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There is a major national ad
campaign, funded by the oil industry and other usual suspects, to
convince the public that measures to reduce greenhouse gas emissions
(GHG) and slow global warming will result in massive job loss. This ad
campaign warns of slower growth and the loss of hundreds of thousands
of jobs, possibly even millions of jobs, if some variation of the
current proposals being debated by Congress get passed into law.
In fact, standard economic models do show that measures designed to
reduce GHG by raising energy prices will lead to some cost in terms of
slower economic growth. And slower economic growth implies fewer jobs,
although the impact will almost certainly be less than indicated in
these scare stories.
However, the oil industry's scare stories about job loss never put
it in any context. In these models, any government measure that
interferes with market outcomes almost by definition reduces
efficiency, leading to less economic growth and fewer jobs. Efforts to
slow global warming fall in this category, but so does almost
everything else, and many items in the everything else category have a
much larger impact.
For example, defense spending means that the government is pulling
away resources from the uses determined by the market and instead using
them to buy weapons and supplies and to pay for soldiers and other
military personnel. In standard economic models, defense spending is a
direct drain on the economy, reducing efficiency, slowing growth and
costing jobs.
A few years ago, the Center for Economic and Policy Research
commissioned Global Insight, one of the leading economic modeling
firms, to project the impact of a sustained increase in defense
spending equal to 1.0 percentage point of GDP. This was roughly equal
to the cost of the Iraq war.
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