One Job Forward, Two Jobs Back
Another triumph of Obamanomics.
Jul 19, 2010, Vol. 15, No. 41 • By ANDREW B. WILSON
The Great Obamanomic Job Creation Machine rumbled into action again over the Fourth of July weekend, promising to spend as much as $2 billion to support creation of 1,585 “permanent” jobs by two solar energy companies. That comes to a potential cost of over $1.25 million per job.
In his weekly radio address on July 3, President Obama chided the Republicans for failing to climb aboard his job-creation bandwagon, which he claims—against strong evidence to the contrary—has created or saved 2.8 million jobs over the past year. And he isn’t finished. He vowed “to keep competing aggressively to make sure the jobs and industries of the future are taking root right here in America.” Here’s what he said:
It’s all I, I, I with this president. The repeated use of the first person singular pronoun illustrates what the economist Friedrich Hayek called “fatal conceit” or “the pretense of knowledge.” If no one in the private sector is beating a path to the door of either one of these small and unheralded companies—to buy their products or invest in their technologies—what makes Obama and the Department of Energy so sure it’s wise to put $2 billion of the taxpayers’ money at risk on their behalf? And if President Obama has gone on a VIP tour of one or two solar panel or wind turbine factories, does that constitute real knowledge—or simply “the pretense of knowledge”?
And there are other aspects of this presidential pronouncement that deserve closer inspection.
First is the willingness to commit huge sums of money for the creation of comparatively few jobs in favored industries. Abound Solar is supposed to create 1,500 “permanent” jobs, while Abengoa Solar is promising just 85 “permanent” jobs, according to the Department of Energy fact sheet, at its plant in Arizona. Add another 3,600 construction jobs, which will disappear after the three plants are built, and the cost per job created still amounts to $386,000—which is more than seven times the median household income in this country.
Second is the willingness to bet taxpayers’ money on unproven companies set up for the express purpose of pursuing government grants. As it admits in one of its press releases, Abound Solar is already “fueled in part by enhanced federal support, including tax credits and loan guarantees, for renewable energy.”
Third is Obama’s decision to look to nearly bankrupt Spain for the clean energy jobs of the future. Abengoa Solar, beneficiary of fully $1.45 billion of the “conditional commitment” announced by the president, is based in Seville. Though part of a larger Spanish conglomerate with $6 billion in revenues and 23,000 employees, Abengoa Solar itself had fewer than 400 employees at the end of 2009 and annual revenues of less than $150 million. In the annual report on its website, Abengoa Solar lists the total capacity of its solar plants in operation and under construction around the globe at 493 megawatts. To put that into perspective, 493 megawatts is just 0.03 percent of the electrical generating capacity of Cleveland Public Power, which supplies one medium-sized Midwestern city. It’s more than enough to fry an egg, but not nearly enough to begin to create “transformational change.”