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September 22nd 2011 print

Peter Smith

Green dream jobs

Asylum seekers will present a dwindling problem as they gradually decline in numbers for lack of economic opportunities. In fact, Australians may well contribute to a wave of economic migrants seeking opportunities in Asia.


Pursuing make-believe green jobs while losing real jobs


Is there any future in making solar panels more expensively than can the Chinese? Be careful, this is a trick question designed to tease out whether you are a capitalist-supporting Neanderthal indifferent to catastrophic global warming or, alternatively, a forward-looking guy or gal embracing a clean energy future. You might lamely protest that it will be useless to make relatively expensive panels that no-one will buy. Tosh, you will be told, we have to be part of it otherwise we will be left behind. Eventually, everyone will be making solar panels and windmills more cheaply than everyone else and selling them to everyone else. We know that for certain because every country intends to create many thousands of clean energy jobs.

According to a recent report in The Washington Post, the Obama administration allocated $38.6 billion dollars for loan guarantees for companies creating green jobs. With almost half the money gone, 3,545 jobs have been directly created. That is around $5 million per job. Let us suppose the money in total resulted in the original target of 65,000 jobs. That would still be over $500,000 per job. And how much confidence should we have in them being permanent jobs, if their creation depends on government largesse. Not much.

Solyndra, the solar panel manufacturing company that has just gone broke in the United States, taking $527 million taxpayer dollars with it, created 1100 jobs. Alas, those ($480,000 each) jobs proved to be extremely temporary. President Obama took his photo opportunity before the axe fell and is unlikely to return to the empty factory or to visit the unemployed workers he shook hands with while extolling the virtues of green jobs. Solyndra found that it couldn’t make something for, say, $100 and sell it for $50 to match the Chinese and make a profit. Apparently, the Obama administration also took time to work that out.

Green job czars have to understand that their plans will come unstuck in a system which has the nasty habit of rewarding businesses which make things more cheaply than can other businesses. Capitalism and globalisation are the problems. Julia Gillard has to work more closely with Bob Brown to stymie capitalism and globalisation, if we are ever to get those green manufacturing jobs in Australia.

We need to cripple the resource industries which are despoiling the planet and squeezing the “good economy” out of existence, and heavily subsidise the particularly green parts of the good economy. Only then can we look forward to bicycle-friendly communities living sustainably, with lots of teachers, nurses, artists, high-speed rail workers, and solar panel cleaners and windmill minders. A side benefit is that asylum seekers will present a dwindling problem as they gradually decline in numbers for lack of economic opportunities. In fact, Australians may well contribute to a wave of economic migrants seeking opportunities in Asia. This too would be beneficial in lowering Australia’s population and reducing our take-up of resources and congestion on the roads.

That’s all a bit of an exaggeration you may say. Not really. There is simply no way that Australian manufacturing industry will be able to compete in the emerging green jobs market unless it effectively insulates itself from competition. China will out-compete Australia, Europe and the United States in making most things, and certainly green things, that come off an assembly line.

Australia’s economic advantages are not aligned with moving towards a green energy future. China’s are because, unlike us, they like nuclear, and will continue using more coal and gas for the foreseeable future while justifiably claiming to have low per-capita emissions. They are able to churn out low-cost solar panels and windmills for the rest of the world; increasing their competitive advantage in manufacturing by increasing energy costs in the rest of the world; and all without any worries about tiresome environmental regulations getting in their way.

The government claims as one reason for its Clean Energy Bill that “Australia produces more carbon pollution per head of population than any developed country in the world”. There are two ways to look at this: one, as a badge of irresponsibility or, the other way, as Australia playing to its strengths. Australia has abundant supplies of cheap coal. Cheap coal is cheap energy; and cheap energy is one of the keys to having a competitive manufacturing sector and saving and creating manufacturing jobs.

Some parts of Australian manufacturing are struggling even with cheap energy; take it away and the picture gets bleaker and reduces the potential for new manufacturing enterprises to develop and grow. It is important that Australia makes things, and exchange rate gyrations in keeping with resource prices, distance from overseas markets, and a small population spread over a large land mass, do not help. Cheap energy helps, and overcomes some of the disadvantages that are not faced by manufacturing in the United States, in Europe or in Asia.

It is disingenuous to give statistics on Australia’s carbon emissions on a world scale as a reason why we must act. We are not in the same position as other countries. When exactly did it become de rigueur in the Labor Party and in the unions to hamstring Australian industry by moving ahead of a global enforceable agreement on capping and trading emissions? Have all the old-style hard-heads in the industrial wing of the Party died out?

We can be confident that the Chinese government primarily thinks about what advantages China. The Australian government should think about what advantages Australia. We can do our bit right now by a “no regrets” policy of investing in R&D, by allowing the market as much scope as possible to improve energy efficiency (through, for example, privatisation and the reduction of red tape and excessive regulation), and by mining and exporting more uranium, including to India. Or, we can disadvantage our manufacturing industries and lose jobs for no measurable environmental gain by adding a carbon tax to the existing mishmash of expensive environmental constraints on energy efficiency.

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Peter Smith, a frequent Quadrant Online contributor, is the author of Bad Economics