Friday, 28 September 2018

The Greed & The Green Confusion

Jeremy Corbyn wants to put an end to the "greed-is-good" culture while at the same time "kick-start a green jobs revolution". These are nice ideas - but like all Corbyn's nice ideas, they are horrendous, and only serve to create a fool's errand.

The 'greed is good' problem
Let's start with greed. The paradox of greed is that at an individual level it is bad for those who are severely afflicted by it, but yet at a collective level it is greed - by which we often don't really mean greed, but aspiration, and the need to live - that drives economic growth and increased prosperity. Given that Corbyn's policies will, without fail, hamper economic growth and retard prosperity, it is a sure thing that any policies he implements to tackle greed will make things worse not better.

John Maynard Keynes famously said that by 2030 we will be working 15-hour weeks. He was on the right lines - leisure time has hugely increased since 1930, but he was a bit too ambitious, as there are no indicators that our current 40 hour working week will drop by that many hours. But why were Keynes' calculations off? There are a few obvious reasons; namely we work 40 hour weeks because we need that amount of work to live, and because many of us enjoy our jobs, and because many people would struggle to fill an additional 25 hours of leisure time per week.

While all that is true, my guess is that there's an even bigger driver of our work patterns - the mongering of status. Sadly, one of the main drivers of our work hours is the need to out-earn and outspend one another. It should be noted that by 'outspend' we don't just mean consumable goods, we mean quality of education, place to live, health care and so on. And of course if you are trying to keep up with the Joneses, and the Joneses are working hard to stay ahead, you are going to have to work as hard to keep up with them - if you care about that sort of thing.

The 'kick-start the green revolution' problem
The problem with this idea is that there aren't really any viable 'green' jobs you can just create that add value because of their creation. Some jobs make things greener, some make things less green, but a state project that tries to artificially create green jobs is effectively subsidising green technology while ignoring all the opportunity costs, and that is a bad idea. Subsidising green jobs is going to have a negative knock-on effect on competition, which will stifle innovation as producers will actually have less of an incentive to innovate and create more environmentally efficient businesses. Moreover, subsidising green technology would simply impose a burden on taxpayers that goes against the grain of market signals and consumer choices.

The best way to kick-start a green revolution is to do as little as possible to interfere in the competitive process that producers are already trying to maximise in the production of new, more efficient 'green' energy technologies as quickly as possible. People don't need much help to do this - it is already written into our DNA, and nature's too (see here for more on this).