Laborless Days Ahead With Cap and Trade

The Foundry-Heritage Foundation
With Cap and Trade, It Will be Laborless Day
Posted September 4th, 2009 at 12.23pm in Energy and Environment.
Traditionally, Labor Day symbolizes the end of summer but historically, Labor Day was a “creation of the labor movement and is dedicated to the social and economic achievements of American workers.” A day of rest. A paid holiday. Well, if Congress passes cap and trade legislation, many Americans will be forced to take unpaid days of rest because they’ll be unemployed.
The Heritage Foundation’s Center for Data Analysis found that, for the average year over the 2012-2035 timeline, job losses will be 1.1 million greater than without a cap and trade bill. By 2035, there is a projected 2.5 million fewer jobs below the baseline. Some of these jobs will be destroyed completely. Others will move overseas where carbon capping isn’t in their country’s agenda and therefore the cost of production is cheaper.
We’re not the only ones who project unemployment from cap and trade. The Brookings Institute, for instance, projects that cap-and-trade will increase unemployment by 0.5% in the first decade below the baseline. Using U.S. Census population projection estimates, that’s equivalent to about 1.7 million fewer jobs than without cap-and-trade. A study done by Charles River Associates prepared for the National Black Chamber of Congress projects increases in unemployment by 2.3-2.7 million jobs in each year of the policy through 2030–after accounting for “green job” creation.
Surely the government can create green jobs by subsidizing windmill and solar projects. But we can point to Spain as an example of how green energy investments destroy more jobs than they create. The Spanish research, directed by economist Gabriel Calzada, at King Juan Carlos University, analyzed the subsidized expenditure necessary to create the green jobs in Spain. It compared those funds to the private expenditure needed to support the average conventional job. Supported by other data as well, they conclude that each subsidized green job in Spain eliminated over two conventional jobs.
The environmentalists do not see government expenditure as having a cost. They employ the same free-lunch fallacy that underpins essentially all the analysis showing green-energy subsidies increase employment.
The first week of every principles of economics class goes over the problem with free-lunch assumptions. The labor and material used to make windmills or solar panels or to install insulation cannot simultaneously be used to make refrigerators and automobiles. When government spends more money, it necessarily diverts labor, capital and materials from the private sector.