By Christopher Lingle
UBUD, Bali ― Development projects identified with the catchphrase ``Green New Deal" are being proposed with increasing frequency around the world. While these programs often meet with public approval, implementing them may do serious harm to the economy and offer little benefit to the environment.
In Korea, belief that environmental constraints can trigger innovation and economic growth led to a commitment for 50 trillion-won ($37.8 billion) toward low-carbon green projects. Policymakers in Seoul claim the projects can create about one million jobs by 2012.
The Lee administration hopes to accelerate economic recovery with large-scale investment projects. One project would increase the use of major rivers by building dams, reservoirs and other water management facilities with the spending of 18 trillion won.
Another 11 trillion won is set aside for a `green" transportation network, with low-carbon emitting railways, bicycle lanes and other public-transport systems.
More subsidies would be granted to promote ``green" cars, including hybrid vehicles and to develop solar and wind power along with other renewable energy sources. Other projects include expanding forests and building two million ``green" homes and offices.
But presumed environmental or industrial benefits of such renewable energy schemes overlook the fact that subsidies are motivated by political considerations.
As such, they tend to overstate benefits while understating costs. Indeed, cost considerations demand that conventional technologies be chosen over renewable schemes.
As it is, most ``Green New Deals" are a dog's breakfast of government spending programs that come with claims they can ``create" new jobs. But this spending involves subsidies that divert resources from economic sectors that suffer offsetting losses.
For example, subsidizing renewable energy sources cannot ``create" jobs, even though construction and operation of renewable facilities requires more labor than conventional ones.
This non-economic use of labor cannot lead to a net increase in employment since new ones depend upon increased taxes that absorb funds that could have been used in other economic sectors.
In sum, headline numbers about ``green" jobs tend to overlook that government spending leads to overcrowding or the destroying jobs in other economic activities.
In all events, one should hope that such programs do not have the same results as the original New Deal programs that were so counter-productive for economic progress. Instead of ending the Great Depression, the New Deal raised costs for businesses and crowded out private capital, while bureaucrats stifled the creative powers of capitalism.
In 1933, Roosevelt's first year in office, unemployment hit nearly 25 percent. After four years of FDR policies, joblessness declined to 14.3 percent. Even though the New Deal involved a doubling of federal spending, unemployment rates remained in double digits and were above 20 percent until just before World War II.
Massive New Deal outlays estimated at about $32 billion ($500 billion today) bought votes and earned accolades from those in favor of the welfare state, but had few economic benefits.
Despite such profligacy, FDR presided over most of the period of the longest recession for the United States in modern times, which began in 1929 and lasted 43 months, followed by the 1937 recession, which lasted another 13 months.
Throughout the Great Depression, the fiscal deficit averaged 3.6 percent of national income, while the unemployment rate averaged 18.6 percent. While U.S. federal debt climbed to almost 44 percent of GDP in 1939 from just over 16 percent in 1929, there was very little relief to show for this dramatic increase.
Another issue relates to the justification for implementing ``green" policies on the grounds that reduced carbon dioxide output can mitigate climate change. Despite endless repetition of assertions about anthropogenic global warming, many scientists and substantial research suggest that humans have little impact on the climate.
For example, the impact of variability in solar activity on climate sensitivity and the impact on the absorption and reflection of solar dimming and brightening of the sun over the past 30 years tend to be ignored.
If human contributions to greenhouse gases are not the main cause of climate change, policies to reduce CO2 emissions may unnecessarily impose costly burdens on industries.
It turns out the sense of urgency for action to reduce greenhouse gas has been removed given the results of a new study in the Proceedings of the National Academy of Science.
The lead author, a scientist at the National Oceanic and Atmospheric Administration, said that even if CO2 emissions ended, released heat from oceans will keep temperatures ``almost constant" for nearly 1,000 years.
Since reducing global CO2 levels cannot alter climate changes already triggered, it does not matter if we curtail greenhouse gases now or much later or maybe at all.
Christopher Lingle is research scholar at the Centre for Civil Society in New Delhi and visiting professor of Economics at Universidad Francisco Marroquin in Guatemala. He can be reached at CLingle@ufm.edu