A Green Economy Creates Jobs... And Kills Jobs Too

President Obama frequently touts all the new jobs that will be created as a result of an investment in a new "green" economy. He's especially been on the march since Friday when his massive climate change bill called cap and trade was passed by the U.S. House of Representatives.

He's right. It will create new jobs for certain companies that may have a competitive advantage in it and/or can take advantage of all the dollars that will be flowing into it via guvment subsidies. The money goes out. Somebody gets it. For those companies that get those dollars it is a potential bonanza.

Unfortunately, all is not as sweet and tasty as Cheesecake. It will kill jobs in companies and in regions that rely on current modes of energy production. That may not be all bad if you're replacing ugly emissions producers with clean emissions producers and the job loss to job gain ratio is about even. It's actually unlikely that's the case because existing companies utilizing current energy producing methods are already operating at lower relative costs since they have an existing infrastructure and certain inherent advantages. Producing and transporting coal or oil, for example, so that it can be useful is cheaper as it is now than solar, wind, or ethanol. Otherwise, the shift would be more pronounced by now because we would already see it being adopted more widely than in it is. Alternative energies have been around for many decades now. Since it is more costly per unit to widely utilize alternative "green" energy sources, it is not widely used.

The other aspect of this "job creation" legislation is that consumers will have to pay in utility bills for it. Expect your monthly electricity and maybe gas bills to go up at least $20 to $30 per month and probably more. Ultimately, this bill also makes it more costly for business to operate. Especially for business that are heavily dependent on energy as an input to their production processes.

In the end, it is consumers and other businesses that lose. Whether the gains from new "green" jobs offset these loses is doubtful. But who knows? Maybe we can hope and if we hope hard enough we will see that "green" energy will usher in a new era of peace and harmony for all of mankind. And maybe some of ladykind as well.

The alternative would be to have existing energy producers become more clean. This is akin to the reality that the car industry has cars that offer much higher mileage than a decade ago. Some models get over 50 MPG now. This requires patience. I guess that since we're in yet another crisis we might as well shoot first and ask questions later. Adding costs to businesses and embarking on an uncertain probable net job killer is yet another reason why I am so pessimistic on an economic recovery anytime soon.