This article “Mitt Romney's green-jobs criticism carries risks” by Nicholas Riccardi of the Yahoo News discusses the effects of “green jobs.” Congressman Mitt Romney criticizes President Obama’s “obsession” with “green jobs.” Basically, green jobs should lower the use of resources and/or ecological impact. Green jobs must also create jobs. In simple terms, it must create economic efficiency.
The economic article will be explained in terms of the principal microeconomic concept such as the cost-benefit principle, particularly through opportunity costs. Microeconomics’ basic tenet says that there is always a tradeoff between capital, labor and natural resources (like energy in this example) in the production function. This article is expressed in terms of the effects of promoting green jobs and how this creates or destroys economic efficiency. The gist of the story is the evaluation of the green jobs using the opportunity costs as a standard economic principle. This tackles one of the main lesson of Chapter 1 and 2.
As a basic assumption in these chapters, individuals make choices to optimize their goals. These choices reflect cost and benefit analysis and trade-offs because people cannot choose all the economic choices due to scarcity. They just have to make the intelligent choice/s which they think will make them better off. This is regardless of whether they still crave for more of the goods or services they chose. Thus, they make decisions based on this assumption. In this article, the basic questions of microeconomics will be addressed through greening, green jobs and the US government intervention in creating these presently valued services.
The Republican congressman does not believe in the government programs and mocks President Obama's goals of promoting green jobs. He thinks that green initiatives such as solar or wind-energy opportunities would destroy jobs in other sectors. Romney even suggested that the US Congress should let the wind energy tax break expires. However, this has been viewed negatively.
Romney's camp argues that their congressman is just criticizing Obama’s seemingly “excessive government interference in the market” (Riccardi, p. 1). Meanwhile, the present government also views green jobs as a positive and a net creator of employment. It is one of the major highlights in Obama’s 2008 political campaign. The president believes that incentives are needed to promote the efficient use of energy, especially in the renewable energy sector.
Meanwhile, Congressman Romney believes that the incentives to push green jobs “may actually lessen the total number of jobs available because they replace positions in dirtier, but more labor-intensive industries” (p. 1). Romney also cites a controversial study in Spain which supports Romney’s principal contention that every renewable energy job in Spain meant a loss in 2.2 other jobs.
This concepts and controversies bring forth the main concepts of which jobs must be promoted by the government by virtue of the general good and greater economic efficiency. This shall be brought down to the main principles of cost-benefit, tradeoffs and opportunity costs. Basically, jobs (labor) can be substituted capital through mechanization. Similarly, capital can be replaced by labor through the use of manual labor such as the use of shovels and picks instead of construction machineries. In the aspects of green jobs, the basic principle can be used and hence, when it comes to energy use, fossil can be replaced by either capital or labor in order to sustain the same production.
This can be explained in terms of the fundamental microeconomic principle that jobs can be created or lessen by substituting labor for capital, energy, and/or other resources in the production function. Hence, the policies of the present government must be viewed in terms of simply evaluating whether or not green jobs increase economic activities and create more jobs.
In assessing the initiatives of U.S. President Obama through the cost-benefit principle, the benefits must be greater than its costs. This means that the replacement of energy or alternative resources used in making green jobs should promote more jobs and economic efficiency than the opposite of promoting lesser jobs. Also, it should not be discrepant to the jobs in other sectors or industries affected by the promotion of the green jobs in the other side.
Green initiatives should improve economic efficiency by overcoming economic barriers to cost effective green measures. Hence, greater economic activity and more jobs are promoted. However, this is not that simple. This is because there are trade-offs in the process of replacing the use of energy or alternative resources in the various sectors. There are various instances where the substitution, while creating more green jobs, also reduces brown jobs or the jobs which are not promoting green efficiencies yet they are major resource of income and employment for the people. This is where the criticisms, like those of Congressman Romney, stem from. As most opponents see it, the prioritization and preferences for green jobs, weaken other industry sector.
This is where the concept of opportunity costs set in. To set it in a fair assessment, green jobs must be evaluated in terms of the government policy. In short, does a particular green policy of Obama create more jobs than it destroys? However, the very concept of opportunity costs should be measured by the notion that preference for green jobs may also lessen other jobs. This is because green jobs must be viewed with greater consideration of the future reduction of costs on future economic activities of green jobs compared to the present costs to the lack of jobs as an impact of the substitution from the extractive industry to the more ecologically balanced industry.
However, this means that while the present efforts of the Obama administration is to create more green jobs, this can also mean that there may be jobs that will be reduced. Thus, it is important to understand that this article is understood with the good understanding that green jobs initiated by the US government’s intervention have opportunity costs. In some of the industries promoted and the green jobs pushed, there will be traditional jobs and sectors which will be negatively affected. Similarly, the financing allocated to provide or promote green jobs might otherwise lessen the finacial resources of the government in other jobs initiatives. However, this issue should not be generalized to mean that green jobs and Obama’s policies is not promoting economic efficiency.
Opportunity costs, for this situation, means the price of creating and promoting more green jobs by the US administration. This implies that in choosing to produce one job against the other, the US government foregoes another job. However, this also does not mean that this is the highest-valued alternative that must be foregone in order to keep a green job. This is because the value is not just in terms of the price of the job but also some other social good. In this case, this is sustainability.
Romney’s reference to the costs of green jobs in Spain is not a fair comparison. This is because there are different economic factors which canot be generalized by the two different economies. These include the social value which the American society loves and how the Obama administration plans to pursue it. We must consider the social value which the present thrust of greening aims to promote. As traditionally understood, the “government is naturally inefficient, so some is lost. Government doesn’t always pick the best “investments,” so more is lost” (Cook, p. 1).
However, in terms of applying the “multiplier effect,” the economic principle supports the extra costs of promoting green jobs since it is assumed that “the government knows how to spend the money efficiently, hence, each dollar taken produced more than a dollar’s worth of economic activity” (p. 1).
The article on the opportunity costs (green jobs versus other jobs) are plainly explained by the simple mechanisms of cost-benefit analysis and the opportunity costs. While there is a simple illustration of the other jobs which might have been given up in the pursuit of the green jobs, it must also be understood in term sof the other costs (social and environmental) which the whole economy should consider.
At the present context, the reactions of Congressman Romney and other opposing groups may be taken well with the understanding of how drastic other jobs are lost. However, the opportunity costs must be greatly understood in the more general context of the social and environmental considerations and costs which will redound to us in the future, if we do not heed of this concern now.
Cook, Christopher. The Price of Green Jobs. Western Free Press Website. Accessed on 30 August 2012 < http://www.westernfreepress.com/2012/05/09/the-price-of-green-jobs/>.
Riccardi, N. Mitt Romney's green-jobs criticism carries risks. Yahoo News. August 7, 2012. Accessed on August 30, 2012 from, http://news.yahoo.com/mitt-romneys-green-jobs-criticism-carries-risks-183717891.html.