The Pacific Research Institute
bills itself as a think tank that champions freedom, opportunity, and personal responsibility by advancing free-market policy solutions. But judging from its new report touting the emissions-limits-rescinding Proposition 23, the Institute is not a stickler for incorporating free-market economic principles into its analysis.
The outfit this week e-mailed us its new report "Prospective Employment Effects of California Proposition 23,"
which makes the case that, since energy use in California has gone up over the years just as the number of jobs in the state have increased, then reducing energy use would cut jobs. The report seems to ignore a he key economic concept called substitution of goods
, where consumers and producers tailor how they spend their money based on changing market conditions.
"The logic of the paper makes no sense," said Stanford professor James Sweeney
, director of Stanford's Precourt Energy Efficiency Cente
r and senior fellow of the Stanford Institute for Economic Policy Researc
h. "It says we cannot use energy more efficiently without putting people out of work. And that's simply nonsense."
According to the report, by PRI fellow Benjamin Zycher, there's no reason to think that energy consumption and job growth won't always be inexorably linked. In think-tank-ese: "There exists no evidentiary basis upon which to predict a fundamental change in the employment/energy relationship in the state."
Proposition 23 would repeal the California Global Warming Solutions Act of 2006, which calls for a reduction in California's production of greenhouse gasses. Reducing energy consumption as required under the Act would therefore eliminate 1.3 million jobs from the California economy by 2020, Zycher posits -- meaning Proposition 23 would save that many jobs.
"The electricity [use] per capita in California has not grown at all since the early 1970s," Sweeney contends. "California has been able to grow employment during that time ... So the simple notion that there's a one-to-one linkage between electricity use and employment is shown to be invalid by what's been happening in America as a whole, and California specifically."
Looking at the ground-level mechanics of energy savings also undermines the PRI thesis, Sweeney said.
"It's assuming that any way we reduce electricity must lead to less people employed," he said. "It's the assumption that if I were to insulate my home, and hire carpenters and contractors to insulate the home, and use less electricity, the net effect would be people would be put out of work because I hired those people to make my home more efficient. It's the assumption if I buy an energy-efficient appliance in place of an energy-hog appliance, and I save money, and I use that to buy things -- say restaurant meals -- people will be put out of work. "
"That's simply nonsense," Sweeney reiterated.
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