A smart economy is a green economy

A green new deal (US), green collar jobs (UK), a smart economy is a green economy (Eire) — slogans are one thing, but now the government is putting our money where their mouth is.

See http://www.edie.ie/news/news_story.asp?id=16444

Summary: “Concerned about the loss of jobs that comes about by exporting waste, the Government has launched a €13 million market development programme to help create new Irish jobs by using recycled materials to produce environmentally-friendly goods.”

It’s only 13 million euro, but it is still 13 million euro wasted.

Recycled material is of lower quality than virgin material so it has to compete on price. This means that recycling is done by people on really low wages — that is, low wages on the Indian wage scale. There are substantial occupational hazards in recycling, so Irish labour costs would be high even if wages were low (on an Irish scale). Recycling in Ireland is just not an option, unless the process can be almost fully automated, in which case few jobs would be created.

Increasing the share of recycled materials in Irish manufacturing cannot be good for employment either. Irish companies already have the option to use such materials. The fact that they do not avail of that option would suggest that there is something not right with the cost or quality of recycled material. A subsidy would change the balance, of course, but subsidised input substitution is not known to lead to output growth (and hence new employment).

There is, of course, a niche market for products that serve the environmentally conscious consumer. Real money can be made in designs for that market, even if little money is made in the actual production. Eco-design is a saturated market, however, and Ireland has no obvious edge over its would-be, well-established competitors.

As I said, it’s only 13 million euro. But it is more money down the drain, and it shows that the government really does not understand much about the creation of jobs or wealth.

36 thoughts on “A smart economy is a green economy”

  1. @Brian
    Sorry. Forgot to mention the environmental impact.

    Recycling is good for the environment.

    Recycling in India is cheap, labour-intensive, and energy-extensive.

    Recycling in Ireland is expensive, labour-extensive, and energy-intensive.

    Shifting recycling from India to Ireland thus increases costs (and hence reduces recycling, which is bad for the environment), destroys jobs (that is, loads of jobs lost in India and a few created over here), and increases energy use (which is bad for the environment).

    Shifting recycling from India to Ireland does not decrease energy use in transport, because waste is transported by spare capacity. On a volume basis, more stuff is shipped from India to Ireland than from Ireland to India. Shifting recycling from India to Ireland would mean that ships would be emptier travelling to India, but would not mean fewer ships as they would travel there anyway to haul stuff over here.

  2. @Richard
    glad you cleared that up…I was beginning to think you were against it!

  3. It’s a bit annoying that the Green Party clearly don’t genuinely care enough about it’s professed raison d’etre to actually think these things through…

    Did anyone catch Elizabeth Davidson on RTE the other day? Discussed on politics.ie here

  4. The argument that material be recycled in India works best from an environment standpoint if Irish industries don’t require the material to be returned for manufacturing, but rather it is returned as finished product we would have bought anyway – otherwise the empty ship argument is reduced by the recycling quotient of material re-imported/material exported.

    “Recycled material is of lower quality than virgin material so it has to compete on price. ”

    In the case of glass, for instance, what the public thinks of as “recycling” – chuck it in a bin with arrows on it – can entail anything from reuse (alcohol bottle deposit return, as here in Ontario*) through recycling (melted and made into new bottles) to downcycling (using broken mixed glass as road fill rather than digging huge holes in the countryside to extract gravel)

    This is three different price points and thus depends on the State to create the conditions where reuse is the most feasible outcome (by enacting deposit taxes so the bottle remains intact) and recycling is workable (by finding ways to reduce clear glass contamination with coloured glass, such as by reducing the use of unattended recycling bins).

    The issue with post-consumer materials vs. virgin materials as that frequently virgin material production pay insufficient royalties or even receive subsidies to recompense to the effects of their production, not least that they are mostly non-renewable resources. Governments have frequently given away the store on primary materials and water. Were the market price higher, it would be worthwhile for post-consumer industries to improve their processes to approach virgin quality.

    Where the argument for recycling is weakest is whether the quantity of material produced by a recycling facility exceeds the capacity of Irish industry to absorb or where it is largely drawn from imported items we don’t make at all.

    * We’re still in the era of “if it works in Canada it must be good”, right?

  5. @Mark
    Your point on transport is well taken.

