One Job Forward, Two Jobs Back
Another triumph of Obamanomics.
Jul 19, 2010, Vol. 15, No. 41 • By ANDREW B. WILSON
The Department of Energy’s commitment to the two companies comes in the form of loan guarantees rather than outright grants. The guarantees put them ahead of other private companies in the borrowing and investment queue—including companies that could be the next Apple or Microsoft. And they put public money at risk in the service of people who are out for private gain. The risk is real.
Russell Kanjorski, the vice president for marketing at Abound Solar, was one of the principals in another energy company in northeast Pennsylvania, called Cornerstone Technologies LLC, which attracted $9 million in federal grants before it halted operations in 2003 and later filed for Chapter 7 bankruptcy. As reported by the Wilkes-Barre Times Leader, “Cornerstone reported $14,100 in assets compared with $1.34 million in debt” in its bankruptcy filing. The $9 million in federal grants to Cornerstone were earmarked by Kanjorski’s uncle, Representative Paul Kanjorski of Pennsylvania, chairman of the House Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises.
It is also worth noting that Nobel Laureate and former vice president Al Gore, who has accumulated a substantial fortune in the course of campaigning against global warming while investing in alternative energy and lecturing on the subject, has lent his name and support to Abengoa Solar and the parent company, Abengoa. The Spanish company’s stock jumped in November 2007 when an investment fund headed by Gore announced it was acquiring a stake in the company. (Abengoa also owns a biofuels business that is aligned in various ventures with BP, “the world’s first green petroleum company,” as it used to boast.)
Is there anything wrong with spending large amounts of public money on “green” jobs that may or may not pay off in the long run? As a matter of fact, there is. As one prominent government economist who has studied alternative energy explains, “The opportunity cost of creating these jobs is important. If the government takes a million dollars to create one job, that’s a million dollars that could have gone to more efficient and productive use in the private sector—in creating stronger and better jobs for more people.”
The same point may be made about everything the government does with the purported goal of boosting the economy and creating jobs. In making the case last year for the $787 billion stimulus bill, Obama and the Democrats claimed it would stop unemployment from going above 8 percent. Instead unemployment climbed to 10 percent and has remained at or near that level ever since. Rather than admit error, the administration is now claiming that the stimulus has kept unemployment from going up to about 12 percent.
But the stimulus hasn’t worked. The principal effect of an alarming rise in government spending and deficits has been to undermine a normal cyclical recovery. Part of the blame for continued high unemployment (especially long-term unemployment) surely rests on the crazy growth of new entitlements and federal spending, combined with the likelihood of a raft of new taxes—some hidden (e.g., rising health premiums resulting from Obamacare) and some not (e.g., the value-added tax now being discussed)—to pay for more government and government-directed redistribution of income.
Give the Obama administration credit, then, for destroying or impeding the creation of at least two or three jobs for every one that it claims to have created or saved—including those at Abengoa Solar and Abound Solar Manufacturing.
Andrew B. Wilson is a writer and business consultant.
Correction: This article originally identified Cornerstone Technologies as a solar energy company. In fact, Cornerstone was supposed to produce technologies related to the use of anthracite coal.