Two types of government programs, and their performance record

I was watching an old David Letterman with Bill Clinton, from 2010, and Clinton was talking about rather obvious policy measures that he claimed would have huge benefits. A lot of this has been talked about before in other venues, of course, but looking back from the benefit of six years I’d be interested in talking about why these goals haven’t been met:

  1. Clinton said that green energy creates more jobs than fossil fuels, and that the stimulus spends a lot on green energy development. Six years later, I understand that there are more jobs in traditional fossil fuels than in green energy, but that’s not a fair comparison, since we still use mostly fossil fuels. What is the “bang for the buck” in green energy vs. fossil fuels, as of right now? For example, does $1 million in sales of solar cells or windmills generate more jobs than $1 million of oil or coal sold?

  2. Clinton said the stimulus would put us ahead of much of the rest of the world in development of green energy. Did this pan out at all?

  3. Clinton said that fixing buildings to make the more energy efficient pays for itself and provides tons of jobs. He did not specifically reference the stimulus on this point, but I do remember talk that the stimulus did have some money for making existing buildings more energy efficient. How much has been done in the last six years? And if it does indeed pay for itself, why isn’t every private sector company with sufficient capital doing it? Or is it being done as we speak, it’s just not the kind of thing that makes headlines?

  4. On jobs(which were obviously a big problem in 2010), Clinton cited the skills mismatch theory of joblessness. He claimed that the unemployment rate could be cut by nearly half if only we just trained Americans for the jobs that were open. That sounds really simple, but hasn’t the federal government had multiple job training programs for decades? Were any new ones created in the last eight years? Is there any data on how successful government job training has been?

The problem here is that you’re aiming at an increasingly variable and mobile target. No-one knows what new sorts of jobs will be available in the future (when I started my working life, no-one would have predicted the technologies I had learnt to use by the end of it), and some changes happen very dramatically. Short-term training may be too specialised on what we know now.

That sounds right to me, but policymakers who tout these programs always talk about how they are training for the jobs of the future. They imply that they know what those jobs will be.

How dare those people have the temerity to not know the future?!

the metric you need to examine is the employment per invested dollar - but if it is to be coherent, it will have to compare the like to the like and have the agreement on that. As the structures of these industries is very different, it is very easy to make the false comparisons. Is it to the extraction against what phase of the green production (the panel production for the photovoltaïcs? the installation? at what scales, for the centrales or the households?)

To make the intelligent economic comparison you need to compare what the benchmark that was used. Was the spending referred to approved in part or in full and how did it compare with other countries, knowing that the EU and many other large economies are not climate skeptic and the large levels of the investment have been approved.

To only make comparison against a TV show claim is very strange and nonsensical.

This is true, the energy efficiency retrofitting depending on the baseline of the investment has the efficiency gains of 20-40% which depending on the energy prices generate the positive IRRs of the 8-15% and the simple paybacks periods of 3-7 years in cases of the bank financings.

although it is not an american observation, I observe in other cases that

  1. the understanding among most companies of the potential gains (savings) is very weak.
  2. the execution is diffuse and the capital budgeting cycle for the retrofitting often is not easily mobilized as within the structure it is not
  3. the mobilzation of the capital is not self evident as the having the engineering and the financial modeling to convince the sources of funding of the viability of such investment (and it is not for all the cases, it does require the analysis and the expertise which makes it not something any medium sized company easily can jump into).

There are in any case numerous of the large and well-established in of the programs in this context with mixed public-private financings via the commercial banking sector in the eastern europe and Turkey that are very convincing. the public aspect has been supporting the technical side develop so the market can adopt.

but just the fact you pose the question tells us immediately the consciousness of these things is low.

People are people. Why do you expect the politician to be different than the internal manager?

There are the models that gives the best guesses. And just like the manager pitching for her new investment inside of the company, the pitch will be the strongest numbers that they think they can get away with.

I do not understand the pretended puzzlement…

They say they do. Overselling your programs breeds cynicism and mistrust.

It’s an ex-President acting as an unofficial spokesman for a current administration. His words carry weight.

Clinton said six years was the payoff time in the case of the Empire State Building, so that sounds about right.

When asking people to spend billions of their hard earned money, you have to be able to deliver the results you promise. I know I wasn’t the only one to think, “I’ve heard this pitch before”. But Clinton usually knows his stuff, so I didn’t just dismiss it like I normally would.

The problem is that in the world of politics, the numbers don’t have to be even close to plausible. I just wanted to know how close Clinton’s numbers turned out to be. The four items on my list sounded quite obvious and doable the way he explained them. It was a compelling sales pitch. But did any of it pan out even close to what he said?

Like all humans they make guesses.

expecting the world to work as if it is populated by the philosophical abstractions and not the living human beings does that.

If the living human beings are expected, acting in the ways living human beings are always doing whether the private sector or the public sector, then life becomes more understandable.

If there is the interest in the economic question and the real analysis outside of the politics, I suggest this paper (PDF) from the World Bank, “Issues in estimating the employment generated by energy sector activities” (2011) as it is global in the view, but also touches on the USA with the comparisons.
Measuring employment impact issues
The summary on the Box 7 on the page 38 of the PDF gives you the estimates comparisions as of the 2010 data.

It is in any case understood generally that the fossil fuel industry as it exists now is the very capital but low labor intensity and this is the typical reason the employment performance of the OPEC countries is well known to be very poor. This is not a surprise of course.

