EclectEcon

I am skeptical about the various concerns many people have about global warming. But suppose they are right. Even if they are, devoting scarce resources to fight global warming is not win-win, as Hilary Clinton has recently argued: to create jobs in industries that spring up to help fight global warming is to attract those scarce resources away from some other use. That is a cost to society, not a benefit! Those employees, those machines, supplies, and buildings, all have some alternative use. And by attracting them to the fight against global warming, we must give up the alternative use -- a forgone opportunity, an opportunity cost.

From James Pethokoukis:

"This issue of energy and global warming has the promise of creating millions of new jobs in America. It can be a win-win, if we do it right."—Sen. Hillary Clinton, at last night's Democratic debate in South Carolina

And with that, Clinton seemingly stumbled into the classic economic trap known as the Broken Window Fallacy. As described by the French economist Fredric Bastiat, the fallacy imagines some punk kid chucking a rock through a store window. A bad thing, right? Yet a contrarian onlooker offers that the troublemaker may have actually helped the economy because now the storeowner will have to hire a glazier, who will make money replacing the window. Then the glazier will use that money to buy bread from a baker, who then might buy shoes from a cobbler. And the "multiplier effect" goes on and on, creating a more prosperous economy.

But Bastiat points out that such reasoning ignores the hidden costs to the shopkeeper, who was forced to spend money on windows instead of something else that may have had higher value to him or society, like a new suit or investing in a start-up tech firm.

Yet another reason policy makers need to learn more about the "natural unemployment rate" (even with its failings) and stop talking about "job creation".