Recycling to Nowhere
The green economy meets the facts.
Aug 27, 2012, Vol. 17, No. 46 • By IRWIN M. STELZER
Besides ascribing a legitimate role to the regulators for which she has little use in most other connections, Furchtgott-Roth here ignores the fact that, like governments, large private-sector companies can screw up. Think of BP. Of course, private-sector players bear the cost of their incompetence (at least sometimes), while government bureaucrats rarely do. But in appraising the environmental impact of something like fracking, it is not enough to say, in the absence of private-sector errors, worry not about the environment. I have been around the energy industries for more decades than I care to remember and can assure the author that there will be errors. They may not be frequent, but these are industries in which one error—be it by BP in the Gulf of Mexico, or by the utility companies during the blackouts of 1965 and 2003, or by the officials responsible for the Exxon Valdez oil spill of 1989—can have rather high costs.
Given the complicated nature of the energy sector, the not-always-perfect performance of the industry’s managers, and plain bad luck, these possibilities must be considered and weighed against the more serious costs of refusing to add to our energy supply sufficiently in advance of demand growth. Shale oil will, as Furchtgott-Roth notes, prove to be an economic game-changer for an energy-hungry America, but its risks must be recognized and managed.
But this is a quibble, required of all reviewers of economic tracts. My main quarrel stems from a desire for more from an author surely capable of providing it. It would have added to the large contribution this book makes to the debate about regulatory policy if she had shared with us her suggestions for the criteria to be used in setting policy capable of avoiding the errors she criticizes. From her other writings we know that she is unenthusiastic about the carbon taxes that so many economists feel would create a level playing field for all energy sources and eliminate the (nontheological) justification for subsidies to uneconomic wind, solar, and other renewables, and allow markets rather than regulations to determine the level and pattern of energy consumption. She is, after all, more than a little skeptical about those who believe there is such a thing as “green jobs” to be wished into existence by lavishing taxpayer cash on worthy recipients. How would she reduce their role?
In the end, it would be churlish to argue that Diana Furchtgott-Roth has not made her case. By piling fact upon fact, example upon example, carefully analyzing the relevant data relating to the costs of green-jobs policies, and reminding us of the fallibility and partisan nature of politicians’ glowing forecasts of the job-creating potential of subsidies and regulations, she has shown that these programs, more often than not, make “people feel good about themselves” only by placing a huge burden on the economy.
They might not quite be the “disaster” the title suggests, but they surely are “expensive, inefficient . . . counter to economic growth and . . . a wasteful way of meeting our objectives.”
Irwin M. Stelzer is a contributing editor to The Weekly Standard, director of economic policy studies at the Hudson Institute, and a columnist for the Sunday Times (London).