I won’t ask if they think Americans are this stupid, since they obviously do. Leaving aside the question of whether carbon needs to be capped, since that has nothing to do with whether doing so “creates jobs” on net, is there a non-drone, non-bought-and-paid-for human being on this earth who thinks throwing obstacles in the path of production “creates jobs” in a non-trivial sense? Couldn’t I, with equal justification, say that forcing every business to destroy its roof and then build a new one out of clay, or chopping off every third worker’s right hand, would create an analogous series of jobs?
Source link: http://archive.mises.org/10050/capping-carbon-creates-jobs-citizen-heres-how/
Capping Carbon Creates Jobs, Citizen! Here’s How!
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I don’t think I’ve seen a more obvious appeal to the broken window fallacy…
These are the same people who think that expanding the bureaucracy is good because it creates more jobs. The laws of economics mean nothing to these people…
http://en.wikipedia.org/wiki/Agitprop
I think that key word here is “potential.”
“I won’t ask if they think Americans are this stupid, since they obviously do”
And I won’t ask if you [Thomas] agree with them.
I do! I think people (Not just Americans) are this stupid.
My proposal combines recreation and job creation.
I propose building full scale titanic replicas and sending them off with a few thousand passengers to rub up against icebergs on nice calm evenings. We’ll just equip them with more lifeboats. Think of all the fun people can have with the experience. We can create an assembly line of titanics so there is always a ready replacement.
Lots of jobs, lots of steel, glass, furniture and stuff…it could turn the economy around!
1. A special prize should go to jc butte for his “sink the Titanic replicas” jobs program. Excellent.
2. It must be just a coincidence that most Global Warming hysterics are economic noodle-brains. Right?
3. Please check my math. Obama says that his $787 billion pig out, I mean STIMULUS bill has saved or created 150,000 jobs.
787,000,000,000/150,000 is the same as (dropping four zeros from each side)
78,700,000/15 = $5,246,666.66 per job (all of which, of course, is borrowed from Red China, and must be paid back).
http://news.yahoo.com/s/ap/20090527/ap_on_go_pr_wh/us_obama_solar_power
That’s efficient, right? This has ALWAYS worked in the past, right?
Actually, all of these bailout bills amount to $5 trillion or so (all borrowed). For $5 trillion/$150,000, I get $33.33 million per job saved or created.
The American people see through this, right?
Personally, I’ll take the cash up front.
I love how they use windows as an example in this broken window fallacy!
I was discussing gov fuel standards with a friend who claimed something analogous to the above. I asked him if he was correct then why doesn’t he do his part by crashing his SUV into other vehicles that are also fuel inefficient. After all the, insurance money will pay for most of it and they both can buy more efficient vehicles. Strangely, he recognized the absurdity of my statement but not of his own.
To quote comedian Ron White “You can’t fix stupid”
Actually, I think you really could find a market for a Titanic ride.
well lookie at the source of this chart… the environmental defense fund. quite possibly the biggest collection of tree huggers with a congressman in the back pocket in the world. were screwed (and i am in canada!!!)
And then Santa Claus will give us all presents from the North Pole toy factory…
What is even more ridicules is the fact that solar/wind energy is so diluted that it takes more energy to harvest it then the energy we will ever be able to get from it and utilize it… but that’s another story of our time.
The only way to reduce CO2 is to advance use the energy of the 21st century (Nuclear Energy). Building the industry of the 20th and especially 21st century using an energy source of the 19th century was the worst mistake politicians ever made in the history of the world. Correcting this mess will be very costly whatever way we do it, that’s the reality unfortunately.
I would also note that it is probable that a KW of electricity produced from renewable sources will cost more than a KW produced by most traditional methods. (That is why significant financial subsidies and point-of-the-gun government mandates are generally required for renewable energy resources to be utilized.) With individuals and businesses spending more for the same amount of electricity, they will have less to spend on other goods and services. Only a fool or a political beast would not realize that overall economic output and standards of living will be negatively impacted.
Funny, I don’t remember the last time investors ran with fiat bills before them for diminished returns via increased taxation. That is, of course, unless Uncle Sam is another “reluctant investor” in this R/D.
Dennis, I have recently discovered that an Archimedes Screw, run backwards, is more than 90% efficient at generating electricity in low head, high flow applications. This more than a 10% improvement over turbines. I even have some ideas to improve it… Would you guys get pissed at me if I went after some stimulus money?
The only way the economy and the standard of living can go further without increasing energy consumption hence production is to get a higher efficiency on energy utilization. And that is very hard to do when the economy is forced to waste energy, time, capital… it is very hard to do even without those obstacles around. That is what these anti-capitalist people never going to understand in a million years.
“Only a fool or a political beast would not realize that overall economic output and standards of living will be negatively impacted.”
