Comments (21)

• David

  Interesting post and article/editorial. Tweeted it.

  Published: June 25, 2009 6:32 PM

• BioTube

  Comrade Obama ignoring inconvenient truths? Impossible!

  Published: June 25, 2009 7:32 PM

• Vedran

  Congrats Gabriel!

  Published: June 25, 2009 8:06 PM

• Russ

  Even some eco-whackjobs are starting to get it (sort of). I saw a book in the bookstore today that claims that if we don't do something about global warming very soon (it's always an emergency with these people, isn't it?), the planet will become "permanently hot". The solution? An energy source that is more eco-friendly; nuclear!

  Published: June 25, 2009 8:26 PM

• Fred

  Obama knows what he is doing. For those of you who do not get it, green jobs are another method by which the state will take the wealth of the unconnected. It has even fooled most of middle America into supporting this.

  Published: June 25, 2009 9:13 PM

• Cliff

  I am on board with Fred, I believe firmly and sadly that Obama knows exactly what he is doing.

  It is either that, or he is perhaps the most dull-witted person to have ever occupied that office. For a while I thought, and in an odd way hoped), the latter however events have shown him to be conniving and manipulative--both traits the help explain his meteoric rise to power.

  Published: June 26, 2009 7:00 AM

• Nathan

  The claim that 2.2 jobs are lost per "green" job, while accurate, is a bit disingenuous. Just as jobs have been lost during all industrial and productivity revolutions, jobs may be lost in the transition to "green" jobs and energy. The fact is, Windmills/Photovoltaics/ect. may require fewer maintenance personnel per mega watt to operate.

  As Austrians we are quick to point out how gains in productivity lead to more products for all and free use of labor in other industries. Job losses aren't necessarily bad. The wasting of resources is the true menace.

  It is nice to occasionally use the liberal's fantastic claims on job creation against them, but it's worth pointing out in the same breath how this is not necessarily a bad thing.

  Published: June 26, 2009 8:43 PM

• newson

  i agree with nathan. unemployment is a function of labour market rigidity and welfare incentives, not productivity.

  green policies should be viewed through the prism of productivity. that the alternative energy sector depends heavily on public subsidization should be proof sufficient that wealth destruction is occurring.

  Published: June 26, 2009 9:46 PM

• P.M.Lawrence

  Newson, it's not so much the welfare incentives that are the problem as such, but the other, deeper imbalances and distortions for which welfare is a tourniquet, and also the burdens of funding it that are thrown onto the wider economy via taxes etc. If you simply removed welfare and loosened labour market rigidity, it could easily happen that the labour market clearing wage was too low for some people to survive on. They would then turn to predatory behaviour or die trying, which throws "Vagrancy Costs" on others quite apart from their personal distress - it has happened before, historically. So the deeper underlying problem is the structural distortion that stops people having meaningful fall back options to support themselves without that.

  Published: June 26, 2009 10:36 PM

• newson

  to pm lawrence:
  how could the market clearing price for labour be below the starvation level?

  anyway, hundreds of thousands of illegal immigrants work in spain (mainly north africans) in lousy-paid jobs (no welfare and on the lookout for police), casting doubt on your scenario.

  Published: June 27, 2009 2:51 AM

• P.M.Lawrence

  Newson wrote "how could the market clearing price for labour be below the starvation level?"

  Dead easy - it has happened historically, e.g. in England in Tudor times.

  "anyway, hundreds of thousands of illegal immigrants work in spain (mainly north africans) in lousy-paid jobs (no welfare and on the lookout for police), casting doubt on your scenario".

  No, that just shows that there are enough jobs of that sort in that particular time and place for the numbers involved (only a tiny fraction of the population). But can you say that, say, everybody in Gaza now can price themselves into work they can survive on? Without outside aid and/or trade to make up the difference, Gaza can't support its current population.

  Published: June 27, 2009 5:05 AM

• Walt D.

  The creating jobs claim is a canard. A farmer can decide not to use his tractor and hire people with shovels to dig his fields. However, as Newson said, the issue is productivity. The whole idea of using a tractor is the first place is to be able to produce more crops with less labor.
  
  Nathan said:
  
  "The fact is, Windmills/Photovoltaics/ect. may require fewer maintenance personnel per mega watt to operate."
  
  One of the problems with Windmills is that they are unreliable. Also you need a huge amount of windmills to produce 2000 MWH 24-7. Coal an nuclear plants have a huge advantage in this area. Although it has not always been the case, nuclear plants are now very reliable. They rarely shut down, except for routine maintenance. You do get occasional unexpected shutdowns. Diablo Canyon has had to shut down due to sea weed and jellyfish in the cooling intakes. From an economic standpoint, ask the question - why does wind energy cost 3 times as much as coal or nuclear if it requires less capital and less maintenance and the fuel (the wind) is free? Do we have price gouging?
  
  In any case, there is one sure thing - the Cap and Trade legislation will create a huge number of jobs for government bureaucrats. However, these people, by definition, are not productive and will have to be supported by a shrinking pool of productive employees in the private sector.

  Published: June 27, 2009 3:25 PM

• newson

  to pm lawrence:
  you're confusing survival with unemployment. it's not credible that people would prefer to starve than work. vagrancy is a lifestyle choice. wiping out the transfer payments would give the government a larger surplus or smaller deficit, and by inference, increase the pressure for tax cuts.

  it's also possible that people could work and starve if malthusian constraints apply, or if a blockade is in place (these two conditions may apply to gaza, i suppose, but definitely not in spain which was the case referred to by the study's author).
  

