Whack-A-Mole for Economic Fallacies

Alternatives including solar and wind will be adopted soon in large part due to market forces. However many politicians, look at alternative energy as a way to create "green collar" jobs. In their world, there are no costs involved only benefits. All we need to do is provide subsidies or launch a government program for alternative energy, and we will give plenty of jobs to people. This is only a thinly veiled rephrasing of the classic broken window fallacy. The story goes like this: A boy breaks shopkeeper’s window. The townspeople say that this accident makes work for the glazier who will buy bread, and who will in turn buy shoes. They conclude that the boy benefited the town economically. No matter how many times the fallacy is repeated as truth, it is still fundamentally wrong.

Returning to the idea of "green collar" jobs, we must remember that jobs are a cost. Giving someone a "green collar" job takes away resources in a very real way from another industry. For example, engineers, computer scientists, and construction workers among others are needed to create a wind farm. A mechanical engineer might design aircraft engines instead. A computer scientist could work for Google instead. Construction workers could build a road or a bridge. We are likely in a recession now, so the costs of giving someone a job may be lower. Instead of collecting unemployment they could be at least be doing something useful. A recession is only temporary though, and government programs and subsidies long outlive their usefulness. Government will end up picking winners, and the rest will be left behind paying the costs.