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Green Investments and Jobs: A Response to a Second Heritage Foundation Critique

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In a note posted on November 12 at the Heritage Foundation’s “The Foundry” site, Conn Carroll purports to have found “many things wrong” with my 11/7/08 response to an earlier Heritage Foundation critique of the study I co-authored, “Green Recovery”, which was published in September by the Center for American Progress.

At a certain point, repeated back-and-forth ripostes of this type become counterproductive, especially when the Heritage Foundation authors convey little apparent interest in considering the arguments and evidence that my co-authors and I actually presented in “Green Recovery”. Still, I will respond here to the four supposed errors that Conn Carroll claims that I made in my 11/7/08 response. Beyond this, I think the most useful proposal is to invite those interested in getting at the truth to read “Green Recovery” for themselves and form their own judgments.

Why I am talking about tiny spending figures?

Carroll faults me for offering a simple example in my 11/7/08 response in which I compare the employment impact of spending $1 million on green investments versus spending the same amount of money within the oil industry (Carroll incorrectly states that the spending figure in my example is $100, not $1 million). Carroll suggests that by offering this simple example with rounded numbers, I am somehow out of touch with reality. Her point: The Obama campaign had proposed a 10-year green investment spending program of $150 billion, not a puny figure like $1 million or even $100.

In fact, “Green Recovery” proposes a government spending program on green investments of $100 billion over two years. We state this point clearly on page one of “Green Recovery”: “This green recovery program would spend $100 billion over two years in six green investment projects.” We repeat this crucial figure at several points throughout the report, including five pages (pp. 14-18) plus Appendices 2 and 3, both of which offer details on how best to implement this spending program. There is no way a reader of “Green Recovery”could possibly miss our proposed spending figures or the discussions surrounding them. I can therefore only conclude that Carroll has not read “Green Recovery” or is deliberately misrepresenting its contents.

Cost-free government spending?

Carroll writes, “Pollin seems to live in a completely cost free world where the government can spend $1 million to create 17 new jobs without any repercussions anywhere else in the economy.” In fact, all of the estimated impacts we present in “Green Recovery” are derived from the input-output model of the U.S. economy produced by the U.S. Department of Commerce. The whole point of building from this kind of model is precisely to be able to trace through how spending initiatives in one part of the economy generate impacts in other parts.

If we had not used the government’s input-output model, or something equivalent, it would not be possible for us to estimate the overall employment effects of our $100 billion spending proposal. We also wouldn’t be able to estimate the relative effects for different sectors of the economy, including identifying which sectors—such as construction and manufacturing—that are likely to see a relatively large expansion of employment opportunities.

Thus, in the detailed table on p. 4 of “Green Recovery,” we present lists of representative job categories that would likely expand significantly through our green investment proposal. What about the fiscal constraints and consequences of our green investment proposal? Carroll says we ignore these issues altogether. But again, as noted above, we devote several pages to exploring fiscal issues in depth.

Green investments produces only bad jobs?

Carroll says that the jobs I want to create are “lower, entry-level jobs.” Here is what “Green Recovery”actually says:

Green investments generate not only significant numbers of well paying jobs with benefits but also a relatively high proportion of lower, entry level jobs that offer career ladders that can move low-paid workers into better employment positions over time. The average pay for employees associated with green investment areas is about 20 percent less than the average for those connected to the oil industry. But this number is deceptive because a green investment program will create roughly triple the number of good jobs—paying at least $16 dollars an hour—as the same level of spending within the oil industry (p. 11).

Again, I don’t see how someone who actually read the report could have missed this passage, especially when they have directly quoted one select phrase within the passage.

Green-collar jobs produce less energy?

Carroll claims that “according to Pollin’s own report, ‘green collar’ jobs produce less energy.” Yet again, Carroll has missed entirely a central feature of our proposal: that 70 percent of the green investments we propose are focused on raising energy efficiency, in areas such as building retrofits, public transportation, freight rail, and “smart grid” electrical transmission systems. The point here is $70 billion in investments in energy efficiency will both create more than 1.5 million jobs and will lower energy consumption and costs across the board—for homeowners, small as well as large businesses, schools, and hospitals.

Beyond this, the 30 percent of spending we propose for renewable energy investments is aimed at accelerating the rate at which these clean alternatives will become cost-competitive with fossil fuels (keeping in mind that, at present, the market prices for fossil fuels do not include the costs to the environment of emitting greenhouse gases into the atmosphere). Almost all the spending we propose in these areas would go to private investors in the form of tax credits and loan guarantees.

The proposal, in other words, is to create new opportunities for private-sector initiative, and to combine these private business opportunities with a program to fight global warming and generate millions of decent jobs. It would perhaps be interesting to have a serious discussion as to why Carroll opposes these goals, or the measures we propose to achieve them.

My co-authors and I at the University of Massachusetts-Amherst worked hard, with the support of colleagues at the Center for American Progress, to advance a serious policy agenda in “Green Recovery.”Everyone is of course free to agree or disagree with any and all features of what we have proposed. But before forming an opinion, shouldn’t one be committed to making an honest attempt at knowing what we have actually written?

In this regard, there is nothing to be gained by relying on egregiously distorted discussions of our work such as the two posted by the Heritage Foundation.

Dr. Robert Pollin is a Professor of Economics and Co-Director, Political Economy Research Institute, at the University of Massachusetts-Amherst.

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