Friday, February 25, 2011

U.S. Manufacturing: More Output, Fewer Workers


I have featured the graphs above before on CD, and they were the basis for this op-ed in today's WSJ, "The Truth About U.S. Manufacturing" (also available here). 

See Dan Ikenson's related post on the Cato blog, he's done some great work on this topic, here's what he says:

"It can’t be emphasized enough how important it is to present such illuminating, factual, compelling analyses to a public that is starved for the truth and routinely subject to lies, half-baked assertions, and irresponsibly outlandish claims about the state of American manufacturing."

127 Comments:

At 2/25/2011 9:38 PM, Blogger Hydra said...

When do we all get to stop working, but one?

 
At 2/25/2011 9:46 PM, Blogger Benjamin said...

Does the value of output per U.S. worker include components made abroad but included in final product?

Looks like China will pass us shortly, btw.

In general, however, I agree with this chart--productivity of private-sector American workers has been soaring. In the private sector, the incentive is to do more with less, continuously. So goods and commodities, long-term, become cheaper.

In the public sector, including the military, goods and services only become more and more expensive.

 
At 2/25/2011 11:29 PM, Blogger Hydra said...

The incentive is go do more with less......

=>>>>>>=========

Kevin's paradox.

Environmentalists think efficiency means we will use less resources.

 
At 2/25/2011 11:30 PM, Blogger Hydra said...

Jevon's paradox, not Kevin's.

Stupid speller.

 
At 2/26/2011 12:16 AM, Blogger Buddy R Pacifico said...

This Federal Reserve study confirms that foreign inputs have a large influence on U.S. Manufacturing statistics.

 
At 2/26/2011 12:58 AM, OpenID American Delight said...

You mean that the labor unions have misled us???

 
At 2/26/2011 3:43 AM, Blogger PeakTrader said...

The productivity data are great. Yet, 15 million people are out of work, while 125,000 to 150,000 jobs per month are needed just to keep up with population growth.

Will the country create over 20 million jobs in the next four years to bring the unemployment rate to 5% (i.e. full employment)?

According to Warren Buffett, the country is still in recession, since real GDP was 0.14% higher last quarter than the 2007 peak (before the lower Q4 revision from 3.2% to 2.8%), excluding population growth.

So, real per capita GDP remains below the 2007 peak.

Only 36,000 jobs were created in January. Hopefully, that'll increase substantially in February.

 
At 2/26/2011 7:22 AM, Blogger juandos said...

Well regardless of our alledged efficiency Willem Buiter, chief economist at Citigroup claims "China should overtake the US to become the largest economy in the world by 2020, then be overtaken by India by 2050"...

 
At 2/26/2011 10:29 AM, Blogger morganovich said...

what are they using as a deflator in that "real" output measure?

 
At 2/26/2011 10:33 AM, Blogger juandos said...

"what are they using as a deflator in that "real" output measure?"...

Who is that question addressed to morganovich?

 
At 2/26/2011 12:32 PM, Blogger morganovich said...

j- ideally dr perry as he's the one who made the chart.

the choice of deflator makes a big difference as underestimating inflation over estimates productivity gains and vice versa.

 
At 2/26/2011 2:35 PM, Blogger Walt G. said...

That's a well-written article in the WSJ, Professor Perry. I especially agree with the last paragraph. Skill sets have to be current and transferable. Employers will only pay those who can make them money, and those who can't, don't work. Those are the people who often complain about illegal aliens and transplant auto factories being the brunt of the problem.

Times change. People have to change with them. I personally see the results of more output with fewer workers at GM. It is what it is: Progress. Too many people are waiting for "the good ole days" to come back. They need to look around and realize they are here now, and even if they are not, it is what we have to make the best we can with it.

 
At 2/26/2011 2:36 PM, Blogger morganovich said...

it is interesting to note that the slope of the line turns up shortly after 1992 when the CPI calculation was changed (which makes sense as the old and new CPI series took a few years to diverge)

might that be a significant contributor to this "productivity miracle"?

basic statistics tells us to pay very careful attention to such inflection points, particularly if they coincide with a data splice or a methodology change.

whatever you believe about the correct CPI calculation, it is difficult at best and meaningless at worst to compare the data series across such a splice.

this is precisely the sort of thing that climate scientists have tried to pass of splicing thermometer data onto proxy data and and failing to account for changed in their temperature monitoring networks (like urbanization and the huge drop in reporting stations in the late 80's.)

 
At 2/26/2011 2:41 PM, Blogger Walt G. said...

morganovich,

How about the metric of the same finished steel tonnage in 2011 from 1,200 workers than in 2000 with 3,300 workers?

 
At 2/26/2011 3:05 PM, Blogger Hydra said...

The productivity data are great. Yet, 15 million people are out of work....

==============================

With enough productivity, dont you eventually put everyone out of work?

With enough productivity, don;t youeventually fulfill the herarchyof needs to the point that no more productivity is needed?

Or do fewer and fewer of us go on producing more and more that the rest will have to be provided funds to buy?

 
At 2/26/2011 3:06 PM, Blogger Hydra said...

this is precisely the sort of thing that climate scientists have tried to pass of splicing thermometer data onto proxy data and and failing to account for changed in their temperature monitoring networks (like urbanization and the huge drop in reporting stations in the late 80's.)

==================================

I've heard this argument repeated over and over.

It one of the dumbest things I ever heard.

 
At 2/26/2011 4:41 PM, OpenID Sprewell said...

Funny, Hydra, I was going to say the same about your "where are the jobs" argument. That's the same dumb argument people made in every past recession. A 100 years ago it was, "Where will people work if not in the fields producing food?" There is going to be an information boom in the coming years, there will be a lot of work there. The dot.com boom was never realized, there's a lot more to be done there. Those who can't do info-work will deliver their pizza or cut their hair, but at least they'll have someone willing to pay for those services. That's what's coming next, the real estate bubble was just a diversion because the finance guys were too dumb to know where to invest to get tech going again, so they dumped the savings glut into supposedly safe housing.

 
At 2/26/2011 5:49 PM, Blogger morganovich said...

walt-

"How about the metric of the same finished steel tonnage in 2011 from 1,200 workers than in 2000 with 3,300 workers?"

that's certainly a more direct worker productivity measure, though, obviously, not necessarily germane to the economy as a whole, particularly as steel production lends itself to automation far better than most kinds of industrial production.

it would be ingesting to see the relative rates of substitution of capital between unionized and non unionized industries.

 
At 2/26/2011 6:02 PM, Blogger morganovich said...

hydra-

"
I've heard this argument repeated over and over.

It one of the dumbest things I ever heard."

so you are arguing that there is no problem grafting a thermometer record onto, say a tree ring proxy? (even assuming that one accepts that tree rings are a valid climate proxy, itself a quite questionable premise).

it is precisely this sort of statistical chicanery that alley mckittrick etc to irrefutably (and verified by numerous independent sources) debunk mann's infamous "hockey stick".

are you arguing that losing over half the station in the terrestrial climate network in less than a decade can simply be ignored, especially when the ones that dropped out were overwhelmingly rural?

you are merely demonstrating your complete lack of any even basic understanding of statistics and data handling.

you need to stop reading "daily KOS" and go get an education on how to handle data.

 
At 2/26/2011 6:07 PM, Blogger Johnster said...

According to the BLS, the average hourly wage of a job in manufacturing was $21.30 in Dec 2006 and $23.47 in Dec 2010. This is a 10.2% increase. The productivity increase in manufacturing is leading to higher and increasing wages.

