Can we tax, spend, and regulate our way to prosperity? Some say we can—if the taxing, spending, and regulating help fight global warming.

North Carolina’s legislators are considering a package of 56 proposals to reduce greenhouse gas emissions. The proposals include such things as mandates on consumer appliances, energy-efficiency requirements for government buildings, subsidies for buying energy from renewable sources, subsidies for investment in renewable-energy technologies, mandating pay-as-you drive insurance, restricting the hours of operation of heavy trucks and buses, mandates for recycling electricity, rationing energy use by businesses (via a cap-and-trade system), new vehicle taxes based on emissions.

Mandate, regulate, tax, ration, subsidize, restrict … If that doesn’t seem like a formula for economic growth, then you must be unfamiliar with the work of Appalachian State University’s Energy Center. According to the Energy Center, the proposed global warming policies will add 32,000 new jobs and $2.2 billion to the North Carolina economy by the year 2020.

Of course, those estimates are a far cry from estimates released six months ago of 325,000 new jobs and $20 billion in value to the economy by the year 2020. Only off by a factor of nine.

ASU’s modelers produced the new, more modest estimates after the earlier ones were criticized by North Carolina’s John Locke Foundation as well as the Beacon Hill Institute in Massachusetts. The Beacon Hill Institute has produced its own estimate: the global warming proposals will cost North Carolina 33,000 jobs, and subtract $4.5 billion from the Gross State Product by 2020.

As the Beacon Hill Institute study points out, the problem with the ASU estimates is that they are based on an input/output model, which assumes that any resources used in the implementation of the policies would not otherwise be used by the economy. (We have written previously in a different context about the problems with input/output models. See Government’s Magic Job Machine.) In other words, the model assumes that anybody employed as a result of these policies would otherwise be unemployed.

As most sensible people know, there’s no such thing as a free lunch. The question now is: Are North Carolina’s legislators sensible people?

Cross-posted at InsiderOnline.