    So are your other points, none of which argues in favour of a subsidised increase in the domestic share of recycling — which is what the government is after.

  6. Of course the Greens are inept. At least the Reds had a raison d’etre. The Greenies have to be middle class and stupid it seems. In the old days the idiots would have been sent to a seminary or the civil service…..
    Why they continue to exist politically is beyond me. All their best policies are stolen and one or two candidates also. Ecology and economy should go hand in hand. Comparative advantage and all that.
    Really the problem is government it survives until it is too wasteful of resources. As resources become too plentiful, they become outrageous. Until resources become scarce again, relatively.
    I blame the economists….no actually, the sheeple.

  7. The so-called “Green economy” will have serious ‘unintended consequences,’ such as the item below.

    But, hey, they’re only Asians, right?

    HB

    ‘Green’ lightbulbs poison workers

    Hundreds of factory staff are being made ill by mercury used in bulbs destined for the West

    WHEN British consumers are compelled to buy energy-efficient lightbulbs from 2012, they will save up to 5m tons of carbon dioxide a year from being pumped into the atmosphere. In China, however, a heavy environmental price is being paid for the production of “green” lightbulbs in cost-cutting factories.

    Large numbers of Chinese workers have been poisoned by mercury, which forms part of the compact fluorescent lightbulbs. A surge in foreign demand, set off by a European Union directive making these bulbs compulsory within three years, has also led to the reopening of mercury mines that have ruined the environment.

    Doctors, regulators, lawyers and courts in China – which supplies two thirds of the compact fluorescent bulbs sold in Britain – are increasingly alert to the potential impacts on public health of an industry that promotes itself as a friend of the earth but depends on highly toxic mercury.

    Making the bulbs requires workers to handle mercury in either solid or liquid form because a small amount of the metal is put into each bulb to start the chemical reaction that creates light.

    (Continue reading the full article at:

  8. @Henry
    That’s indeed far away.

    Some of the mercury travels with the bulb and will end up in Irish landfills and groundwater.

    If you’d follow the health and safety regulations to the letter, then if you’d drop a box full of CFL bulbs in a supermarket, that supermarket will have to be evacuated and decontaminated. If they don’t, and you do develop symptoms of mercury poisoning (which are fairly unsymptomatic), you can sue your local supermarket.

  9. Unfortunately, it’s not just environmentalists who are green about material prosperity and economic development. In fact, it’s hard to find anyone in the public sphere who is an unabashed advocate of expanding industry and commerce. The smart economy, greentech and sustainability are weasel words that all express a backward retreat from the traditional goal of economic policy – GDP growth and productivity.

    Let’s take a historical view. Human development is a story of expanding production through technological, organisational and societal advances. Such growth has assumed the expansion of labour (employment and/or time) and also efficiency gains so that more can be produced in less time. This is forgotten by those who wish to direct smart economies to privilege efficiencies and constraints in the exploitation of natural resources. Let’s concentrate on how we can increase the productivity of society, rather than protect worthless resources (natural resources have no value except those derived from human preferences, NB misanthropic animists and gaia-botherers are free to disagree with this). Time is money, in the sense that time is the most important opportunity cost for society.

    Resource-efficiency innovations – like low-carbon technologies. recycling and energy conservation – implicitly belittle the desirability of extensive and intensive advances in labour productivity. How an economy expands what we can produce in our short lives is its key measure. You can’t live on thin air, as the advocates of the post-material economy preach. Let’s ditch the smart economy and carbon economy blinkers and start debating how Ireland can inspire a new economy based on material ambition.

    anemeconomy.info

  10. The fantasy of ‘green jobs’ relies on taxing people to pay for them. It’s just a slogan. Their latest admission is that a carbon tax will not be revenue neutral, I rest my case.

  11. If the taxes are merely bringing private costs in line with social costs, I wouldn’t care a jot if it’s revenue-neutral or not.

    Well, maybe a jot, given the Irish government’s current predicament. But the point is, the taxation system should be based around aligning private and social costs, so that markets can be allowed work their magic.

  12. “Concerned about the loss of jobs that comes about by exporting waste”. We are getting into seriously dangerous territory if national self-sufficiency starts getting used like this as an argument for government intervention.

