Proposition 23: Jobs or Wishful Thinking?

Proposition 23: Jobs or Wishful Thinking?
By Debra J. Saunders
10/28/2010

I love this quote from clean-tech exec Eric Dresselhuys to the San Francisco Chronicle's David R. Baker: "If California isn't leading the charge on implementing these technologies, why be here? Do you want to be here for the high taxes, the high cost of living? Right now, you want to be here because California is where the action is."

In a nutshell, that is the argument against Proposition 23 -- which would stall the impending implementation of AB32, California's landmark 2006 global-warming bill, until unemployment dips to 5.5 percent. If voters delay AB32, they will staunch the creation of clean-tech jobs -- because no sane entrepreneur would dream of doing business here without a sweetheart deal from Sacramento.

To keep venture capitalists rolling in it, Californians are supposed to raise the cost of doing business for everyone else. No worries: California's unemployment rate is only 12.4 percent.

The real choice here is between jobs and magical thinking. AB32 promises to reduce the state's greenhouse gas emissions by 30 percent in 10 years. There's no easy way to reach that goal. State regulators will have to raise energy prices on consumers and businesses, raise fees on industries and slap more regulations on already burdened employers.

And for what? Green jobs represent about 1 percent of California jobs -- as opposed to manufacturing, which accounts for 21 percent of jobs. A recent UC Berkeley study predicted that AB32 will create the equivalent of 1,000 to 3,600 permanent jobs each year. Those numbers simply don't stack up against California's 2 million lost jobs, or the jobs that could go away.

Both the yes and no sides of this campaign throw out big numbers. I won't use them. Instead, I'll quote California's nonpartisan legislative analyst, who predicted the fiscal impact of Proposition 23's passage: "Likely modest net increase in overall economic activity in the state from suspension of greenhouse gases regulatory activity, resulting in a potentially significant net increase in state and local revenues."

Remember: AB32's supporters never claimed that their bill would put a dent in the world's greenhouse gas production. The law, they claimed, would act as a catalyst for renewable energy innovation -- while creating good clean-tech jobs at home.

That's what Spanish Prime Minister Jose Louis Rodriguez Zapatero said when he championed policies that were supposed to put Spain "at the forefront of the renewable-energy industry."

A 2009 King Juan Carlos University study found that the Spanish program cost more than $700,000 per job -- and that for each green job, 2.2 jobs were destroyed.

Economics Professor Gabriel Calzada, who worked on the King Juan Carlos study, told me that Spain's situation is "unsustainable." Entrepreneurs jumped on Spain's generous solar subsidies -- and Madrid already has had to cut back what the government promised to pay them. The country is saddled with $173 billion in obligations to its expanding class of renewable energy investors. Calzada warned, "Don't play with taxpayers' money gambling in what politicians think will be the future in energy."

If California voters don't stop AB32, they'll also be gambling with California's remaining jobs.
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To read another article by Debra Saunders, click here.