The government is a notoriously inefficient job creator.
As economy and business columnist Robert Samuelson points out, the money for government jobs has to come from someplace else, generally taxes or loans. “But if the people whose money is taken via taxation or borrowing had kept the money, they would have spent most or all of it on something—and that spending would have boosted employment.”
Government’s dabbling in private sector job creation is even more ineffective because the decisions of where and how to spend taxpayer dollars are based more on politics and puffery than economics.
In 2012, Californians passed overwhelmingly the Clean Energy Jobs Act (who could resist with a name like that?) that closed a tax loophole for multi-state corporations and dedicated millions of dollars toward renewable energy and fuel-efficiency projects in public schools.
Billionaire hedge fund manager turned environmentalist Tom Steyer led the effort to pass the measure, promising that steering millions of taxpayer dollars to clean energy projects would result in an economic resurgence for California, which was battling through a recession at the time.
The Green Chamber of Commerce boasted that Proposition 39 would “create tens of thousands of new jobs, and help advance the state’s clean energy economy.”
However, three years after the lofty promises, an Associated Press investigation shows the results are dreadful. “Barely one-tenth of the promised jobs have been created, and the state has no comprehensive list to show how much work has been done or how much energy has been saved.”
Proposition 39 backers said the initiative would create more than 11,000 jobs every year, but the AP reports only 1,700 jobs have been added in three years, “raising concerns about whether the money is accomplishing what voters were promised.”
Millions of dollars are being dumped into these clean-energy programs, but where is all the money going? “More than half of the $297 million given to schools so far has gone to consultants and energy auditors,” the AP reports. “The board created to oversee the project and submit annual progress reports to the Legislature has never met.”
In the Los Angeles School District, which has nearly 1,000 schools, the AP could not find one project that has been completed. “Two schools were scheduled this summer to receive lighting retrofits and heating and cooling upgrades, but no construction work has been done on either site.”
Additionally, the Act has generated significantly less revenue than expected. Steyer said the Clean Jobs Fund would draw in $550 million annually, but the most collected in any one year so far is $313 million.
This was all predictable, though the magnitude of the failure is significant. It is also another costly reminder that the government should not be relied upon to be a competent or effective job creator.
(Editor’s note: An earlier version of the story incorrectly identified Robert Samuelson as an economist. He is a columnist who writes about business and economic issues. hk)