In a June 1st editorial entitled “Foreclosures: No End in Sight”, the New York Times correctly suggests that robust job creation and economic growth is likely to be the only real solution for the “relentless rise in foreclosures.”

However, their prescription to create that growth is replete with errors and economic fallacies. The Times says:

President Obama needs to put more effort and political capital into promoting the middle-class agenda that he outlined during the campaign, including a push for new jobs in new industries, expanded union membership and a fairer distribution of profits among shareholders, executives and employees.

Many people will readily understand why a push for expanded union membership may not be conducive to economic growth (with GM the poster child for that discussion) as well as why a “fairer distribution of profits” – to be determined by politicians – is anathema to a functioning capitalist system.

A more subtle argument, however, is the idea of “jobs in new industries”, a plan likely to be as destructive in practice as it is seductive in rhetoric, if history is any guide.

The only “new industries” which President Obama speaks about with any frequency relate to renewable energy, with his calls for “green jobs”. However, a study from Rey Juan Carlos University in Madrid, “the very first…critical analysis of the actual performance and impact…of the Spanish/EU-style ‘green jobs’ agenda”, shows that we can expect President Obama’s focus to substantially raise unemployment at great cost to taxpayers.

Some of the key findings of the study:

• “For every renewable energy job that the State manages to finance, Spain’s experience cited by President Obama as a model reveals with high confidence, by two different methods, that the U.S. should expect a loss of at least 2.2 jobs on average, or about 9 jobs lost for every 4 created, to which we have to add those jobs that non-subsidized investments with the same resources would have created.” Therefore, the US should expect to lose up to 11 million jobs in President Obama’s quest to create 5 million “green jobs”.

• “Since 2000 Spain spent (over $800,000) to create each ‘green job’, including subsidies of more than $1.4 million per wind industry job.”

• “Each “green” megawatt installed destroys 5.28 jobs on average elsewhere in the economy: 8.99 by photovoltaics, 4.27 by wind energy, 5.05 by mini-hydro. These costs do not appear to be unique to Spain’s approach but instead are largely inherent in schemes to promote renewable energy sources.”

• Despite “creating a surprisingly low number of jobs”, 90% of those jobs were essentially temporary, i.e. in construction and marketing, “and just one out of ten jobs has been created at (a) more permanent level.”

• Renewables consume enormous taxpayer resources. In Spain, the average annuity payable to renewables is equivalent to 4.35% of all VAT (national sales tax) collected, 3.45% of the household income tax, or 5.6% of the corporate income tax for 2007.

The New York Times does recognize the importance of economic growth in solving our nation’s housing woes, but then lapses into an economic prescription much more likely to kill the patient than to cure it.