 
At 2/26/2011 6:11 PM, Blogger morganovich said...

hydra-

and if you want to examine a stupid argument, i'd recommend looking at your own:

"With enough productivity, don;t youeventually fulfill the herarchyof needs to the point that no more productivity is needed?"

no. you don't. that's a ludicrously luddite view.

what happens is that your standard of living goes up.

how many things are there in your house that didn't even exist 60 years ago?

some of the guys who used to be needed making clocks are now freed up to make computers.

more productive people get more stuff. people buy more than just food and clothing.

more productivity means we can have more leisure goods. so more people buy golf clubs, or bicycles or video games.

this idea that people will run out of things to need/want is utterly groundless. when have you ever seen that happen?

people with primitive means of production have fewer goods and a less comfortable lifestyle.

you seem to want to go back to making it difficult to produce things to increase employment, but that is just a poverty trap.

getting everyone to dig holes with spoons instead of shovels is NOT the answer. that is how you inhibit wealth, not create it.

look around the world. countries with the highest productivity are the richest and tend to have lower unemployment as well.

how you you account for that if you "fulfill the herarchyof needs to the point that no more productivity is needed"?

 
At 2/26/2011 6:12 PM, Blogger PeakTrader said...

Hydra says: "With enough productivity, dont you eventually put everyone out of work?" etc. etc.

With enough productivity, a country can shift into new economic revolutions.

In 1900, over 40% of the U.S. labor force worked on farms. Today, it's less than 2%.

Obviously, Americans "found" other work.

You can "blame" the capitalists, particularly the rich ones.

 
At 2/26/2011 7:06 PM, Blogger Jason said...

getting everyone to dig holes with spoons instead of shovels is NOT the answer. that is how you inhibit wealth, not create it.

Morganovich, clearly using spoons instead of shovels is a path to ruin. In America I feel the problem we face is one of a hyper diversity of people, crossing all levels of skills and capabilities. But the curve doesn't look like a normal distribution, it's more like a weibull distribution, weighted more heavily to the lower end. Regardless, when we look at the number of jobs that are needed to sustain, say, "full" employment, the jobs would have to be weighted to the skills available. Otherwise, we have what we have today, a huge disparity in the availaility of higher skill jobs versus lower skill, non-minimum wage jobs.

This is where your Roman saying "what they don't spend on bread, they will spend at the circus" (paraphrased) kicks in. However, we really aren't doing a great job of building the small business, low skill set jobs to do this.

Where I am going: If you have the right set of bad laws and regulations that prohibit small business growth, and high productivity, can these simultaneous set of forces work to actually rapidly reduce standards of living?

 
At 2/26/2011 9:28 PM, Blogger Hydra said...

Obviously Americans found other work. But I'm looking at that productivity curve and wonder how long before it goes vertical.

I'm not making an argument, I'm asking a question, which is when do we have all we need? M's answer is never: our living standard is always better with more stuff. We've gone from 50 but per acre corn to 200, and who is to say we can't do 600?

We will always make more stuff, or have our robots do it.

But is it necessary? Some of you already think much of government is not necessary. When is PE no longer necessary?

Is the increasing wealth gap a sign? What do we do with low skill people we no longer need?

I think Jason gets it.

But, even if we agree that more is always better, who seriously believes we can increase production and consumption indefinitely.

Maybe we are a couple thousand years from a problem. But, if the argument is that we can't send our grandchildren a deficit, then the next question is what kind of deficit?

 
At 2/26/2011 9:33 PM, Blogger Hydra said...

Maybe, if Americans find other work we SHOULD blame rich industrialists. Especially, if it isn't necessary work.

After all, hunter gatherer tribes and subsistence farmers actually work a whole lot less than 40 hrs.

 
At 2/26/2011 9:38 PM, Blogger Hydra said...

I'm with Jason. I have useful work I could do. I could hire a couple more people.

But I am prohibited from doing this work by zoning laws and other regulations.

WHY? Because the powers that be think it is "too much".

 
At 2/26/2011 11:29 PM, Blogger VangelV said...

"It can’t be emphasized enough how important it is to present such illuminating, factual, compelling analyses to a public that is starved for the truth and routinely subject to lies, half-baked assertions, and irresponsibly outlandish claims about the state of American manufacturing."

What irony. See if you can spot it.

 
At 2/26/2011 11:38 PM, Blogger Hydra said...

I'd say the irony is That this news comes from vange.

 
At 2/27/2011 2:08 AM, Blogger PeakTrader said...

Hydra, there's a moral question that's too often overlooked.

When "good" choices are made, people (or governments, firms, households, or individuals) should be rewarded, and when "bad" choices are made, people should be punished.

Promoting equality also promotes immorality, because good choices become equal to bad choices.

Also, there's the fundamental economic problem of scarcity, i.e. unlimited wants and limited resources.

Limited resources should be allocated and employed to where value is maximized, even if it means the rich benefit more than the poor.

 
At 2/27/2011 11:02 AM, Blogger Jason said...

Hydra, I'm not drawing conclusions. I'm asking Morganovich for his take. If VangelV wants to weigh in, good too.

My observations are that productivity increases at the automotive engineering level come in several flavors:

1. Integration of features through innovation.
2. Feature development with better tools and processes.
3. More than occasional overuse of salaried employees through management authority.

What I've witnessed is 1 has been fairly reliable, 3 is more or less constant, and 2 occurs only when needed.

This makes sense as you understand how the automotive industry operates. Items 1 and 3 occur without cost to the OEM or tier 1 supplier. Their suppliers provide integration to remain competitive and salaried workforce is a fixed cost, more or less. However, productivity enhancement through tools and process require expenditure.

Regardless of the reasons, productivity enhancement, and the reduction of the supply base has resulted in a substantial reduction of engineering employment in the Detroit metro area. The engineers displaced have retired, stop looking for work, or gone into micro OEMS or other industries such as farm or mining machinery and military.

BUT another outcome is substantial increased employment in low cost countries. So, for instance, if 10 engineering positions were eliminated at an automotive supplier, another 10 have opened up in India, Mexico or China. I don't know how this is measured, but I don't really consider this productivity, especially given the quality of the product provided.

Anyway let's just say, reduced workforce, getting more with less = productivity. So where are all the new startups these displaced workers might work at? I know they are not here in Michigan, and I fully acknowledge things suck here. But shouldn't they be somewhere else? I am assuming there aren't as many as in past recessions, for a number of reasons, including all the crappy regulations we've added.

So, I wonder if we have created a situation where normal (and desirable) productivity occurs and a number displaced workers don't really have anywhere to go.

 
At 2/27/2011 11:46 AM, Blogger morganovich said...

my point is this:

increased productivity has always driven increased living standards.

look at the industrial revolution or at the invention of assembly line processes.

both drove massive step functions in productivity.

both also drove huge increases in wealth and standard of living.

it is too narrow a view to look at what we produce now, saying that it will take fewer people to do so in the future, and then claim that this will drive unemployment.

the reverse has been true in every major step function in productivity.

this is because we wind up consuming more and new manufactured goods and because such increases in wealth drive an increase in the demand for services.

the US economy was not harmed by a drop in farming jobs from 80% to 3%. new jobs cropped up. (pardon the pun) it freed up workers to do other things.

all the arguments about the vast unemployment that such productivity gains would cause fell flat then, just as they will fall flat now.

the assembly line destroyed the jobs of many "skilled artisans" but that did not destroy the economy, it caused it to flourish.

nor do we wind up "not needing" low skilled workers. they are always in demand. if there is a surplus of them, then there is a great incentive and opportunity for businesses to find something for them to do. last i heard, landscaping, food prep, and all manner of other low skill jobs were not being taken over by robots.

low skill workers will get low wages, but is that really a surprising result?

a low skilled worker running a drill press is far ore productive that a low skill worker with a hand drill just as one on a cell phone assembly line is much more productive that he would have been in a world where artisans made individual iphones by hand.

this productivity leads to higher wagers. it also leads to lower product prices, which benefit everyone. you can get wind glasses at bed bath and beyond for $4, but if you insist on having them made in an unproductive way (hand blown like the reidel sommelier glasses) they cost over $100 a stem putting them out of reach for most people just as hand made cars cost far more than the ones coming off an assembly line.

thus, productivity helps on both ends you have more money to spend on items that cost less.

i still have not heard a single argument or seen an example of how productivity gains have harmed a society or its employment rate.

