Last week, Roger Meiners, a senior fellow a the Property and Environmental Center in Bozeman, MT and a professor of economics at the University of Texas, Arlington wrote an op-ed piece in the Wall Street Journal proclaiming the federal stimulus program directed at creating green jobs to be a "turkey." Meiners' reasoning is based on the cost of installing solar panels at the U.S. Fish and Wildlife Service's Ennis National Fish Hatchery at a cost of $179,000--all paid for by stimulus money.
According to Meiners, the solar panels may have a total life of 25 to possibly 40 years with the actual return on the investment taking closer to 70 years. He bases this claim on the fact that the fish hatchery requires 34,000 kilowatt hours per year, priced at $.10 per kilowatt, so the cost of energy needed to run the fish hatchery is $3,400 per year. The solar panels will generate 75% of the energy needed, for a savings of $2,550 annually. Therefore, Meiners reasons, if the panels last 40 years, they will save the hatchery approximately $102,000, leaving the remaining cost of $77,000 unfunded. In other words, this difference will have to be made up by the taxpayer.
Let's look at the actual economics of this. If the hatchery chose to place $2,550 per year in a savings account, accruing an average of 3% per annum for the next 25 years, the shortfall of $77,000 would be made up. That solution may seem simple, perhaps too simple for a professor of economics to understand that any savings will be ultimately be spent somewhere else and create additional stimulus. This may be Keynesian economics in its rawest form, but it's relevant to this discussion.
Meiners is also assuming that everything remains exactly the same for the next 70 years--that development of newer and more efficient solar panels will not happen, and that the replacement costs for those will not decrease over time. But if this were the case, all home computers would still cost thousands of dollars and we'd still be listening to music on $200 Sony Walkmans. So Meiners' argument leaves absolutely no room for advancement.
Perhaps the result of another stimulus package from the past--the building of the Fort Peck Dam project in northeast Montana--makes a good counterpoint to Meiners' point of view. Built during the Great Depression (1933-1936) as a result of the Public Works Administration, Fort Peck Dam's creation employed over 10,000 Montanans during the worst economic period in American history and made history--it is the largest hydraulically filled dam in the United States.
Today Fort Peck Dam generates 185,000 kilowatts of energy every year. Just as there are today, there were probably many Depression-era naysayers who believed the dam's building was just another federal government giveaway that would spend us all into oblivion. However, although there were problems with the dam's construction, it's still working pretty well after 70 years.
And when it comes to the Ennis National Fish Hatchery, we are, once again, looking 70 years into a future that we cannot possibly foresee. If the past is any indication, perhaps we still have a chance to make it through. Meiners complains that "our great grandchildren will pay for it, since this piddly little project is part of the trillion-dollar deficit that we are unloading on future generations."
It's obvious that, in general, Meiners does not agree with the Obama administration's stimulus program. Fair enough. Certainly discussing the stimulus program's potential flaws is worthwhile. However, it's surprising that such an accomplished professor as Meiners would rely on such reductionist and cynical hyperbole to make his points.
Jonathan A. Schein is CEO of ScheinMedia and publisher of MetroGreenBusiness.com