Indeed, Dennis. Indeed. However, that which is absent from your analysis is that craven class of econo-killers who actually pine for reductions in output and standards of living. And they’re out there in huge multitudes.
Anyone who has listened to Thom Hartmann’s show of shows has heard him wax disdainfully of the “inability of economists to subtract” – a point that restricted to the imputation of government intervention I’m half-inclined to agree with. Only he doesn’t mean it that way. They want us to produce less. They want us to not take up too much time and space on Earth. And they’re in the driver’s seat.
Elementary economics should inform all the great unwashed on this site that the problem is coal’s external costs – economists call them externalities – those costs that are imposed on parties not otherwise connected with the running of a particular business.
These costs should be internalized, then we can worry about whether wind is cheaper than coal.
So the actual problem revealed by this shallow article is the non-acceptance of Globa l Warming theory. The fact that the academies of science of all G8 nations, plus those of India and China endorse Global Warming theory.
Who here is qualified to contradict all of these science academies? No one, I would suggest. It would be far better to direct your energies to solving the massive energy dilemma we face, than whining on about how expensive this all is.
With such an explanatory graphic as that, it’s hard to disagree. This plan can’t fail!
Don’t forget to check out my Coasean parody of the graphic, which lampoons pseudo-libertarian “solutions” to the problem of pollution.
@Sancerre;
You are absolutely correct – 18th-century courts de-facto legalized pollution trespass (the externality), and 1970′s regulations codified it for all time.
So we Misesians, and particularly Rothbardians, wish to remove the externality by returning the liability for pollution trespass back to the polluter.
Where I would disagree with you is that absolutely no scientist has definitively identified CO2 as a pollutant. Even the EPA’s attorneys admit this – no health harm has been or can be directly shown, which obviates any (tenuous) authority they might have to regulate CO2.
Furthermore, since CO2 is already a part of the atmosphere, it cannot be controlled by reverting to a tort conception of pollution.
And it matters not. The worst pollution trespassers (coal-fired power plants) are also the biggest carbon dioxide emitters. It is quite possible that by simply restoring the tort status of pollution, CO2 emissions would be DRASTICALLY decreased without doing anything about it directly at all.
THAT’s carbon emission reduction any Rothbardian can live with.
QUESTION on BROKEN WINDOW FALLACY: In Economics in One Lesson, we hear about a shopkeeper who’s window is broken. Thinking this will increase overall employment just because a window repairmen is needed is incorrect. Hazlitt points out the repairman’s employment is created only at the expense of some other, unknown vendor’s underemployment. The example he gives is a tailor from whom the shopkeeper had wanted to buy a suit will now won’t get the business because the shopkeeper had to pay for the window repair. The question is: couldn’t the window repairmen now buy the suit that the shopkeeper can’t? Isn’t the only thing that is really “lost” for the community the time it took to repair the window? Am I missing something or was that the whole point of the Broken Window Fallacy?
Matt, that was too easy. Hazlitt does not directly imply that the COMMUNITY is worse off (though it arguably is, since it has effects on the shopkeeper’s planning and future profitability), only that the shopkeeper is worse off (a wealth transfer from the shopkeeper to the glaizier), and furthermore, that the example is used by the proponents of the fallacy to argue for actions that DO make the community (at least, the taxpayers) worse off.
Thanks libertyvini, for your reply. Here is the exact quote from EIOL: As [the shopkeeper] was planning to buy a suite that very afternoon, instead of having a window and a suit he must be content with the window and no suite. If we think of him as a part of the community, the community has lost a new suit that might otherwise have come into being, and is just that much poorer.
So my question is, why can’t the window glazier go and buy that suit now. The only difference I can see, for the community, between the shopkeeper buying the suit and the glazier buying it is that the glazier might not be able to buy it until the next day. So the community is not poorer — its that it remains poorer one day longer than if the window hadn’t been broken. Thoughts?
Matt H.:
Capital destruction (the window in the example) is never a good thing for the individual or the community.
And you are correct, time is lost. But the window repair set the community’s development backward, not forward, as is implied in the image above.
Think of it this way: France today is more advanced than it was in 1939. So, it could be claimed that the only thing lost in the war (not accounting for the waste of human life, of course) was time.
But time translates directly into lost opportunities and lost development — a loser for the community. France today would be even more advanced had the war never occurred.
Time is not something to simply wave away.
Hi Matt,
If you assume that nothing has been lost, you are ignoring the fact that resources are limited. What is really lost in the window breaking is not the money used to replace the window but all of the resources used to replace it (including labor, materials, land, and capital)
It is these resources that are lost, not money, although the money still serves as the best instrument to measure the loss.
