry Hazlitt once wrote that each generation has to learn the economic lessons all over again because it is easily seduced by what he called (after Frederic Bastiat) the “broken window fallacy” — the failure to understand that in a world of scarcity, resources commandeered by government are diverted from the uses that consumers and entrepreneurs would have chosen. Indeed, if any fallacy can be applied to the notion that forcing this country into a “horse-and-buggy” energy future will be an economic plus, it is the fallacy of the broken window.