  13. I should be fair and point out that this quote is from the journalist rather than the government department.

    Richard, its not fully clear from the government website that this initiative is about the type of basic recycling operation you are talking about. For example, it talks about involving third level institutions.

    Is it possible that this is more about developing some very specialised types of recycling process that might be worth doing in a country like Ireland? It would be good to know more about what the actual grants will be going toward to evaluate fully whether it is as bad as you suggest.

    http://www.mdg.ie/MDGRoot.aspx?ContentID=28

  14. @Liam
    “involving third level institutions” = cheap student labour?

    Seriously: There are high-value-added parts to recycling. These are in the marketing and design of products, the logistics of the recycling process, and in research to increase the quantity and quality of recycled materials. A trick to get the mercury out of discarded CFL bulbs would be very valuable, for instance.

    Stimulating that is not as dumb as creating jobs for rag-pickers. You should still wonder what is the externality? What is the public good that deserves a subsidy? In its most favourable light, this policy strikes me as a politically-expedient-but-not-really-viable-infant-industry policy.

  15. Steve’s comment above hits the nail on the head. The green movement implicitly rejects the Aristotelian world view that suggests planetary resources exist solely for the benefit of humanity, which is also basic to the Christian world view and to the ideologies of capitalism and communism. Instead, at its broadest level, the green world view is based on a recognition of the interdependence of all living things and their interconnectedness, a world view, by the way, to which I am personally sympathetic.

    Modern green parties date from the early seventies and owe their origins to the radical left of the 1960s, plus social movements with environmental objectives e.g. anti-nuclear groups and their offshoots. Essentially ‘protest’ parties, green political parties throughout Europe and rest of the English speaking world have gradually found their way inside the political system in recent decades, including as in our own case, into government.

    Our own green Party is a peculiar political beast in that, unlike a lot of its European counterparts, it owes it origins almost solely to social protest movements – the ‘fight’ against Carnsore and other celebrated environmental causes of the 1970s and ’80s – and its leading members have for long demonstrated a strong anti-technological, anti-science bias as well as an antipathy to adopting existing forms of political power (for many years the Irish Green Party resisted the idea of itself appointing a ‘party leader’).

    So what, you may reasonably ask, has any of this got to do with current economic policy direction of the government? Quite a lot as it turns out. When forming his government in 2007, Bertie Ahern allocated the portfolios to Green Ministers that they wanted – Environment and Energy. He might have been better advised to place his Green Party colleagues in different Ministries where they would have had to argue the toss for their perspective on environmental matters and energy policy with their Cabinet colleagues rather than being allowed free rein to pursue one cockamamy pet project after another, usually allied to a claim that Ireland will become ‘a world leader’ in this , that or the other field of the new green economy and unfortunately also usually oblvious to any scientific, economic or technological evidence to the contrary. In other words, all their geese are swans.

    To be fair to them though, they’re new at the game of exercising political power and whatever else they lack it’s not courage. What has to be a matter of concern, and is hardly their fault as ministers, is the extent to which Government Departments or their agencies, may temporarily adopt ‘the Minister’s view’ without resistance or criticism in order to fall in line with the powers that be. This is particularly the case with energy policy, since getting our energy policy right is vital to the future of the Irish economy.

  16. Thanks Veronica

    and in fairness, the average Green politician is not dumber than the average politician — and the Greens are not the only ones with cockamamy pets

    I just happen to specialise in environment, energy and transport — and thus run into Green politicians more often

  17. Richard,

    Yes , no doubt we could be here until Christmas listing off the cockamamy pet projects of our political and governing classes down through the years…

    Meanwhile you may already be aware of this forthcoming event, but if not it may be of interest to you given your specialisation and I’m sure the IIEA would have no problem welcoming you:

    Dear Colleague,

    “It gives me great pleasure to invite you to a lunchtime meeting with Professor Igor Shvets and Mr Graham O’Donnell of the Spirit of Ireland Group on Thursday June 4 @ 12.45pm at the Institute of International and European Affairs.

    They will present and discuss the group’s recently announced strategy to make Ireland energy independent within 5 years and a net exporter of energy thereafter through the large-scale deployment of wind farms and hydro storage on the West Coast of Ireland.