Bob Murphy put this same thing up on May 21:
http://consultingbyrpm.com/blog/2009/05/edf-summarizes-bastiat-in-one-picture.html.
I copy here some of my comments there:
Not that I approve of the “green jobs” mantra, mind you, which is both confused and being used to sell a faulty and grossly government heavy package.
But the effort to enclose / better manage the commons is, in and of itself, wealth-enhancing. We should not examine solely the costs/benefits of new actions, while ignoring problems with (and beneficiaries of / losers under) the status quo.
While this case for green jobs is obviously flawed, where is the analysis observing the flaws in the current system that prompt the support for green jobs?
Rockwell has pointed to the public utility monopoly as at the root of consumer frustration, and Block and others point how industrial rent-seekers prompted the courts to abandon the protection of property rights as leading to tremendous pollution, a popular backlash and a wave of regulation (which still favors upstream polluters over those downstream).
But libertarians and Austrian these days seem to be interested in a close analysis of one side of the issue, while ignoring the rent-seekers profitting from the state-sanctioned status quo, and shirking the difficult task that Cordato refers to of trying to solve problems (as perceived by people whose preferences are currently frustrated) stemming from a lack of clear and enforceable property rights or other mechanisms that allow parties to engage in transactions that advance their preferences.
The hard questions relate to whether the benefits of regulating a commons exceed the the costs – as a government-managed commons may exacerbate the problem, as we see with traditional, pre-ITQ (individual transferrable quotas) regulation.
I would note, as Mises does, that far from simply “evolving” by itself, “property rights” represent institutions deliberately established and often formally enacted to abate tragedy of the commons-type problems.
BTW, did anyone see the May 19 MIT report?:
“Climate change odds much worse than thought; New analysis shows warming could be double previous estimates
“The most comprehensive modeling yet carried out on the likelihood of how much hotter the Earth’s climate will get in this century shows that without rapid and massive action, the problem will be about twice as severe as previously estimated six years ago – and could be even worse than that. …
“The new projections, published this month in the American Meteorological Society’s Journal of Climate, indicate a median probability of surface warming of 5.2 degrees Celsius [9 degrees F!] by 2100, with a 90% probability range of 3.5 to 7.4 degrees [6.3 to 13.2 degrees F!]. This can be compared to a median projected increase in the 2003 study of just 2.4 degrees [and the temps reported are averages, with many places warmer]. …
“Without action, “there is significantly more risk than we previously estimated,”
http://mises.org/Community/blogs/tokyotom/archive/2009/05/22/new-mit-study-climate-warming-odds-much-worse-than-thought-quot-increases-the-urgency-for-significant-policy-action-quot-quot.aspx
TT
@Matt:
I think you’ve stumbled on the macro problem. If I remember correctly Hayek pointed out that Keynes’s main mistake in his treatise on money was that he thought that there was no problem if not all the agents involved in the production of a pencil, as an example, made a profit, as long as the total cost was the same as the sale cost of the final product. I might be wrong, so many other people here may help you better.
But I think that in order to better understand the problem that you have pointed, it is indicated to read some of the critics of that treatise, which I’m sure you will find on this site.
Best of luck.
Tom:
Bob Murphy has already made an excellent post on “The Myth of Green Jobs”. Someone at the conference had a great counter along the following lines:
The purpose of a power plant is to produce electricity (in a cost-effective manner). We can create as many jobs as we like by closing the power plant and employing people to produce energy by peddling on exercise bicycles!
Support Your Local Glazier: Break A Window Today
What’s the cost of that lost time, Matt? Would that waste of time have a negative impact on otherwise typical economic productivity?
What I’m trying to say is: no broken window means potential production of some new good or service, while broken window means no new good or service because resources must be diverted to making a secondary window. The window that a new business wanted for its storefront is now diverted to the business with the broken window. Will the new business go bankrupt because its “Grand Opening” gets pushed back?
That’s about all I can manage as an explanation. I’m an amateur Austrian.
I like the little flag the metal worker has and the insinuation that the whole process would be confined to the US. Wouldn’t such capping raise costs across the board? So ordering anything from the US would be considerably raised, while ordering from China would remain the same. It doesn’t take a genius to figure out how that would play out. Of course, that is assuming there would be commercial activity left in the US after carbon capping.
If goods don’t cross borders, armies will.
Interesting in this ad fallacy is the fact that the waste of resources (the REAL problem of the b.w.f.) is buried into oblivion.
All those young Keynesian green graphic designers are unaware of the fact money is supposed to have a real substance. You should think they are concerned about the earth resources getting wasted… but no, this would involve thinking.
The crisis with its zillions pulled out of the empty Fed hat comforts them into believing that money is simply an ideological code. It’s not capitalism that failed. It’s the idea of economy as a whole.
