The Government can't create jobs

Recently the Center for American Progress and the Nevada Conservation League partnered to report on the economic impact of federal investments in clean energy in Nevada.

The report claims that 15,000 jobs would be created, or more than four times the number of jobs created in the oil industry with the same size investment. They also claim that in this time of record unemployment Nevada, more than anything, needs an economic stimulus package to get our economy jumpstarted.

For anyone paying attention, the stimulus package back in April 2008 didn't work too well. Look where it got us.

Unfortunately, the idea that government itself can generate growth and create jobs is a myth. The authors of the report have made a very simple economic error by ignoring opportunity costs.

They have assumed:

  • That the investment options available are clean energy or oil energy, and nothing else.

In reality, taxpayers as individuals could invest their money in the world's largest Tickle-Me-Elmo factory if they thought they could make a profit on it. The sky is the limit on what can be invested, bought, sold or consumed. The vast array of different jobs that could be created are too numerous to imagine.

  • That the money will be invested in clean energy or simply vanish into thin air.

The only way you can claim that federal investment in clean energy will generate 15,000 jobs in Nevada is to assume that had the money not been invested in clean energy, it would have been burned.  In reality, like I said above, the money could have been spent elsewhere. Who knows what jobs would have been created if taxpayers had the power to spend THEIR OWN MONEY as they see fit.

Federal investment in clean energy will create 15,000 jobs related to the clean energy industry at the cost of thousands of untold jobs elsewhere in the economy. CAP and the Nevada Conservation League probably made an honest and easy mistake in their economic analysis. It is easy to see the jobs, roads or buildings that currently exist, but it takes quite a bit of imagination to understand the cost – those jobs, buildings or industries that never came into existence.

The government cannot create jobs. At best, it can only shuffle wealth and jobs around.

The problems with a cap-and-trade permit system to deal with pollution and climate change constitute another beast to slay entirely.

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