 
At 2/27/2011 12:00 PM, Blogger morganovich said...

jason-

your point about skills is interesting, and you could certainly argue that as the pace of economic change accelerates, fewer people will be able to adapt to it as easily.

jobs are more fluid and the fortunes of companies and industries are more variable and less predictable.

this may marginalize some people whose skills and learning curves are not up to it, but this is counterbalanced by the fact that there are for more opportunities now than there were then and that even those with low skills have a higher standard of living today than they did 50 or 100 years ago.

having no skills in 1900 was rough. what were you going to do? you'd fight for basic subsistence. this is rarer today as even unskilled labor in many cases is much more productive.

sure, the life of an itinerant lettuce picker is tough, but such has always been true. was it any better in 1950 or 1900?

employment recovery in this recession had been extremely weak, the weakest of any major recession since WW2.

certainly some of this has to do with the regulatory and taxation thicket that has grown up here making it easier to do business elsewhere and reducing our own pie here, but that is not really a productivity issue.

my view is that we are still in recession in real terms. using a low GDP deflator makes it that we are growing, but i think most of the last decade has seen ultra loose money drive inflation that we are not admitting to and prevent the economic adjustments needed to weed out malinvestment and drive assets into more productive hands. this landscape has been made much more pernicious by a concatenation of nonstop asset bubbles and busts (an unavoidable consequence of such loose money) which have made business investment very challenging.

we place far too much faith in the ability of monetary policy to mitigate the facts and needs of the business cycle and in so doing, have short circuited it entirely. busts are as necessary as booms and play a vital role in the business cycle. attempting to eliminate them merely makes the pent up imbalances larger.

that, i fear, is the great mistake of our time.

 
At 2/27/2011 12:24 PM, Blogger Jason said...

This comment has been removed by the author.

 
At 2/27/2011 1:17 PM, Blogger Hydra said...

The past is no guarantee of the future, you investmentadvisor would say.

Yes, we will invent new stuff.

PTs statement implies success and growth is good.

We acknowledge this will accrue to the wealthy.

What happens to every one else, whether unemployed or underemployed?

 
At 2/27/2011 1:50 PM, Blogger PeakTrader said...

Hydra, President Kennedy stated that a rising tide of economic growth generated benefits for all.

Absolute living standards have risen for both the rich and the poor.

Are the poor better off if the rich creates a trillion of wealth or if they don't?

 
At 2/27/2011 2:09 PM, Blogger morganovich said...

"
Are the poor better off if the rich creates a trillion of wealth or if they don't"

they are better off.

that trillion gets spent on something. that creates jobs and opportunities.

you keep arguing like you have any evidence at all the productivity increases have ever hurt the poor, but you don't ever present it because it doesn't exist.

the fact that the last 100 times i have dropped a ball it fell does not guarantee that it will happen next time, but it gives me a pretty good idea that it will. productivity gains work the same way.

show me even one time that productivity gains have harmed an economy and a society, and i'll take your argument seriously.

 
At 2/27/2011 3:05 PM, Blogger VangelV said...

Morganovich, I agree with you. I'm asking if we've damaged our markets and economy to the point where displaced workers are now anchors with no where to work.

I am sorry but I do not understand what you mean. From what I can see we have no free markets to damage. What we have are massive regulatory burdens that make it difficult not only for the lower skilled workers but for the highly productive ones. Somehow I do not believe that you are calling for the elimination of those regulations or for free markets.

Let me point out a few things with this argument. While the US is clearly the leading manufacturing power in the world we have to realize that things are not exactly as Dr. Perry presents them. For one, the state of real manufacturing is a mystery because the BLS does not adequately adjust output for the true inflation rate. It is ironic that we are quick to doubt the accuracy of economic claims put out by the French, Libyan, or Chinese governments but somehow give the US government a free pass.

But there is another large factor that is also an issue; composition of manufacturing output. While the US industrial sector accounts for approximately $3 trillion of GDP one could argue that at least a third of that output is consumed by the American government and that some exports are directly or indirectly subsidized by the American taxpayers. While all those aircraft sales may look nice on the books, it is important to realize that civilian aircraft sales are likely to be the destroyers of capital. The only reason why they go on is because of accounting that hides the fact that the American military sales are providing indirect subsidies. (Look at what NASA gets for each dollar spent versus what you can get from the private sector for a fraction of the cost.)

Add to the numbers foreign arms sales financed by foreign 'aid,' industrial production that is only possible because of high tariffs on imports, or 'buy American' policies and the numbers show up a lot differently than Dr. Perry would have us see them.

The US is too great a nation to allow it to be destroyed by many of the pessimists on the left. But that does not mean that we can ignore as many of the optimists on the right would have us do.

 
At 2/27/2011 3:22 PM, Blogger Ron H. said...

"so you are arguing that there is no problem grafting a thermometer record onto, say a tree ring proxy? (even assuming that one accepts that tree rings are a valid climate proxy, itself a quite questionable premise)."

Especially embarrassing is the apparent decline in temperature since 1960 indicated by the tree ring proxies. How can we "hide the decline"?

 
At 2/27/2011 3:47 PM, Blogger Jason said...

I am sorry but I do not understand what you mean. From what I can see we have no free markets to damage. What we have are massive regulatory burdens that make it difficult not only for the lower skilled workers but for the highly productive ones. Somehow I do not believe that you are calling for the elimination of those regulations or for free markets.

VangelV, Morganovich responded and I pulled this comment. However:

I am in agreement with you, I think. I feel we have massive regulatory hurdles that harm the lowest skilled workers most. In a proper business cycle, you would have businesses started, productivity gains, reduced employment in those businesses, wealth created, wealth reinvested in new businesses, and on and on...

BUT, I wonder if we have hit a point where the reinvestment is not happening. I also wonder if this is due to a combination of regulations and poorly directed choices due to govenment policies (you and Morganovich have discussed this pretty well).

I am not a blind advocate for completely free markets, but I think we need to be more free than we are today. Though, I am starting to see the downside of even moderately regulated markets.

Another question I have is can we recover from this? The Romans didn't.

 
At 2/27/2011 3:56 PM, Blogger VangelV said...

BUT, I wonder if we have hit a point where the reinvestment is not happening. I also wonder if this is due to a combination of regulations and poorly directed choices due to govenment policies (you and Morganovich have discussed this pretty well).

Is there doubt? I do not see much in the way of net capital investments being made in the US economy because I do not believe that investors are comfortable with the uncertainty about the future of America's debt. If Republicans had to be pressured by the Tea Party to get the 'cuts' to $60 billion, what does that tell us about the lack of credibility by either of the mainstream parties and the future of the unfunded liabilities?

