Letter - Can Government Policies Create Energy Savings? - NYTimes.com

Analysts can quibble with the total jobs indirectly generated by government policies, because economists have a great deal of artistic freedom when building their models. Such is the case with the recent study on jobs created by California’s energy-efficiency policies conducted by the Center for Energy, Resources and Economic Sustainability at the University of California, Berkeley.

The report claims that California businesses and households were simply ignoring billions of dollars in energy-saving measures that would “pay for themselves” because they were so economical. It took political intervention to force these shortsighted companies and consumers to save themselves money.

And in fact, the study says, the savings were so great that for every job lost through reduced energy consumption, more than 50 new jobs were created by the extra income energy consumers were able to spend on other goods and services.

Even if this fantastical story were true, California’s lawmakers would only need to fax their recommendations to all major American companies around the country for the “savings” to be evident.

Yet that won’t happen. Instead, state legislatures around the country will point to the “success” of California to justify their own set of higher taxes and costly mandates, hurting businesses, citizens and economic growth.

Politicians don’t create wealth or jobs; all they do is penalize productive sectors and subsidize inefficient ones.

Robert P. Murphy
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The writer is an economist at the Institute for Energy Research. [Via The Chilling Effect]