The Economist on ‘job creation’ in the energy sector

A very timely opinion piece in The Economist here on how energy policy should not be confused as with job creation.

Too often investment in the energy sector, especially around low-carbon energy, is held up as a way to ‘create’ jobs for the economy. This article dispels the myth:

At the risk of being obvious: energy policy is not a jobs programme. Here are three reasons why politicians shouldn’t try to create jobs through energy policy: it’s ambiguous, it’s inefficient, and, most importantly, it’s undesirable.

In summary the author’s critiques are as follows:

1. What counts as a ‘green’ job, for example? Would that job have occurred anyway? Did the ‘creation’ of that job crowd-out another job?
2. The energy sector is typically capital intensive rather than labour intensive and hence efforts to ‘create’ jobs may be better directed elsewhere.
3. More important issues exist in energy, such as accessing cheap, sustainable energy and the security of energy supply – adding a further goal of ‘job-creation’ muddles this.

Given job-creation via energy seems such a hot topic throughout much of the world right now due to weak economic activity, elections forthcoming in the US and NZ and ongoing concern with carbon emissions and a need to ‘green’ the energy sector, it’s worth keeping in mind these criticisms.

  • Those are all good points – good post.

    Luckily, with inspiration from the Herald I’ve figured out the job creation business anyway, so we don’t need to worry about that avenue:

  • I approve of the way politicians refer to ‘jobs created’ rather than ‘net jobs created’. It is merely misleading rather than outright untruthful!

    • Sometimes they get them confused – and use net when talking about job creation.  When that happens I sit there and think “man, they really could have sold that a lot better if they understood the data and manipulated it”.

      • Are you saying you could spin it much better if you weren’t bound by the economist’s strict code of ethics?

        • Yes.

          Thank goodness that I bound myself to the secret code of economist ethics all those years ago – after all, if I ever break it I die.