I am not a blind advocate for completely free markets, but I think we need to be more free than we are today. Though, I am starting to see the downside of even moderately regulated markets.

Regulations harm efficiency of resource allocation and lead to waste. While I began as a lefty there was no way for me to logically argue for regulations that would not harm innocent parties so I adapted the Rothbardian arguments, which I found to be the most consistent.

Another question I have is can we recover from this? The Romans didn't.

There is still a lot of hope if the country changes direction. The Romans did not have the unregulated internet to shed light on the problems that were created by politicians and the special interest groups that used them to transfer wealth from the taxpayer to themselves.

 
At 2/27/2011 3:59 PM, Blogger Hydra said...

Are the poor better off if the rich creates a trillion of wealth or if they don't"

they are better off.

===============================
A rising tide raises all boats the same amount, but it raises the rich mans boat several hundred ton-ft and the poor mans boat a hundred pounds-ft.

You act like the rich create that trillion of wealth out of thin air. Or as if they are solely responsible for the tide.

Sure, you drop a ball a hundred times and it falls a hundred times, I'm not arguing that. Everything you say seems to be historically true.

The question I am asking is if we are missing something. We are on a space ship, and every time you drop your ball it falls toward earth. But eventually we pass some inflection point and suddenly it starts falling toward the moon. (Yeah, I know, its a bad analogy, but even the space station has micro gravity, not no gravity.)

We accept the tech bubble and the housing bubble, could there be a productivity bubble?

I plan, schedule, organize and fund up front all the work on the farm, without that my workers would have no work: I get it. But, I can plan, schedule and fund all I want and without them I get one quarter of it done, if I'm lucky.

Yes, they are better off because of my relative wealth, but I cannot increase that wealth without their help. I'm beter off because of their relative poverty.

But the time isn't that far off before I could use that wealth to automate the farm. Put the equipment on autopilot and the whole farm mows itself and puts itself in the barns.

Now I don't need those guys anymore. Are they still better off?

At one time I worked in a sheltered workshop, teaching people to make brooms and rags. (Hey, times were hard for me, too.) these were good people, but they had almost no skills or abilities. It could take weeks to train one to cut out the buttons and zippers to make rags.

My workers are good people, but I can't imagine training them to program or maintain an autopilot for a harvester.

So I'm looking at that output curve and wondering how long before it goes vertical. And not to fall into the zero sum game trap, I'll concede we create new jobs by inventing new stuff.

I'm not sure it is enough, and I'm not sure the increasing wealth gap isn't evidence of jasons suggestion. Relatively speaking, fewer and fewer people can afford haircuts and manicures and car detailing and more and more people are competing for those jobs.

Are they STILL going to be better off? I don't think that what has happened historically requires it.

I'm not even convinced that it has always been historically true. The construction of Cathedrals was a giant public works project: the rich letting the poor dig holes with teaspoons, if you will.

But lets concede even that idea, (that making the rich wealthy is good for the poor) and assume that unlimited production means unlimited wealth for the rich and a lot more wealth for the poor. That could happen because we find jobs for them, or because we decide they have to be supported regardless.

Do we really believe there is no such thing as maximum production? Even conceding a knowledge society, how much knowledge do we need if the only available job (except for a few) is equivalent to walking the dog?

What do we do when computers are operating the farm, trading on wall street, mowing the lawn, making medical diagnosis, and preparing dinner?

A few years ago I let a boat take me to the Bahamas: fired off the SatNav, slaved the autopilot to it, hooked up the computer to the electric winches and the boat sailed all the way to Marsh Harbor by itself.

I imagine some "poor" folks painted the bottom before we left.

 
At 2/27/2011 4:13 PM, Blogger Hydra said...

"so you are arguing that there is no problem grafting a thermometer record onto,

=================================

I'm not getting into the global warming argument. I just think that arguing that a thermometric record is invalid because conditions have changed around the thermometer is a crummy argument.

Yes, I understand the problem with data splices: we hit more home runs now, because we have more games per season.

BS. There is more to it than that.

This is like having a model that calculates the probablity of train wrecks, and claiming the entire model is bunk because one switch is set differently than planned.

But like I say, I'm not going to argue global warming, don't care one way or antother, frankly.

But I will ask one question: what evidence would it take to change your mind? A foot of sea rise? Two feet? Three?

If you cannot answer that question, then your mind is made up, and the truth will never be extant to you.

 
At 2/27/2011 4:24 PM, Blogger Hydra said...

Regulations harm efficiency of resource allocation and lead to waste.

===============================

Not necessarily. I can allocate my resources efficiently and profits me in a way that harms others to an extent greater than my profit.

Is that still efficient?

As long as a regulatons only equalizes the costs, it is efficient. But a regulation that prevents $10 worth of damage and costs $100 to obey, is not efficient.

Total Cost = Production Cost + Exteranl Cost + Government Cost

You cannot achieve lowest total cost without considering the efficiency of regulation, which is why I propose regulations that are market regulated.

Recently the EPA backed off on some tough emission regulatons, and in their concession statement they said the new rules (revised downward) would achive nearly the same health benefits at half the cost.

WTF were they thinking (before) then?

I have useful work I could do, but I am prohibited from doing it by zoning and other regulations. I get your point, and I feel the pain. I still don't think your statement above is 100% correct.

 
At 2/27/2011 4:29 PM, Blogger Hydra said...

Especially embarrassing is the apparent decline in temperature since 1960 indicated by the tree ring proxies. How can we "hide the decline"?

=================================

Sounds ike an assymetric set of standards. You will beleive one average measure or proxy and not another.

If a witch drowns, she is innocent.

 
At 2/27/2011 4:30 PM, Blogger VangelV said...

Not necessarily. I can allocate my resources efficiently and profits me in a way that harms others to an extent greater than my profit.

You can't do that in a country where property rights are protected. The lack of regulations does not mean that you can do harm to others without compensating them for it.

 
At 2/27/2011 4:49 PM, Blogger Hydra said...

You can't do that in a country where property rights are protected.


=================================

Bingo.

But, property rights can be overprotected, hich means someone gains at someone elses expense. which means proerty rights a re NOT protected.

Protate cancer kills more men than breast cancer kills women, but we spend a lot more on breast cancer.

Your argument only works when proerty rights are protected equally. But the whole lobbying industry, funded mainly by private enterprise, is dedicated to preventing that from happening.


And then, PE compains about excess regulation.


Well, excss to who, and by how much? Which is why we need market based regulation, which allows the maximum production and best allocation of resources, given the regulation in place.


If the winners in a regulatory scheme are willing to claim that it provides a net total benefit, then they ought to be willing to subtract from that benefit enough to pay off the losers in that scheme.

 
At 2/27/2011 4:50 PM, Blogger Hydra said...

In the example I gave above, EPA as much as ADMITTED the previous regulation was too strict, and too costly, for essentially the same benefit.

 
At 2/27/2011 5:39 PM, Blogger VangelV said...

Sounds ike an assymetric set of standards. You will beleive one average measure or proxy and not another.

If a witch drowns, she is innocent.


Do you have any idea what you are talking about? Or are you as lost when discussing this topic as you are in most of the others?

 
At 2/27/2011 5:41 PM, Blogger VangelV said...

But, property rights can be overprotected, hich means someone gains at someone elses expense. which means proerty rights are NOT protected.

Is it possible for you to be rational even once in a while?

 
At 2/27/2011 5:41 PM, Blogger VangelV said...

