News
Is AB32, the Global Warming Solutions Act of 2006, a job killer? The answer depends on who is asked.
Ask a local liberal blogger: “Most of the programs from AB32 won't go into effect until 2012 anyway, when the economy will hopefully improve. In addition, the premise that AB32 will destroy jobs is unproven. Proponents argue it will create jobs.”
Ask the executive director of the Sierra Business Council: “I support AB 32, and believe that it will lead to job creation.”
If you ask California Assemblyman Dan Logue and Rep. Tom McClintock, they think that AB32 is a job killer and are sponsoring an initiative to suspend AB32 until California's economy improves.
Logue and McClintock held a public meeting, asking local business owners if environmental regulations, including AB32, are job killers. Nevada County businessmen
Greg Souter, Souter Construction, Jeff Pardini, Foothill Lumber, Greg Peters, Peters Drilling and Pump Service, and Lowell Robinson, Robinson Enterprises explained in the meeting how CARB regulations are affecting their businesses, resulting in the layoff of long term employees.
There have been a number of studies of AB32's economic impact, including a September 2009 study on the Cost of State Regulation on California Small Business by Sanjay B. Varshney, and Dennis H. Tootelian, CSUS Business School Professors.
“The study finds that the total cost of regulation to the state of California is $492.994 billion, which is almost five times the state's general fund budget, and almost a third of the state's gross product. The cost of regulation results in an employment loss of 3.8 million jobs.”
Critics claim these professors were not economists, therefore not credible. Additionally, their economic model did not consider the parameters these critics considered important, thus resulting in an invalid study. This demonstrates a major weakness of job forecast models, the input determines the output.
The UC Berkeley Center for Labor Research and Education analyzed the Employment Impacts of AB32, California's Global Warming Solutions Act. The main job findings:
“A review of the two macro-economic forecasts commissioned by the California Air Resources Board (ARB) of economy-wide effects in 2020 shows small overall job growth due to AB 32.”
These macroeconomic forecasts used two models, giving conflicting results, one predicting 12,000 jobs by 2020, the other one 120,000 jobs by 2020.
“A review of the two macroeconomic forecasts commissioned by ARB that examine specific economic sectors shows small job growth and loss by sector; but inconsistencies between the models lend doubt to the credibility of the results.”
... Again, pointing to the weakness of models to forecast the future.
Perhaps more instructive are some real world experiences from nations that have already implemented AB32 style regulations. AB32 was patterned after the European Union's green jobs and energy reduction programs.
Those programs in Spain and Germany have been an economic disaster, reducing jobs and driving up energy costs. After years of promoting “green jobs,” Spain has the highest unemployment rate in Europe, standing at an alarming 17.5 percent. Every green job has cost the Spanish economy 2.5 non-green jobs, according to the study. Youth unemployment is currently at 42.9 percent.
The German think tank Rheinisch-Westfälisches Institut für Wirtschaftsforschung published a report on the Economic Impacts from the Promotion of Renewable Energies: The German Experience. It points out that the “green jobs” that have been created through government subsidies are more than offset by the inefficiency of the resulting energy production:
“While employment projections in the renewable sector convey seemingly impressive prospects for gross job growth, they typically obscure the broader implications for economic welfare by omitting any accounting of offsetting impacts.
“These impacts include, but are not limited to, job losses from crowding out of cheaper forms of conventional energy generation, indirect impacts on upstream industries, additional job losses from the drain on economic activity precipitated by higher electricity prices, private consumers' overall loss of purchasing power due to higher electricity prices, and diverting funds from other, possibly more beneficial investment.”
Should we to believe CARB's modeling forecasts for thousands of green jobs? Or, should we look to the examples set by Spain and Germany who found that using stimulus funds to promote energy saving and generate green jobs have a negative effect on employment. Also, when the stimulus stopped, the jobs vanished.
What should we believe — models, or the real world? Considering the real world evidence, I think that AB32 is a job killer, and it could be your job!
Russ Steele is a blogger at NC Media Watch (ncwatch.typepad.com/). He writes on issues of concern to the citizens of Nevada County.