That’s an interesting question. I did a literature search and the answer I found was that it is mainly true but mainly because there are more construction jobs available in energy efficiency and clean energy production than traditional fossil fuels [1,2]. And this makes sense considering that the traditional industries already exist while cleaner energy plants generally don’t. It does seem that when the construction jobs are filtered out that the jobs are about the same [1,2]. Although not all green energy is the same. Solar and wind require few ongoing jobs while biomass requires plenty [1,3].
[1] Pollin, R., Heintz, J., & Garrett-Peltier, H. (2009). The Economic Benefits of Investing in Clean Energy: How the economic stimulus program and new legislation can boost US economic growth and employment (No. economic_benefits). Political Economy Research Institute, University of Massachusetts at Amherst.

[2] Campbell, B., Dufay, L., & Macintosh, R. (1997). Comparative Analysis of Employment from Air Emission Reduction Measures. Pembina Institute for Appropriate Development. Prepared for: Environment Canada, Global Air Issues Branch.

[3] Steinberg, D., Porro, G., & Goldberg, M. (2012). Preliminary analysis of the jobs and economic impacts of renewable energy projects supported by the § 1603 treasury grant program. Contract, 303, 275-3000.

A TV talk show… as you wish.

the variables will be both by the climate / local microclimate and the age of the fitting that are being replaced, but in any case for large volumes of the projects, it is 3-7 years in observed action, this outside of the US so different cost of the capital, cost of labor can impact the details

Beni adam, beni adam.

the numbers appear to be close and probably are based on the observed and the estimated numbers that the World Bank paper is presenting, done by the World Bank economists who are intentional technicians and not caring about your politics.

So whatever he said, he at least it seems you can feel he was basing it on the analyses by non political experts and not just on a political spin.

So it will depend a lot on what forms of energy end up being the most dominant. this is only my semi-educated opinion, but biomass has always sounded like a politically popular form of green energy, but not one likely to actually be useful. It creates jobs and makes farmers, a sympathetic constituency, a lot of money, but doesn’t seem to have as much potential as solar or wind, which create fewer jobs.

There’s also the reality of international trade. China can’t exploit our coal and oil for us, but they can make 100% of our solar panels. Environmentally, this is GREAT, since that means literally any country can make solar panels, whereas not all countries have fossil fuel access. Which is where we get into something else politicians don’t like to talk about: making tough choices. Do we protect our domestic green industry, and thus slow down the transition away from fossil fuels, or do we embrace green energy as fast as it’s developed, regardless of who develops it?

Did the World Bank actually measure what has happened, or what they project should happen based on their models? What I want to know is whether making solar panels and windmills is actually producing more jobs than drilling for oil or mining for coal, proportionally? How many jobs per million or billion invested?

Non-political experts are fantastic, but their fatal flaw is that they don’t understand government incentives. Programs can and do fail because they are designed for political rather than practical purposes.

Here are some numbers now that I’ve had some caffeine. This is all from [1] above which seems to provide the best overall summary.

Oil: 5.2
Coal: 6.9

Wind: 13.3
Solar: 13.7
Biomass: 17.4

Filtering out construction

Oil: 5.1
Coal: 6.8

Wind: 10.6
Solar: 10.5
Biomass: 10.4

And apparently, I did the pre-caffeine math in my head wrong. It looks like all three green energy are about the same filtering out construction. Ahhh, blessed is the caffeine that wakes up my brain.

It is true that for solar and wind a large percentage of jobs are manufacturing 47.4 and 37.4 respectively. I have no idea of they are the sort of manufacturing jobs which are done overseas or not.

They can be, it’s actually been a bit of a thing with solar panels. This administration chose jobs over the environment:

A review of the ranges across multiple studies with a global scope is found in the World Bank paper I have linked

People can also look at the tables and see a critical analysis of the studies underlying the summaries.

It is the case of course that a lot of the econometric work has been done.

the Biomass from the agricultural production is now known to be very very problematic and probably not a net positive for either the climate or the sustainability, except in very limited cases like maybe the brazilian sugar canes.

The making of the panel is only one component of the PV fabrication, and now with the automation coming, one which the China is losing edge on given the issues of the shipping costs, risks and the implementation times.

Protection for the lower value added industries is almost always a stupid wasteful thing.

the paper is a review of multiple studies and discusses the different issues

it is not their models it is the review of many global studies, maybe you can decide to look at it, it has the summary boxes.

That has been a known case for a long time, see the paper. The fossil fuels modern extraction is now very capital intensive and very low on the labor intensity. See for example the pages 38 forward.


I can assure you the world bank experts working in these areas for 15+ years understand the bureaucracies flaws, I think better than you do in fact.

But that can not prevent political mistakes.

But that does not tell us anything about the econometric analysis of the employment multipliers across many countries.

Beni adam beni adam.

Political = egos
so it also happens with private projects.
The problem is one of the degree and the one of the ability to change more easily.

Here’s a link to aGAO report on federal job training programs. Nearly 50 of them :eek:. I’ve only skimmed. It seems hard to measure.

Does the us federal government actually execute these programs directly itself or is it via the states? I am confused by your system.

Trump says he’ll make America great again. I demand to know his benchmarks!

He’ll finally make his first billion. And he won’t have to “lose” it to pay no taxes.