In the example I gave above, EPA as much as ADMITTED the previous regulation was too strict, and too costly, for essentially the same benefit.

What does the EPA have to do with free markets?

 
At 2/27/2011 6:40 PM, Blogger PeakTrader said...

Hydra, the only way to move from one economic revolution into the next is through efficiencies of production, because of limited resources.

People, rich and poor, are better off after the Agricultural-Industrial-Information-Biotech revolutions than they were before.

There are many more economic revolutions to come, which are inevitable. The question is how fast do we want the country or society to move into new economic revolutions.

I suggest, the faster we move into new economic revolutions, the better off both the rich and the poor will become.

Fewer resources to produce more output, in each economic revolution, allow limited resources to shift into the next economic revolution.

 
At 2/27/2011 6:48 PM, Blogger Hydra said...

From what I can see we have no free markets to damage. What we have are massive regulatory burdens that make it difficult not only for the lower skilled workers but for the highly productive ones.

=================

I'm not near as highly productive without my workers.

Those massive regulatory burdens came about because free markets did not adequately protect other peoples property rights. We may now have swung too far the other way, but don't expect those burdens to go away. The question remains, free market or no, whether some of us advance to the point where the rest are not needed for productive work.

If it happens that they have to work anyway, then we can "blame the industrialists".

 
At 2/27/2011 6:51 PM, Blogger Hydra said...

Vange, I'm sorry you don't understand. Ill try to work down to your level.

 
At 2/27/2011 6:51 PM, Blogger Hydra said...

This comment has been removed by the author.

 
At 2/27/2011 7:11 PM, Blogger Hydra said...

We are not going to have free markets because they have proven to be inefficient. They didn't adequately protect other peoples rights. EPA ostensibly protects peoples property rights: their lives and health so that they can earn a livliehood. The best we can hope for is not free markets, but equal markets: a level playing field.

What will we use as a level, if not the markets themselves.

But EPA has not done its government duty of treating people equally, as the example shows. Therefore the market was not level. In this case the howls of protest and potential damage to the economy was sufficient to cause EPA to back down.

 
At 2/27/2011 7:22 PM, Blogger Ron H. said...

Jason

You raise some good points:

"BUT another outcome is substantial increased employment in low cost countries. So, for instance, if 10 engineering positions were eliminated at an automotive supplier, another 10 have opened up in India, Mexico or China. I don't know how this is measured, but I don't really consider this productivity, especially given the quality of the product provided."

It IS productive to buy at the lowest cost. In this example, buying engineering services from a lower priced source. This assumes the same level of satisfaction from the new source. If the engineering product (service) is inferior, then this is not the case.

If a lower quality of engineering is acceptable, which I doubt, then perhaps the previous engineers were overqualified. It seems more likely that they were merely overpaid.

"Where are all the new startups these displaced workers might work at? ...But shouldn't they be somewhere else?"

There aren't as many opportunities during a recession, but you may be conflating unemployment due to recession with unemployment due to creative destruction, or improvements in productivity, whether from a lower priced source or from technology replacing jobs.

"So, I wonder if we have created a situation where normal (and desirable) productivity occurs and a number displaced workers don't really have anywhere to go."

If you focus on individual workers you will find some who are harmed. That is an inevitable result of change. If fewer engineers are needed, then fewer young people will choose engineering as a career, so supply and demand will more or less adjust themselves over time.

If you look at the unemployment rate since the 1950s, you will see that other than during recessions, including the current one, it has been pretty much in a range of 4-6%. This tells me that as jobs are lost, others are gained elswhere.

 
At 2/27/2011 7:23 PM, Blogger Hydra said...

EPA admitted that the rules originally proposed would have cost more than twice as much as the revised ones, and offered no more protection. Therefore those who would have paid those costs were not having THEIR property equally protected.

Is that rational?

 
At 2/27/2011 7:27 PM, Blogger Ron H. said...

"I'd say the irony is That this news comes from vange."

Nope, Hydra doesn't get it. Maybe it's the the word irony that he doesn't understand.

 
At 2/27/2011 7:42 PM, Blogger Hydra said...

I agree that in the past, productivity gains have (eventually) led to more employment not less.

I'm not sure we are still living in the 50s.

I'm asking if their might be something new that we haven't considered. We have made enormous IT advances. Instead of a few people disadvantaged for a short time we may have many, for a long time.

 
At 2/27/2011 7:44 PM, Blogger Hydra said...

This comment has been removed by the author.

 
At 2/27/2011 8:09 PM, Blogger Hydra said...

Fewer resources to produce more output, in each economic revolution, allow limited resources to shift into the next economic revolution.

====>>>===============

Agreed, at least so far. But surely there is some limit.

More stuff from fewer resources doesn't necessarily mean cheaper stuff. Today, we can rework an old gold mine and get more gold than it originally produced.

But only because the gold is worth more.

And we probably can't do it a third time.

And if more efficiency does mean cheaper goods, the increased sales means more resources used, not less.

 
At 2/27/2011 8:30 PM, Blogger PeakTrader said...

Hydra, fewer resources means fewer inputs to get more output. That's been the trend.

Eventually, less than 1% of the workforce will produce enough food (Agricultural Revolution), while less than 10% of the workforce produce enough manufactured goods (Industrial Revolution), etc.

Someday there may be hundreds of economic revolutions instead of the four today. Perhaps, at that point, 1,000 workers will produce enough food to feed 10 billion people.

 
At 2/27/2011 8:54 PM, Blogger Ron H. said...

"Obviously, Americans found other work. But I'm looking at that productivity curve and wonder how long before it goes vertical."

You must write this stuff just to get laughs. Do you really think it's possible for dollars of output per worker to reach infinity?

If you are really just a troll, you are one of the best I've ever encountered. You really do a great job of painting yourself as a buffoon.

"I'm not making an argument, I'm asking a question, which is when do we have all we need?

Each individual must answer that for themselves, so you are free to answer it for yourself, but not for anyone else. Neither can anyone else answer for you. I don't believe I've ever heard of anyone who feels they have reached that point, so the answer may be unknowable at this time.

We will always make more stuff or have our robots do it.

But is it necessary? Some of you already think much of government is not necessary. When is PE no longer necessary?

Same answer; only each individual can decide if it's necessary. You are correct that most government is unnecessary. In fact most government seems to have a negative benefit. Consider that even if you had everything you could wish for, and the ability to spend money at any rate you can imagine, you still would find that there was a scarcity of time to spend it. I'm assuming your questions are serious, if poorly thought out, and that an answer might be helpful to you.

"Is the increasing wealth gap a sign? What do we do with low skill people we no longer need?"

You have already answered that for yourself, in the first sentence of this same comment:

"Obviously, Americans found other work."

You are learning. Good work.

 
At 2/27/2011 9:03 PM, Blogger Ron H. said...

...And then there's this gem:

"Maybe, if Americans find other work we SHOULD blame rich industrialists. Especially, if it isn't necessary work."

Listen to yourself. No one, and I mean NO ONE pays people to do unnecessary work, except for poorly conceived government programs that pay for this waste by stealing money from taxpayers.

Do you pay people to do unnecessary work?

"After all, hunter gatherer tribes and subsistence farmers actually work a whole lot less than 40 hrs."

I doubt it, do you have references for this assertion, or is this just more drivel?

 
At 2/27/2011 9:05 PM, Blogger Ron H. said...

"I'm with Jason. I have useful work I could do. I could hire a couple more people.

But I am prohibited from doing this work by zoning laws and other regulations.

WHY? Because the powers that be think it is "too much".