    Due to the anticipated demand for places at this event, I would ask you to return the reply sheet below to reception@iiea.com or phone 018746756 as soon as possible.

    Yours sincerely,”

    I’m intereested in this project, but my heart sinks when I hear the claims it is being surrounded with – net exporter of energy etc. – and the amazing media hype that has been associated with it thus far.

  18. I am well aware of this project. It is so crazy that is is not worth discussing. The only interesing questions are who is funding this and why?

    There are two possibilities. Either this is supported by speculative Asian money from a company with no experience in energy and no experience in Europe. Or this is money from someone interested in disturbing the debate on energy policy. While the debate certainly needs some stirring up, I can’t imagine that any serious would-be entrant to the Irish market would use such tactics.

    I therefore work with the hypothesis that the Spirit of Ireland are a bunch of crackpots supported by a loony moneybag.

  19. Richard,

    Why is it crazy?

    Is it the lack of :
    1) any cb analysis?
    2) environmental impact assessment?
    3) engineer’s pipe dreaming aspect?

    Re your comment above, there is always the third possibility – that it will garner political support and promises of grant in aid etc., a bit like the 260m euro promised for biofuels development grants, well as at least before we all found out what a bad idea it is to use agricultural land to grow biofuels crops.

  20. Ireland should deal with its own waste. Exporting waste to countries with population problems for children to be used as little more than slaves to “process” it is nothing less than criminal in my mind. Ireland has to smelt its own glass, recycle it’s own plastic, mercury,led, copper etc etc. If it was not so cheap to “get rid” of the stuff to slave labour economies we might actually decide to deal with the stuff ourselves. We might use less packaging, use materials which decompose etc. Market and advertise products differently! A lot of problems occur because of our lack of common sense, our lack of care and our ability to avoid being criminally prosecuted for damaging our own environment. We are polluting our water for nearly 50 years now unfortunately that is one problem that we cannot export to Asia so it just build up with 13 counties having to boil their water last year! We have to wake up to our own near criminal lethargic attitude to the environment! Just look at the filth of our cities with rubbish, chewing gum and organic waste rotting everywhere! We need to spend 100’s of millions to educate and train people on how to reduce their waste to near zero.

    As regards the 13 million “wasted” it is better to start these fledgling businesses here that at least begin to teach people to THINK about recycling etc etc. It is not money wasted! Money wasted is materials leaving this shore to be sorted by child ‘slaves” abroad there is a huge moral imperative on us to sort out our own problems and not export them. If the quality is not right then we must get it right and sort the problems not just moan!

  21. @Robert
    Should Ireland grow its own cotton too? Is it not immoral to divert drinking and irrigation water in Mali to grow cotton for the European market? Should Ireland grow its own coffee? Is it not immoral to use land in Ethiopia to satisfy our caffeine cravings?

  22. @Richard
    I notice you use the classic diversionary tactic of not addressing the issues of moral responsibility that I raised. If it is wrong to export our waste to slave labour camps in India and Pakistan, wherever! Then likewise it will be wrong for people to have their drinking water stolen, in order for others to produce cheap goods for western consumption. Two wrongs don’t make a right! Where is the confusion?

    Often the so called “competitive advantage” that economists like to refer to accrue because of an absence of labour laws. No costs are factored in for pollution caused in the receiving country, no costs whatever are added for the adverse health effects on workers both physical and psychological. Indeed shortened life expectancy becomes their problem and not ours!

    I am all for ethical trade and fair trade. If the people of Mali need their water which is being diverted or stolen from them to grow cotton for the European market then it is immoral and we should do something about it! Like wise, many people in Ireland have come to realize that producers of coffee were not getting a fair deal. Many of us as consumers are now doing something about that! As an aside, as far as I can see the common agricultural policy has made the farmers of Ireland into a near mono agricultural society which is destroying much of our water recourses and heritage. Again the mistake is made of not factoring in the cost of damage to the environment.

    The way profits are being measured is a falsehood in the world at the moment. Countries choose to ignore damage to the environment, because they hope the acid rain, global warming, pollution, rising sea levels and temperatures will happen to their “neighbour” and not them.