This is naivety at its best.
It assumes that no matter what components and technology will be bought locally (in this case the US, as the small flags indicate).
The bulk of solar panels are manufactured in India and China is the leading producer of high tech materials used in pollution abatement technologies (car catalythic converters for example)… do I need to go any further?
I mean, how stupid are these people? The British have hundreds of wind turbines from bankrupted wind farms to flog at discount prices and I bet there are plenty of firms outside New Dehli willing to sell you insulating materials at prices better than any US, German or French firm can come up with.
So who are these “investors” who are expected to invest in companies that have suddenly become less efficient due to carbon output restrictions? That would be like betting on a horse who’s just had a leg amputated. Or do “investors”=taxpayers in this case?
@Matt:
The time-cost you realized is indeed an important part of the fallacy.
However, the window repair was not “free” to the glazier – some of the money paid by the baker went to the capital resource of the replacement glass. Thus there is less money to give to the tailor than the baker would have given.
This is a small case but if, say, you start bulldozing farms or houses, you can see that lots of capital wealth is being outright destroyed, which makes the entire community that much poorer.
Conveniently ignores resource scarcity and capital mis-allocation via legislative coercion. Under this premise our economy should never fail so long as the government can make things up to do.
Phase 1: Waste money on dubious and inefficient projects for political reasons
Phase 2: ??????
Phase 3: Profit!
@ Matt and Farside
$50 in wealth net is lost if not more when you consider the cost of labor on repair. The original window was destroyed and discarded. That is property that is possibly gone forever unless the glass shards are recycled which would cost even more money.
Overall the point here is destruction of wealth. Regardless of where the money goes you have to consider all objects. When we focus on economic growth we look at aggregate improvement. Not aggregate improvements as represented by paper money and spending, though keynesians like to do this. We look at overall wealth. That would could mean standard of living, how much we eat, everything. That might also mean how many windows in a house.
This house at least is minus 1 window. So while someone got money for something, a $50 window is destroyed, it’s glass shards were likely sweeped up and tossed into the garbage. Complete waste and misallocation of resources.
The example he gives is a tailor from whom the shopkeeper had wanted to buy a suit will now won’t get the business because the shopkeeper had to pay for the window repair. The question is: couldn’t the window repairmen now buy the suit that the shopkeeper can’t? Isn’t the only thing that is really “lost” for the community the time it took to repair the window? Am I missing something or was that the whole point of the Broken Window Fallacy?
When money is diverted from preferred pathways into less-preferred pathways, the overall result is a net loss of wealth.
The shopkeeper wanted to buy a new suit with his savings, and the tailor would have been the beneficiary of that trade. After the window was broken, the glazier is replaced as the beneficiary of that trade.
The fact the window was broken certainly does not result in a net economic gain, because, as Hazlitt pointed out, the loss of business experienced by the tailor offsets the gain experienced by the glazier.
The overall net result is an economic loss, because after the broken window, the shopkeeper has the same physical wealth he had before (i.e., a shop with intact windows), but has no new suit.
The money he would have used to increase his possessions was instead used to bring him back up to the same level of possessions he had before. Instead of getting ahead, he had to cure a deficiency.
The shopkeeper finds this situation to be a net loss, because the result is suboptimal — he would have preferred to have both an intact window AND a new suit. Instead, he has only an intact window and no suit.
Therefore, even if we assume that the tailor and the glazier cancel each other out perfectly (which they never do, of course), the shopkeeper is poorer than he was before his window was broken.
Multiply that process of calculating a net loss by 300 million people, and you’ll see how the diversion of money from preferred expenditures into mandated “environmental” expenses causes a massive loss of total wealth.
I prefer to think of it this way: the glazer doesn’t have to make windows. He can also make jars. Instead of a jar that someone will want in fall he is making a window nobody wanted. Come fall someone who wanted a jar will be disappointed because the community got a window instead.
If you assume the glaizer is picking his nose while waiting for orders, then there is no loss to the comunity. However that is rarely the case – almost everyone wants something from someone, and so they are looking for something productive to do. If they can’t do their first choice for [for enough money - see supply and demand], they will move on until they find something the comunity wants. So the comunity lost that job. (Unless some else does it, moving the loss, but it is still there)
Even Paul Krugman says, that carbon cap will reduce economic output.
@Sancerre
We’re not dealing with elementary economics when it comes to Climate Change. We’re told that “no price is too high” to correct a problem, that when placed under greater scrutiny might not be a problem at all. People (and species in general) flourish under warmer climes, and we have been far warmer than this in Earth’s history.
The academic dishonesty is on the part of the Climate Change Alarmists who would have you ignore outright there might be benefits to warming.
We can argue later about how much mankind is causing, or how the models are cooked from the get-go.
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