So, you now agree that there are unnecessary, or even harmful regulations?

 
At 2/27/2011 9:21 PM, Blogger Hydra said...

I never disagreed, you just jumped to conclusions.

Not all regulations are bad. Not even the ones that restrict me. More likely the regulation is there for a good reason, its just that the price is wrong.

 
At 2/27/2011 9:38 PM, Blogger Hydra said...

I don't have the reference any more. It comes from a study by a Guy who was an industrial engineer, and later became an anthropologist. He used his skill in time and motion studies to figure out how much various tribes and peoples actually worked. For some African tribes it was as little as 15 hours a week.

Farmers (used to) work like crazy part of the year, the rest, not so much. Industrial farming ended that.

As for those that left the farms I'm not so sure. Study the accumulated wealth over a few generations, and tell me how the people who moved to tenements and factory work fared compared to those that managed to hang on.

 
At 2/27/2011 10:12 PM, Blogger Hydra said...

Ron, listen to what I said, not what you think I said, or what you wish I said.

I postulated a world in which most necessary work is automated and we don't need those people to work. We have all the necessities we need. Food clothing shelter transport.

Now what?

At present we think everyone should work - even the poor souls in the sheltered workshop who cannot really earn their keep. We think 7% unemployment is terrible.

What would we do? We could learn to get used to unemployment, or we could work at something, for no apparent reason. The arts maybe. Build some more cathedrals.

I think a lot of people work hard precisely so they can stop sooner. What is so freaking great about work, anyway?

Then there are people who are affluent, but they are still broke.

We could just goof off, but more likely we will make ourselves work, and for that we can thank the industrialists. After all we can't take the sweat of their brow and distribute it. Even if they no longer have to work for it.

This is all complete fantasy of course. Until you watch a sailboat sail itself for 1500 miles. Then you begin to wonder.

Call it a gedanken experiment. Neil's Bohr and Al Einstein shattered a lot of conventional thought and ironclad theories with not much more.

 
At 2/27/2011 10:18 PM, Blogger Hydra said...

Do you pay people to do unnecessary work?

====>================

Sort of. I don't have to run the farm, after all. It makes some money and looks nicer, but necessary? Not really.

 
At 2/27/2011 10:29 PM, Blogger Hydra said...

On the other hand, maybe you are right. The existence of the farm is partly due to a poorly conceived government program (zoning) that precludes "better" uses.

 
At 2/27/2011 11:04 PM, Blogger VangelV said...

Vange, I'm sorry you don't understand. Ill try to work down to your level.

Just be coherent and logical and we will not have a problem trying to figure out what it is that you want to really say. But your combination of ignorance and incoherence makes it really hard on any reader wishing to understand your point.

 
At 2/27/2011 11:09 PM, Blogger VangelV said...

We are not going to have free markets because they have proven to be inefficient.

And what is your evidence for this bit of stupidity?

EPA ostensibly protects peoples property rights: their lives and health so that they can earn a livliehood.

Nonsense. The EPA allows pollution that demonstrably harms people. That would not be permitted in a system that protects rights.

The best we can hope for is not free markets, but equal markets: a level playing field.

There is no such thing as an equal market. And I do not believe that you understand what a level playing field is, because that is exactly what markets provide but governments prevent. In a free market you will be free to buy products from whichever producer you wish to choose because there will be no barriers to hinder your choices. It is only when governments step in and use tariffs and other regulatory means that your choice is limited and the playing field is no longer level.

 
At 2/27/2011 11:10 PM, Blogger VangelV said...

But EPA has not done its government duty of treating people equally, as the example shows. Therefore the market was not level. In this case the howls of protest and potential damage to the economy was sufficient to cause EPA to back down.

Your inability to reason is showing again. Slow down and try to put together a coherent argument that may actually make some sense.

 
At 2/27/2011 11:19 PM, Blogger VangelV said...

EPA admitted that the rules originally proposed would have cost more than twice as much as the revised ones, and offered no more protection. Therefore those who would have paid those costs were not having THEIR property equally protected.

Is that rational?


No. You are still missing the big picture.

 
At 2/28/2011 12:28 AM, Blogger Hydra said...

Vange. What planet do you live on? It is, first of all impossible for EPA to ban all pollution.

Second EPA has a legal requirement to treat all people and groups equally, such that none suffer an undue burden from the enactment, enforcement, or lack of thereof.

Now for any given pollutant the cost of eliminating it rises non linearly as the concentration goes down. Meanwhile the benefit decreases non linearly. The lowest cost occurs where they cross. Therefore no pollution is not the lowest cost solution and puts an undue burden. Likewise with unlimited pollution.

If EPA has two regulations and each provides the same health or damage savings, but one program costs twice as much, then one group has an undue burden of cost and/ or another group is getting more protection.

Now, what can be a bigger picture than demanding equal protection for people's property?

If your body is your property, then so is your health, which enables you to earn a living.g and therefore the rest of your property. But what value is it to give you 100% protection if it also guarantees you that you can do nothing which pollutes? Meaning everything.

EPA is only one agency, but the same argument applies to all. There is no reason to have a regulation that costs more than the damage it prevents.

But that is frequently the position we are in and it is the cause of much frustration with government regs.

 
At 2/28/2011 12:33 AM, Blogger Hydra said...

EPA has to allow pollution in order to protect rights equally. The lowest cost solution is not the zero pollution solution, and it is not the zero regulation solution either, which is why free markets, in practice, as opposed to in theory, are inefficient.

 
At 2/28/2011 12:36 AM, Blogger Hydra said...

The question is whether the example is rational. If so, the idea is readily expandable to the big picture.

 
At 2/28/2011 12:48 AM, Blogger Hydra said...

I noticed there was a new line on my 943 form this year. If you send in your withholding monthly or quarterly you can accumulate a rounding error that may cause you to pay a feast cents too much or too little.

Can't have an unfair burden or an unfair benefit, so now there is an additional line which requires you to calculate the rounding error and correct it!

That is an insane length to go to to protect a few cents of property rights, but probably someone complained.

 
At 2/28/2011 3:31 AM, Blogger Ron H. said...

"I don't have the reference any more. It comes from a study by a Guy who was an industrial engineer, and later became an anthropologist.

As for those that left the farms I'm not so sure.
"

I other words, you can't support your assertions. You just dribble them out of your ass, as they occur to you.

 
At 2/28/2011 3:57 AM, Blogger Ron H. said...

"Especially embarrassing is the apparent decline in temperature since 1960 indicated by the tree ring proxies. How can we "hide the decline"?

=================================

Sounds ike an assymetric set of standards. You will beleive one average measure or proxy and not another.
"

Your senseless response indicates that you actually don't understand what the phrase "hide the decline" refers to. The massive fraud perpetrated by supposed "climate scientists" as revealed by the climategate emails.

The torturing of data using incorrect statistical methods in an attempt to present a desired conclusion should particularly distress someone like you who has taken graduate level courses in statistics.

 
At 2/28/2011 4:09 AM, Blogger Ron H. said...

"Ron, listen to what I said, not what you think I said, or what you wish I said.

What are you talking about? Here's what you said:

"But I'm looking at that productivity curve and wonder how long before it goes vertical.

The chart shows increasing worker productivity over time. A vertical slope would indicate an instantaneous rise to infinite dollars of output per worker. Do you really want to talk about that as a possible future?

 
At 2/28/2011 4:39 AM, OpenID Sprewell said...

