Extracting Our Way To Prosperity

A few people emailed this week to ask what I thought of Rick Perry’s plan to create jobs by relaxing environmental restrictions on resource extraction. Mitt Romney, I think, has a similar plan coming out today. The big picture on this is that the problem with “brown jobs” is exactly the same as the problem with “green jobs.” Over the long run, even in very poor countries, people generally have jobs. The issue for national economic strategy isn’t about whether or not there will be jobs, it’s about whether or not there will be prosperity. The way this works is that very poor agricultural countries get more prosperous and dirtier by industrializing, and then among rich industrial countries cleaning up is part and parcel of becoming more prosperous. You could increase short-term per capita GDP by sending 12-year-olds to work in sweatshops instead of elementary schools, but that’s an insane growth strategy for a developed country.

As countries get richer, their citizens put more value on environmental protection and demand reductions in air and water pollution and increased conservation of the landscape. The Perry strategy is based around the converse of that, namely the fact that during a recession people care less about environmental protection (PDF) and more about growth. And yet the premise that regulatory curtailment of natural resource extraction explains the recession has no evidence to back it up. Employment in natural resource extraction is extremely robust:

The blue line here is mining and logging extraction (which includes oil and gas drilling), the green line is overall private employment (including resource extraction), and the red line is government employment. Everything’s been indexed so that the pre-recession peak is 100. What you can see is that overall private sector employment is lower than it was pre-recession, but it’s trending upwards. Government employment is lower than it was pre-recession but is also trending downwards. Resource extraction employment, by contrast, is both growing and above its pre-recession peak. So nothing about the current situation suggests that special regulatory favors to the resource extraction sector are a necessary part of the cure. If you have some independent freestanding belief that the United States at the end of the Bush administration was unduly interested in environmental protection, then fair enough. But these industries are growing despite any Obama-era regulatory initiatives and despite the general economic downturn.