    Surely, if we can put together and export micro processors by the millions in Kildare and export Viagra from Cork to half the planet, it is not beyond our capabilities to devise effective and imaginative ways of dealing with the waste that we as a society create, including our agricultural waste. After all, there is huge scope for job creation and technological innovation in this area. I have no problem with exporting the innovations and technologies if we develop them? If?

  23. @Robert
    Reductio ad absurdum has been a debating technique for a long time, but I could have guessed that you indeed favour growing cotton in your backyard.

    You confuse responsibility with implementation.

    I take responsibility for feeding and education my daughter. (This may be because of a moral obligation, or social pressure, or a genetic disposition, or maybe just because I feel like it.) I do not, however, grow wheat, bake bread, or home-school. I take the responsibility, but I let others do the work.

    Waste is the same thing. A responsibility for having it cleaned up does not imply a responsibility to clean it up oneself.

  24. @ Richard
    To paraphrase, “You take responsibility but let others do the work.” The problem with having our waste “processed” is that we let others do the work but refuse to take any responsibility. It is the clear opposite. I grow Japanese maples and lotus trees in my garden! No cotton yet!

  25. @Robert
    I don’t follow. In what sense implies the outsourcing of recycling a denial of responsibility? Why does acknowledgement of our responsibility imply that we cannot export waste for recycling?

  26. @ Richard
    It is not just outsourcing of recycling, the problem is, that it represents an outsourcing of responsibility too! When was the last time minister Gormley visited a tip head in India to see if the little children, adults have got their jabs and have been to school that day? Once the ship leaves the port its out of sight out of mind.

    I general I am not a great advocate of outsourcing. When you bring it to its illogical conclusion,it can become a matter of, will the last person in the economy to have his job outsourced please “turn off the lights!” In Irelands case, programming, engineering, farming etc you can outsource the lot.

  27. @Robert
    If you object to labour standards in other countries, is the logical policy to reduce the demand for their labour?

    This is Gormley’s current policy with which you seem to agree.

    It strikes me that many in India would rather have a job picking rags than no job at all. Indian unemployment benefits aren’t great.

  28. @ Richard
    The reason why the US and Europe was able to live in a “credit bubble” for so long was because the governments in China and India are able to “arrange” for hundreds of millions of people to live in semi permanent poverty. Our trade patterns are actually helping them to do that!

    It suits these governments to have practically an unlimited source of cheap, slave labour. In one of these two countries it is even enshrined in their cultural and religious beliefs. This too is changing. In China these policies allowed the Chinese government to finance US debt at the expense of their own poor. Though this may change now as Obama and Geitner try to monetize the debt away!

    The world is changing, Obama is not going to let Americans rot on welfare stamps as jobs are exported or outsourced to countries like Ireland or India and in this I agree with his pragmatic approach.

    Our first priority must be to our own people their living standards, jobs and the futures of our children and indeed ourselves. Ireland is borrowing 55 million every 24 hours to survive, I certainly do not agree with Mr. Gormley’s approach which is to stay in power regardless! I am green but not that green!

  29. @Richard,

    to be fair if you look at the information on the market development programme website it seems to have quite a focus on organic waste which we are required to increase rates of diversion from landfill substantially. With absolutely no empirical evidence or numbers to back me up, I’m guessing that some policy of exporting organic waste is not an option (the sheer weight etc). MDP seems sensible (enough or at least not completely insane) from that perspective.

    Secondly, the collapse in the price of recyclable material during the summer (if I remember correctly) and the massive backlog of materials would indicate to me that a more secure end source for our paper and plastics is needed. There was also the issue with lots of recyclables being landfilled in China (highlighted on Vincent Browne and Primetime last year).

    (for interests of disclosure, I’m v. active in GP & young Greens, but also economics student, so would like to think not blindly partisan)

    @Veronica

    A good short summary of the origins of Green movements of the past I think. Theres a notable shift in Green movements across Europe but especially in those who have tried or succeeded in going into government – eg German, Irish, Swedish – away from that anti-scientific bias you (correctly IMHO) identified. From my own experience, the surge in membership we experienced here in Ireland after going into government was predominantly among highly educated professionals (environmental scientists, accountants, etc. etc). Its a very different Green movement to the far-left protest movement that in originated from, with – to put it crudely – a focus on environmental issues because of feedback effects to humans rather then to protect the environment from humans. If you catch my drift.

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