Thursday, December 02, 2010

EPA job creation?

Environmental Protection Agency administrator Lisa P. Jackson has penned an opinion piece which appears in today's Wall Street Journal. After lauding the environmental improvements that have taken place since the agency's establishment forty years ago, she then engages in a bit of economic illiteracy:
We have seen GDP grow by 207% since 1970, and America remains the proud home of storied companies that continue to create opportunities. Instead of cutting productivity, we've cut pollution while the number of American cars, buildings and power plants has increased. Alleged "job-killing" regulations have, according to the Commerce Department, sparked a homegrown environmental protection industry that employs more than 1.5 million Americans.
While I have no problem with the existence of the EPA and think that addressing "tragedy of the commons"-type problems such as pollution are a core function of government, this is ridiculous. Simply put, regulations do not create jobs. At best they merely change the composition of employment.

Consider the tax code: due to its byzantine nature tax -- the creation of our politicians -- lawyers and other specialists are able to find employment in this field. If the tax code were abolished and replaced with a sales tax for example, these jobs would then be destroyed. However, the money spent by consumers on tax specialists would then be spent on some other good, providing employment elsewhere. So too it is with enviromental regulation. If money were not spent on complying with EPA dictates, it would be allocated elsewhere, thus creating jobs.

Jackson's rhetoric is both silly and akin to economic flat-earthism.

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