Nearly $2 billion in money from the American Recovery and Reinvestment Act has been spent on wind power, funding the creation of enough new wind farms to power 2.4 million homes over the past year. But the study found that nearly 80 percent of that money has gone to foreign manufacturers of wind turbines.Karl implies that more jobs would have been created if the government would have forced the government to buy American produced wind turbines and that would have been good for the economy.
"Most of the jobs are going overseas," said Russ Choma at the Investigative Reporting Workshop. He analyzed which foreign firms had accepted the most stimulus money. "According to our estimates, about 6,000 jobs have been created overseas, and maybe a couple hundred have been created in the U.S."
Even with the infusion of so much stimulus money, a recent report by American Wind Energy Association showed a drop in U.S. wind manufacturing jobs last year.
Sen. Chuck Schumer, D-N.Y., called the flow of money to foreign companies an outrage, because the stimulus, he said, was intended to create jobs inside the United States...
Several of the large European turbine manufacturers had limited manufacturing facilities in the United States, but there was nothing in the stimulus plan that required that the turbines, or any other equipment needed for the wind farms, be made here, said Rogers. There are strict "Buy America" provisions in the Recovery Act, but this Green Energy Stimulus initiative turned the existing tax credits into cash grants, bypassing the "Buy America" provision.
Bryan Caplan calls the tendency of noneconomists to focus on job creation make work bias ("The Myth of the Rational Voter"). Even during a recession, many economists focus on increasing productivity. Efficient investment leads to increased productivity and economic growth. Job creation follows economic growth. Economists deal with tradeoffs. Economists who opposed the stimulus noted that the funds will not be spent efficiently resulting in lower future economic growth. Economists who supported the stimulus argued that the loss from an inefficient allocation of resources would be smaller than the losses incurred by leaving resources unemployed. This is an issue worthy of debate and empirical investigation.
Economists know that everything has an opportunity cost. The stimulus was financed by expanding government debt. Other things equal, as government expands debt, interest rates rise crowding out private investment. What opportunities did we collectively forego to fund the wind farms? Would those foregone opportunities have been more or less productive than those made through the stimulus?
Senator Schumer expresses a shocking amount of "antiforeign" bias, the tendency to underestimate the benefits if economic exchange with foreign entities, a second bias identified by Caplan. We buy wind turbines from Spain. They earn dollars. What do they do with the dollars when they are based in a country that uses Euros? They can import U.S. goods or services thus decreasing the trade deficit, or they can invest in the United States decreasing net capital outflows. In either case, the dollars are returned to our country and create jobs.
Schumer, and Karl also fail to ask what would happen if the buy American provisions were stronger. Other countries would retaliate by passing their own trade restrictions and remember that the Smoot-Hawley tariffs deepened the Great Depression.
The media can produce stories that ask bad economic questions because most Americans do not have enough foundations in economics to realize that we, through the media, are asking the wrong questions.