Hydra, if you're going to write doozies like "Then there are people who are affluent, but they are still broke," you will not find many people willing to engage your constant stream of contradiction. You complain that low-skilled people don't have work, then you complain that they're put on a treadmill working too hard to get material rewards they don't need. You have perfectly captured the leftie spirit of complaining no matter what the situation. :) According to you, if they have work, it's a "problem" and if they don't, it's a problem! The fact is both are positives. Most people can work for very little time today to cover their basic necessities, as you note. They can choose to work longer to get the posh stuff, or they can choose to do less: it's up to them. I know people who live on $500-800/month in a large metro area in the US, below the official "poverty line." That can be done because of how cheap the necessities are these days.

Yes, there are a lot of unemployed people right now, but recessions spur the jobless to regroup and try something different. Nothing new is ever tried if not for down periods like these. One of the main reasons these downturns are so stultifying is that the education system is so worthless, particularly useless for retraining people. This will change as online learning takes off in the coming years, making the workforce much more flexible. As for "peak jobs," while it is possible that we are transitioning towards that Wall-E future over time, you are being silly if you think basic necessities like "Food clothing shelter transport" take up even a majority of most people's income these days. Most people in the US are so well off that they choose to get luxury versions of all four of those necessities or pursue wants like high-def TVs or gold-plated medical policies. We crossed over past the basic needs decades ago and the economy has only gotten much larger since.

 
At 2/28/2011 8:49 AM, Blogger Walt G. said...

"Then there are people who are affluent, but they are still broke,"

"you will not find many people willing to engage your constant stream of contradiction."

Sprewel, A lot of people are rich in wealth (affluent) but don't have a positive cash flow (broke), so that one is no contradiction or doozie by Hydra (I can't figure some of the other stuff he writes out). That's why you need both the balance sheet and income statement to determine liquidity and viability.

 
At 2/28/2011 9:17 AM, Blogger Walt G. said...

Sprewell,

I agree with you that online learning is an education/training platform that will continue to explode in popularity. I teach an online class in political science, and Carpe Diem is required reading for the interface between economics, politics, and sociology. There are a lot of very intelligent people here even if I don't always agree with them. There's teaching value about current events that is relevant to us in almost every posting.

 
At 2/28/2011 1:39 PM, Blogger Ron H. said...

Walt G.

"Sprewel, A lot of people are rich in wealth (affluent) but don't have a positive cash flow (broke), so that one is no contradiction or doozie by Hydra"

Not to sound too nit-picky here, but "affluent" is the wrong word to use to make the point I can only guess Hydra is trying to make. I understand, as you do, the concept of being wealthy but short on cash flow. Hydra may understand it too, but the word affluent describes an "abundant flow", so a person can't, in fact, be both "affluent" and "broke".

 
At 2/28/2011 1:56 PM, Blogger Ron H. said...

"Vange. What planet do you live on? It is, first of all impossible for EPA to ban all pollution."

No, it isn't. EPA can ban anything it wants. What you may have meant to write is that EPA can't eliminate all pollution.

Your poor choice of words only adds to the difficulty readers here have with your comments.

 
At 2/28/2011 2:04 PM, Blogger Ron H. said...

"That is an insane length to go to to protect a few cents of property rights, but probably someone complained."

First of all, taxation itself violates property rights, so correcting the magnitude of that violation can't really be considered "protecting property rights".

The fact that you are forced to comply with this requirement by spending your time correcting a rounding error is another violation of your property rights.

 
At 2/28/2011 4:15 PM, Blogger VangelV said...

Hydra, fewer resources means fewer inputs to get more output. That's been the trend.

Eventually, less than 1% of the workforce will produce enough food (Agricultural Revolution), while less than 10% of the workforce produce enough manufactured goods (Industrial Revolution), etc.


Both those 'revolutions' required massive investments in capital. If you look at the real US economy you will find that net capital accumulation is now falling.

 
At 2/28/2011 4:45 PM, Blogger Walt G. said...

Ron H,

A Boolean Google search shows 50,700,000 hits for wealth and affluent and 39,400,000 hits for income and affluent. That's close enough that the person using the term should define it. Personally, I want to be wealthy, affluent, and have a high income :)

I think anyone who understands the difference between wealth and income, and is willing to work and adapt at achieving both, will do just fine.

Hydra,

A few cents off messes up columns of numbers that have to match exactly to balance. A lot of programs I use have a logical function of true or false in a spreadsheet cell ("Exact" and "Match"). A penny will cause a false statement and must be found to make the rows and columns match for a true statement (there is no such thing as being a little bit false or true). Pennies or decimals rounded in the wrong places and misplaced commas or spaces in SQL queries are a time-consuming ($$) pain in the ass.

 
At 2/28/2011 6:13 PM, Blogger Hydra said...

Pennies or decimals rounded in the wrong places and misplaced commas or spaces in SQL queries are a time-consuming ($$) pain in the ass.

=================================

Misplaced characters in a sql string can make an entire program fail.

But what I'm talking abot is the case where a guy makes a deposit to his withholding account every month. so he calculate 6.2% of payroll or whatever and it comes out to $2500.004, and he sends in $2500.

He does this every month and at the end of the year he owes 1.2 cents additional, of which he is going to pay 1 cent.

But now he has to calculate that shortage, keep track of it for a year and enter that penny on a different line on the form.

Or it could be the other direction.

Unlike your sql query the government isnt going to stop running over a penny.


This story has two morals: on the one hand it is laudable that the government goes to such lenghts to ensure that no one either overpays or underpays by as much as one cent. It is a moral and ethical obligation of the government to ensure equal protection for peoplse property, so they should not either pay or avoid paying.

But it probably cost people more of their property to protect these pennies than the pennies are worth.
And that was the problem with the EPA example I cited.

Under the original plan the polluters would have been paying far more to reduce pollution and protect health than necssay. And they would pass those costs on to the consumers of their products - who are the same people being protected from the suppliers pollution.

Consumers would have been paying more than necessary to protect their own health. EPA in that case was not properly protecting their health inteests OR their property rights.

Where would the extra money go? It would go for additional scrubbers etc that were not necessary. the scrubber manufacturors would be getting paid for doing unnecessary work.

Without the regulation, scrubber manufacturors would go broke, the polluters would make more money, and the customers would have to spend more for doctors and car washes than necessary.

But with the right level of regulation, everyone comes out ahead over the unregulated condition.

 
At 2/28/2011 6:35 PM, Blogger Walt G. said...

"But with the right level of regulation, everyone comes out ahead over the unregulated condition."

The right level of regulation is one where the other guy's finger gets cut off instead of yours :) How much asbestos is the correct amount to breathe for someone else? For you? The quickest way to improve safety is to have the kid of the person in charge of safety expenses work on the job in question. NIMBY at the worker level. We all have our special interests, don't we?

 
At 2/28/2011 7:05 PM, Blogger Hydra said...

first of all impossible for EPA to ban all pollution."


No, it isn't. EPA can ban anything it wants. What you may have meant to write is that EPA can't eliminate all pollution.

================================

You are nitpicking. EPA an Ban any single thing completely, and has, but it cannot eliminate all pollution by banning everything. Therefore it is impossible for EPA to ban all pollution.

Neither can it eliminate all pollution by requiring perfect containment or control. From a practical standpoint EPA can usually only require the best practical (meaning economic) controls. Occasionally they can demand the best available controls.

But either case, may cost more than the damage the controls are designed to prevent. At that point either someone is getting robbed, someone is getting excess protection, or both.

===============================


"The fact that you are forced to comply with this requirement by spending your time correcting a rounding error is another violation of your property rights."


