WashPost embraces ‘broken window’ economics

Robbing Peter to pay Paul is a crime, not a successful economic policy.

A front-page Washington Post article today suggests that the economic effect of regulations on jobs is minimal.

The Post reports,

Beverly, Ohio — The Muskingum River coal-fired power plant in Ohio is nearing the end of its life. AEP, one of the country’s biggest coal-based utilities, says it will cut 159 jobs when it shuts the decades-old plant in three years — sooner than it would like — because of new rules from the Environmental Protection Agency.

About an hour’s drive north, the life of another power plant is just beginning. In Dresden, Ohio, AEP has hired hundreds to build a natural-gas-fueled plant that will employ 25 people when it starts running early next year — and that will emit far fewer pollutants.

The two plants tell a complex story of what happens when regulations written in Washington ripple through the real economy. Some jobs are lost. Others are created. In the end, say economists who have studied this question, the overall impact on employment is minimal.

Not only is it not clear that 159 permanent jobs can be replaced by 25 permanent jobs plus “hundreds” of temporary jobs, but even if was an exact offset, it would still be bad economic policy. We need more jobs, not the same or fewer jobs. Actual economic growth provides more jobs; regulations just rearrange jobs — i.e., zero sum. The broken-window economics is wealth-reducing, not wealth-creating.

BTW, the fact that the gas plant emits fewer pollutants is unimportant as there are no health or environmental accruing from Obama-era air rules.

Read the Washington Post article.

Read some of our thoughts on the “broken window fallacy” in the context of “clean energy”.

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