  Published: June 27, 2009 10:49 PM

• P.M.Lawrence

  No, Newson, I'm not confusing anything of the sort. While it is indeed not credible that people would prefer to starve than work for enough to survive on, it certainly is credible - because it has happened - that people would rather take up predatory behaviour than starve from either lack of work or from accepting work that does not offer enough to live on. And, in various times and places, there has indeed not been enough well enough paying work on offer. "Vagrancy Costs" is a general term for the cost of this predation, because many people doing it ended up as vagrants and the focus was on moving them on (which still had a cost), but it's not really a matter of whether they are vagrants or not.

  There is no "definitely" about Spain, either. While clearly Spain has enough work above survival level for the number of illegal immigrants you mention, it is not at all clear that real wages would stay above that level if they had to fall enough for all the Spanish currently receiving support to be priced into work.

  Certainly, the Malthusian case refutes any general assertion that real wages could always fall enough for all people to be priced into work and stay high enough for survival, because in that case there aren't enough subsistence resources around no matter how you slice it. But you can still hit that even short of overall resource limits, as we can see in, e.g., the case of the Highland Clearances. Then and there, wool export markets made it more profitable to evict tenants and stock sheep, even if the tenants had offered more rent (within the limits of what they could earn). A few of them did manage to get work in the new factories and many managed to emigrate - but many starved, suffered and died first. And that's not a unique case.

  Published: June 28, 2009 1:56 AM

• newson

  pm lawrence says:
  "While clearly Spain has enough work above survival level for the number of illegal immigrants you mention, it is not at all clear that real wages would stay above that level if they had to fall enough for all the Spanish currently receiving support to be priced into work."

  yes it is. the unemployment rate refers to the official market, not the black market. if illegals can survive, then locals can, too (they don't have the added complication of dodging police). in addition, if nominal wages adjust downwards, so too will nominal cost of living.

  Published: June 28, 2009 3:08 AM

• P.M.Lawrence

  No, Newson, you're not allowing for the numbers involved. The present situation tells us that that many locals could get that work at those wages - but it is silent on whether enough could, at high enough real wages for survival. Maybe they could, and maybe not. While it is true that there would be falls in nominal cost of living as well as of nominal wages, it is by no means certain that the effect would be enough in timing or amount for real wages to remain adequate for everybody. Of course, it would be constraints on real wages that determined this, working through to the nominal stuff, not the nominal stuff working to change the constraints and so the real wages.

  Published: June 28, 2009 4:12 AM

• newson

  to pm lawrence:
  if the capital stock is abundant enough to support hundreds of thousands of illegals (demonstrably above subsistence, otherwise their brothers wouldn't continue to emigrate from morocco) and large numbers of welfare recipients (18% official unemployment), then you've got some explaining to do as to how starvation would be tolerated if the welfare support were removed.

  illegals and nationals aren't necessarily going to be competing in the same job market; almost invariably nationals will earn more than illegals.

  Published: June 28, 2009 6:42 AM

• BioTube

  Just a guess, but I highly doubt that anywhere near the number represented by that 18% figure come into Spain each year. If welfare were stopped, those behind the number would flood the market.

  Published: June 28, 2009 7:31 AM

• P.M.Lawrence

  Eh? I've got no such explaining to do. We were exploring the hypothetical scenario where the labour market was loose enough for real wages to fall enough to price everybody into work, and also welfare support was removed. That presumes there are no effective objections to that. If there were effective objections to people starving as a result, that would most likely work through as... welfare, minimum wages and so on! And, of course, that scenario would have the locals competing in the same job market as any remaining illegal immigrants, since it would have been changed to be that way with both lots chasing the bottom - they only don't while the labour market rigidities and welfare support are around for the locals. Most likely the illegal immigrants would be crowded out.

  So your criticism is that the scenario would not take place, not about how it would work through if it did.

  Biotube, the 18% or whatever of the local Spanish workforce is a number in the millions - far larger than the hundreds of thousands of illegal immigrants currently in jobs there. That's why we cannot infer from those jobs that there would be enough adequately paid work for the locals, under the changed scenario.

  Published: June 28, 2009 8:30 AM

• newson

  to pm lawrence:
  here goes again. a society that generates enough wealth to afford an 18% official unemployment rate and a generous welfare, whilst hosting large numbers of illegal (non-starving and non-criminal) workers, is not going to experience wages falling below starvation level. spaniards will earn more than illegals even after abolition of minimum wages and welfare, because they don't risk deportation, so there will always be two job markets.

  i'm assuming that the tax burden is reduced in the process of cutting welfare entitlements. accumulated wealth would tide many across the transition (the lapse of time necessary for new investment from tax cuts to take place), and the balance would fall on charity.

  Published: June 28, 2009 6:31 PM

• P.M.Lawrence

  Ah - I thought you were asserting that "society" would not permit people to be marginalised, a whole different kettle of fish. But if I read you right, you are clarifying that you assert that with that economic level, necessarily real wages would not fall that much.

  Non sequitur. As I mentioned, maybe, maybe not. Certainly in the case of the Highland Clearances they did, even though there was more than enough "stuff" around to support everybody before and GDP rose after (albeit with a switch away from food production and with a lower economic level than Span today).

  I'm not claiming that your point is necessarily wrong in the Spanish case, simply that it is not established there and that it is certainly not true in general because counterexamples exist. We cannot conclude that "[S]paniards will earn more than illegals even after abolition of minimum wages and welfare, because they don't risk deportation", since we do not know that that effect would be enough to overcome the falls produced by the much greater numbers involved.

  Published: June 28, 2009 7:53 PM