James Pethokoukis

I couldn’t agree more with this sentence from the excellent 2019 book Jump-Starting America: How Breakthrough Science Can Revive Economic Growth and the American Dream by economists Jonathan Gruber and Simon Johnson: “The economic slowdown of the past few decades is not inevitable.” Absolutely. While facing a number of macro challenges — such as the endgame exploitation of the “great inventions” of the Second Industrial Revolution — a better policy response could have boosted growth.

But I don’t love the next sentence: “Our economy can become dazzling again— both in terms of inventions and, more importantly, in terms of the prospects for most Americans.” Yes, rapid tech progress that generates productivity-driven economic growth is key to broader and faster wage growth. And “good jobs” will be created even as other jobs are lost through the process of creative destruction. But let’s not skip so quickly over the “inventions” bit. How about an “invention” that cures cancer, extends the active lifespan, calms a chaotic climate, deflects a killer asteroid?

I have a somewhat similar gripe with those who complain Americans are somehow getting ripped off by the licensing deals between drug companies and government labs. As Rep. Alexandria Ocasio-Cortez said back in 2019, “The public is acting as an early investor, putting tons of money in the development of drugs that then become privatized, [but the public gets] no return on the investment that they have made.” Of course the obvious benefit for the public — besides the taxes paid by companies and investors — is the availability of drugs and other medical treatments that previously didn’t exist.

All that said, it’s no wonder I very much like a new analysis by Eli Dourado of The Center for Growth and Opportunity at Utah State University, who thinks the focus on jobs as a result of decarbonization — such as Joe Biden’s 2020 campaign promise to create 10 million clean energy jobs — is misplaced. From the piece:

Imagine if, by some miracle, dirt cheap 1¢/kWh clean energy suddenly became available for the taking anywhere on the planet, in any quantity, out of thin air. There would be no more energy jobs, no more energy companies, no more energy infrastructure. Would it be a bad thing?

It would certainly be disruptive. Overnight, everyone who works in the energy industry would be out of work. There’s no denying that suddenly unemployed workers would experience anxiety, fear, and short-term material hardship. They would have to find new careers and learn new skills.

At the same time, the world economy would flourish. Climate change would be all but solved. Capital that would have had to be used to build and maintain energy infrastructure could be freed up to do new things. New opportunities enabled by the arrival of cheap energy would abound. . . . If the miraculous energy source suddenly appeared, it would create new jobs in downstream industries, but even this is not the point. Ideally, further miracles would abolish those jobs, too.

Source; aei economics