Location: Pantego, Texas, United States

Tuesday, November 11, 2008

Obama says that he would like to spend $150 billion over ten years to create 5 million "green" jobs. This is obviously bogus to anyone who can do some simple math. If the jobs pay $80,000 per year, then over ten years the payroll for five million jobs would be $2 trillion. There is probably an assumption that all of those people are going to produce something useful that would be sold to generate income. That could be true, but there would also be a capital requirement to produce energy or whatever the "green" product is. The capital investemtn for green stuff is around $5000 per kW at a minimum. (Actually, in Great Britain the cost of "green" energy is about 10 times what was originaly estimated. But I assume that all of the clever people Obama will employ will figure out how to be competitive with capital requiremnets for conventional energy sources.) If Obama wants to replace 20% of the US electricity generation capacity, a number that I have seen mentioned, that is about 200,000 MW. So, the capital cost would be another $1 trillion. Assume that it would take five years to get any of this capacity installed, and ten years to get all of it installed, so about 2.5 years of of total output could be expected. "Green" power is usually not online but about 30% of the time at best. So, if the power were sold at $0.10 per kw-hr, the income would be $131 billion. Maybe Obama plans on starting with just a few people and building up to five million over time. Even with that assumption, the cost would be almost $2 trillion over ten years. So, if we assume Obama is not just flat out lying, their is some sort of political double-talk involved. But, it is a safe bet that the public doesn't undertsand the economics, so what the heck.

Here is an article that discusses the issue. The environmentalist quoted here doesn't believe Obama's number either, but doesn't think the number is important. It is the thought that counts. This is typical liberal stuff. It feels good; it doesn't matter what the outcome is.


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