Ask a local liberal blogger: “Most of the programs from AB32 won't go into effect until 2012 anyway, when the economy will hopefully improve. In addition, the premise that AB32 will destroy jobs is unproven. Proponents argue it will create jobs.”
Ask the executive director of the Sierra Business Council: “I support AB 32, and believe that it will lead to job creation.”
If you ask California Assemblyman Dan Logue and Rep. Tom McClintock, they think that AB32 is a job killer and are sponsoring an initiative to suspend AB32 until California's economy improves.
Logue and McClintock held a public meeting, asking local business owners if environmental regulations, including AB32, are job killers. Nevada County businessmen
Greg Souter, Souter Construction, Jeff Pardini, Foothill Lumber, Greg Peters, Peters Drilling and Pump Service, and Lowell Robinson, Robinson Enterprises explained in the meeting how CARB regulations are affecting their businesses, resulting in the layoff of long term employees.
There have been a number of studies of AB32's economic impact, including a September 2009 study on the Cost of State Regulation on California Small Business by Sanjay B. Varshney, and Dennis H. Tootelian, CSUS Business School Professors.
“The study finds that the total cost of regulation to the state of California is $492.994 billion, which is almost five times the state's general fund budget, and almost a third of the state's gross product. The cost of regulation results in an employment loss of 3.8 million jobs.”
Critics claim these professors were not economists, therefore not credible. Additionally, their economic model did not consider the parameters these critics considered important, thus resulting in an invalid study. This demonstrates a major weakness of job forecast models, the input determines the output.
The UC Berkeley Center for Labor Research and Education analyzed the Employment Impacts of AB32, California's Global Warming Solutions Act. The main job findings:
“A review of the two macro-economic forecasts commissioned by the California Air Resources Board (ARB) of economy-wide effects in 2020 shows small overall job growth due to AB 32.”
These macroeconomic forecasts used two models, giving conflicting results, one predicting 12,000 jobs by 2020, the other one 120,000 jobs by 2020.
“A review of the two macroeconomic forecasts commissioned by ARB that examine specific economic sectors shows small job growth and loss by sector; but inconsistencies between the models lend doubt to the credibility of the results.”
... Again, pointing to the weakness of models to forecast the future.
Perhaps more instructive are some real world experiences from nations that have already implemented AB32 style regulations. AB32 was patterned after the European Union's green jobs and energy reduction programs.
Those programs in Spain and Germany have been an economic disaster, reducing jobs and driving up energy costs. After years of promoting “green jobs,” Spain has the highest unemployment rate in Europe, standing at an alarming 17.5 percent. Every green job has cost the Spanish economy 2.5 non-green jobs, according to the study. Youth unemployment is currently at 42.9 percent.
The German think tank Rheinisch-Westfälisches Institut für Wirtschaftsforschung published a report on the Economic Impacts from the Promotion of Renewable Energies: The German Experience. It points out that the “green jobs” that have been created through government subsidies are more than offset by the inefficiency of the resulting energy production:
“While employment projections in the renewable sector convey seemingly impressive prospects for gross job growth, they typically obscure the broader implications for economic welfare by omitting any accounting of offsetting impacts.
“These impacts include, but are not limited to, job losses from crowding out of cheaper forms of conventional energy generation, indirect impacts on upstream industries, additional job losses from the drain on economic activity precipitated by higher electricity prices, private consumers' overall loss of purchasing power due to higher electricity prices, and diverting funds from other, possibly more beneficial investment.”
Should we to believe CARB's modeling forecasts for thousands of green jobs? Or, should we look to the examples set by Spain and Germany who found that using stimulus funds to promote energy saving and generate green jobs have a negative effect on employment. Also, when the stimulus stopped, the jobs vanished.
What should we believe — models, or the real world? Considering the real world evidence, I think that AB32 is a job killer, and it could be your job!
Russ Steele is a blogger at NC Media Watch (ncwatch.typepad.com/). He writes on issues of concern to the citizens of Nevada County.
