The Broken Planet Fallacy

The Solyndra boondoggle illustrates the folly of treating global warming as an economic blessing.


When Solyndra went belly up last month, less than a year after it started making solar arrays in Fremont, California, an Energy Department spokesman insisted that the $535 million the federal government had loaned the company was well spent. "The project that we supported succeeded," he said. "The facility was producing the product it said it would produce." 

That rather short-sighted definition of success exemplifies the loopy logic of President Obama's "green jobs" agenda, which justifies subsidies based on good intentions and employment opportunities rather than profitability or cost-effectiveness. This policy is rooted in the broken planet fallacy, which treats global warming not as an environmental threat to be handled as expeditiously as possible but as an economic opportunity to be milked for all the jobs it can provide. 

When he took office in January 2009, Obama promised to "help create five million new jobs by strategically investing $150 billion over the next ten years to catalyze private efforts to build a clean energy future." The American Recovery and Reinvestment Act, which he signed the following month, included a down payment on that plan, described by Vice President Joseph Biden as "more than $20 billion for investment in a cleaner, greener economy," aimed at showing "how investing in green jobs will help build a strong middle class." 

A month later, Obama put the figure at "$59 billion invested in clean energy and in tax incentives to promote clean energy." By that fall, the number had expanded to "about $80 billion" for "projects related to energy and the environment." 

Administration officials may not have been sure how much they were spending on green jobs, but they all agreed it was totally worth it. In fact, according to presidential adviser Van Jones, the administration's designated "green jobs visionary," it was "the most fiscally conservative part" of the stimulus package," since "every dollar spent on green jobs is going to be out there working double time, triple time." 

To understand how this works in practice, consider the $5 billion allocated to the Weatherization Assistance Program, which was supposed to create jobs while helping people make their homes more energy-efficient, thereby cutting their utility bills and reducing their "carbon footprint." The administration was so excited about this program's economy-stimulating potential that in October 2009 it issued a report entitled "Recovery Through Retrofit." 

Explaining why the government needs to subsidize weatherization, the report noted that "homeowners face high upfront costs" for "retrofits that pay off over long periods of time," and they worry about "recouping the value of their investment if they choose to sell." According to EnergySavvy.com (which promotes retrofitting and therefore has an interest in making it seem worthwhile), spending $25,000 to make a pre-1977 home more energy-efficient might save $1,000 a year in fuel costs, meaning it would take a quarter of a century to recover the investment. 

Is it any wonder that homeowners are not leaping at this sort of opportunity? While it's true their calculations may not include the environmental impact of the energy they consume, the Obama administration considers that factor in only the most cursory way. Since it makes no effort to weigh the environmental benefit of retrofitting a home against the cost, it has no way of saying whether the investment makes sense, even taking carbon emissions and global warming into account. 

To tip the balance in favor of retrofitting, the administration cites the jobs created by such projects. But if work is not worth doing—whether it's weatherizing homes or making newfangled solar arrays that prove to be uncompetitive—the money paid for it is an unjustified cost, not an economy-boosting bonus. Obama, who bragged about the 3,000 workers who built Solyndra's factory and the 1,000 who were employed there, ignores the possibility of alternative, more productive uses for resources squandered on bad, government-subsidized investments. Those uses would create jobs too, although not ones for which he could take credit.

Jacob Sullum is a senior editor at Reason and a nationally syndicated columnist.

© Copyright 2011 by Creators Syndicate Inc.