Here's a good analysis of the idea that "investing" in green technology by the government will help create jobs and help rebuild the economy:
To understand the fallacy of the government creating green jobs through subsidies and regulations, we have to refer to the writing of French economist Frédéric Bastiat. Back in 1850, Bastiat explained the fallacy that underlies such thinking in an essay about the unseen costs of such efforts. He called it the "broken window" fallacy.
The fallacy works as follows: imagine some shop-keepers get their windows broken by a rock-throwing child. At first, people sympathize with the shopkeepers, until someone claims that the broken windows really are not that bad. After all, they "create work" for the glassmaker, who might then be able to buy more food, benefiting the grocer, or buy more clothes, benefiting the tailor. If enough windows are broken, the glassmaker might even hire an assistant, creating a job.
Did the child therefore do a public service by breaking the windows? No. We must also consider what the shopkeepers would have done with the money they used to fix their windows, had those windows not been broken. Most likely, the shopkeepers would have plowed that money back into their store; perhaps they would have bought more stock from their suppliers or hired new employees.
Were the windows not broken, the town would still have had jobs created by the shopkeepers' alternate spending, plus the shopkeepers would have had the value of their original windows. Because the value of the windows was destroyed, however, they--and the village as a whole--have been made poorer.
It is well understood, among economists, that governments do not "create" jobs; the willingness of entrepreneurs to invest their capital, paired with consumer demand for goods and services, does that. All the government can do is subsidize some industries while jacking up costs for others. In the green case, it is destroying jobs in the conventional energy sector--and most likely in other industrial sectors--through taxes and subsidies to new green companies that will use taxpayer dollars to undercut the competition. The subsidized jobs "created" are, by definition, less efficient uses of capital than market-created jobs. That means they are less economically productive than the jobs they displace and contribute less to economic growth. Finally, the good produced by government-favored jobs is inherently a non-economic good that has to be maintained indefinitely, often without an economic revenue model, as in the case of roads, rail systems, mass transit, and probably windmills, solar-power installations, and other green technologies.
To understand how this works in practice, I now turn to four European countries that went hog wild for renewables, while singing the praises of green jobs: Spain, Italy, Germany, and Denmark.
The author continues to back up theory with evidence by examining the experience of those countries, where every government dollar in spending destroyed at least 2 in private job creation.
And of course, what free market economists say always happens when government subsidizes industry did happen in Spain:
And then, there is the matter of corruption. As Bloomberg Businessweek reports, "An audit of solar-power generation from November 2009 to January 2010 found that some panel operators were paid for doing the 'impossible'--producing electricity from sunlight during the night."[8] Further, it appears that the solar power producers "may have run diesel-burning generators and sold the output as solar power, which earns several times more than electricity from fossil fuels." Nineteen people have been arrested in Spain's "clean energy" sector on charges ranging from bribery, to unsavory land deals, to issuing licenses to friends and family, to simple construction fraud. As the Guardian reports, "When Spain's National Commission for Energy decided to inspect 30 solar gardens, it found only 13 of them had been built properly and were actually dumping electricity into the network."
This is just as Ayn Rand described in her book "Capitalism: The Unknown Ideal", Chapter 7, "Noted on the History of American Free Enterprise". She describes the corruption caused by government subsidies in the railroad industry:
The degree of government help received by any one railroad, stool in direct proportion to that railroad's troubles and failures. The railroads with the worst histories of scandal, double-dealing, and bankruptcy were the ones that had received the greatest amount of help from the government. The railroads that did best and never went through bankruptcy were the ones that had neither received nor asked for government help. There may be exceptions to this rule, but in all my reading on railroads I have not found one yet.
It is generally believed that in the period when railroads first began to be built in this country, there was a great deal of useless "overbuilding," a great many lines which were started and abandoned after being proved worthless and ruining those involved. The statists often use this period as an example of the "unplanned chaos" of free enterprise. The truth is that most (and perhaps all)of the useless railroads were built, not by men who intended to build a railroad for profit, but by speculators with political pull, who started those ventures for the sole purpose of obtaining money from the government.
History repeats itself.
Ahhhh, spring is here & young men's fancies turn to love--------