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Source link: http://archive.mises.org/9748/calzada-in-the-economist/

Calzada in The Economist

April 7, 2009 by

The Economist article “The grass is always greener: Saving the planet and creating jobs may be incompatible” discusses the work of Mises Institute adjunct scholar Gabriel Calzada. As the piece notes,

“Gabriel Calzada Álvarez, a professor at King Juan Carlos University in Madrid, has tried to use empirical data to estimate how Spain’s subsidies for renewables, which so impressed Mr Obama, will affect employment. He calculates that the subsidies for existing renewable-electricity plants, which the government has promised to pay for 25 years, will cost €29 billion. Those subsidies, in turn, have created 50,200 jobs, according to data from the European Commission. That equates to a subsidy of over €570,000 per job. … Spain’s private sector, on the other hand, creates a job for every €260,000 or so invested, by Mr Calzada’s reckoning. So if the government had left the €29 billion in the hands of the private sector, it would have created 113,000 jobs with it–2.2 times as many. In other words, the government, Mr Calzada finds, is destroying 2.2 ordinary jobs for every green one it creates.”


Throwing poop back at the chimp. April 7, 2009 at 8:27 am

I normally hate this type of analysis as it assumes everything can be bundled into aggregate demand and supply.

I am unimpressed with the part about destruction. The government did not destroy anything. It actually did something far worse, it prevented creation. In other words the economy destroys jobs but government steps in robs people of their jobs to give jobs to their friends.

Throwing poop back at the chimp. April 7, 2009 at 8:30 am

I neglected to say that although I dislike the analysis, I do find the conclusion interesting and consistent with my theories about the effect of force on the economy.

flix April 7, 2009 at 8:50 am

actually the amazing thing about this study is the empirical methodology and rigour of the numbers… anyone can give an estimate of opportunity cost, Calzada and his colleagues go deep into the numbers and prove it, (as far as empirical evidence can prove cause and effect of course)…

flix April 7, 2009 at 9:02 am
Ho Pin April 7, 2009 at 9:16 am

It happens that I have been involved in some ‘green’ subsidies in Spain. Calzada is right in some sense, but the difference is even more if you take into account that statistics are awfully inflated by every single government agency. Furthermore, many subsidies creating temporary jobs.

You cannot imagine how many projects deal only with what they call sensibilization of the local population. Basically it consists on making some events, printing many leaflets -green paper but polluting inks- and giving some conferences in primary and secondary schools. Project finished, jobs gone. In the process, they get a good deal of propaganda for the next elections and money for friendly companies easy to justified.

I hope next time Obama choses something really useful from Spain than policy of subsides for renewables.

C. Evans April 7, 2009 at 1:06 pm

For those of us who have read What Is Seen and What Is Unseen or Economics in One Lesson, it’s easy for us to imagine the jobs that were not created. However, for those who lack such imagination, I think that it’s useful to estimate these effects ony because such numbers may help regular people understand the damage the State does.

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