That was precisely one of the points of the example. But I think your other point is mistaken. Even if we beleve the government is taking our money illegally, we probably can't stop that (we do need government for some things), but we can at least see to it that it is taken fairly (equally).

The penny example is extreme, but the embedded idea (and one that is codified in government regulation and policy) is that no one should have to pay even one penny more (or less) than what the government has determined to "steal" as you call it.

You are correct about the waste though. i think it is as stupid as you do.

At one time I was sampling and analyzying PCB residue from a dump site. The level of contamination was so low I had to wash a lot of dirt in even more solvent and then evaporate the solvent to concetrate the contamination to a measurable amount.

Now you gotta run a refrigerated trap to capture the solvent and then get rid of it, somehow.


I was pretty sure I was doing more damage to the environment than the 9 PPB of PCB I was measuring would ever do, if it had just been left buried instead of digging it up so we could discover how big the problem was.

So, we agree, a stupid rule is one that costs more than it saves. If on top of that, the rule is wrong to begin with (stealing) then it has two problems, If it is stupid (inefficient), wrong (stealing) and inequitable (stealing or collecting unequally) as well, then it has three problems.


But that does not mean that every rule is wrong, or that it cannot ever be efficient, if the price is right.



===============================

The people I'm talking about are affluent but broke. They have plenty of flow, but no money to keep. They have a $7500 a month mortage, but if they get a cavity they can't pay.

If you went to them for money for a start up venture, they might love the idea and be unable to invest. They live well, but they have no money: it is spent before they get it.

You call it whatever you want: I call it affluent but broke.

 
At 2/28/2011 7:19 PM, Blogger Hydra said...

How much asbestos is the correct amount to breathe for someone else?

============================

You ask this as if it is impossible to answer, yet we answer such questions every day.

Lets assume we decide to set te limit for asbestos ingestion at some marginal amount over the natural background level. Then we set about reducing all known and controllable sources, wich has a price. And we are very satisfide that we have prevent X deaths and Y days of illness.

That means we have just put a price on eaths and illness.

If it turns out that we could have saved X+1000 lives and prevented Y +10,000 days of illness doing something else, for less money, then we allocated resources badly, unless you think an asbestos workers life is worth more than, say, a miners life.


The second implication of your question is that the correct amount is zero, but that is usually impossible to achieve without unlimited expense. So, if zero is the answer, then eliminating (your favorite pollution here) had better be the most important thing in the world, because you won't have money left for much else.

If your implication were really possible, the first thing we would do is ban all pollution in the ocean that is due to gold, and then find a way to extract it.

 
At 2/28/2011 7:37 PM, Blogger Ron H. said...

"A Boolean Google search shows 50,700,000 hits for wealth and affluent and 39,400,000 hits for income and affluent. That's close enough that the person using the term should define it."

Using something incorrectly a lot of the time doesn't make it correct.

The person using a term can define it any way he wants, but if he wants to communicate something to others, he needs to define it the way they define it.

 
At 2/28/2011 7:37 PM, Blogger VangelV said...

Not all regulations are bad. Not even the ones that restrict me. More likely the regulation is there for a good reason, its just that the price is wrong.

You can't be as stupid as this paragraph makes you out to be. You must be a plant trying to discredit the left by making such ridiculous arguments that nobody can fail to see how stupid they are.

 
At 2/28/2011 7:42 PM, Blogger VangelV said...

Vange. What planet do you live on? It is, first of all impossible for EPA to ban all pollution.

Not only does the EPA not ban pollution that harms some people but it makes it legal. In a society that protected rights no actual harm would be compensated and no imagined harm would be punished. Today we have the opposite.

Second EPA has a legal requirement to treat all people and groups equally, such that none suffer an undue burden from the enactment, enforcement, or lack of thereof.

But it does not do that. The EPA is a political body that can choose what to enforce, what to ignore and what to exempt.

Now for any given pollutant the cost of eliminating it rises non linearly as the concentration goes down. Meanwhile the benefit decreases non linearly. The lowest cost occurs where they cross. Therefore no pollution is not the lowest cost solution and puts an undue burden. Likewise with unlimited pollution.

You are missing the point. Anything can be a pollutant given the right dose. That means that some things that are controlled should not be because their emissions are well below the dose that would do harm while others that are exempted should be prohibited because real harm is done to real people. The EPA cannot distinguish between the two because it works under a legislative legal system. A common law system that actually protected rights would have much fewer such problems and a lot more would get done.

 
At 2/28/2011 7:50 PM, Blogger VangelV said...

I teach an online class in political science,...

If they let you teach a class in political science it is no wonder why the education system is so screwed up.

 
At 3/01/2011 9:09 AM, Blogger Hydra said...

In a society that protected rights no actual harm would be compensated and no imagined harm would be punished. Today we have the opposite.

=================================

You are postulating an impossible situation. No wonder you have no comprehension of politics.

In a society that protected rights no actual harm would be compensated ...

How would rights be protected if you cannot be compensated when your property (rights) are damaged?


Are you postulating that no harm would happen, because rights would be perfectly protected, up front?


What do youcall imagined harm? What you think is imagined may be quite real to someone else.

Suppose you buy a property that is zoned for three houses, and you figure one day you will be able to build for your children. Then a group of people who imagine that runoff is a problem get the zoning rules change and increase the setback requirents, such that you can no longer build.

You paid for property zoned for three homes, which you no longer have. the guy next door has a lot the same size, but a differnt sshape, so he still has his building rights: the setback does not afffect him. He sells for $600,000 but you can only get $300,000.

Is your loss real or imaginary? Is the gain for those who wnated better drainage rules real or imaginary?




There is a different between protecting rights absolutely, and protecting thime equally and fairly. you can only protect one persons rights absolutely.

 
At 3/01/2011 9:22 AM, Blogger Hydra said...

You can't be as stupid as this paragraph makes you out to be. You must be a plant trying to discredit the left

===============================

I am far from the left, but the extreme right is a losing proposition with no means to negostiate.

For example: my county claims that every new (average) home that is build costs them $2700 a year more in services than it pays in taxes. Every home, they claim, is cash negative unless it is valued at $710,000 or more.

As a result, they basically will not allow any homes to be built, period.

I don;t beleive their figures are correct, but assume they are, as long as I'm willing to cough up the extra $2700 a year, whats the problem? let me build.

So there is a situation where the regulation (You can;t build) has the wrong price on it, that being no price. But if the regulation said you can only build if you pay us some minimum tax amount, would be a lot less onerous.

Not perfect but better than sitting around whining that the rule shouldn't be there to begin with.

Take what you can get and then gradually move to the right.


Now suppose that lots of people take advantage of the new rule. That would be equivalent to people agreeing that more taes need to be paid.

And suppose no one did. That would mean people think the tax is too high already. Now, the planning board thinks that growth at 1.5% is sutainable for the counties capital budget. All they have to do is adjust the price until they get the desired growth.

It is a fair deal (or at least fairer than no deal, which is the current situation), and on the table for anyone. Instead, what we have is a situation where only giant builders and cronies can navigate the maze of regulations put up as a barrier to new residents.

 
At 3/01/2011 9:27 AM, Blogger Hydra said...

Not only does the EPA not ban pollution that harms some people .....

==============================

Thats true. Some people do not get absolute protection. that would mean they have all the rights and others have none.

Besides, what good is it to give them zero pollution if it also means zero jobs. It means they cannot do anything either, because they would also have to meet the zero pollution standard.

So, you get some rights, and they come with some responsibilities. you want a boiler, expect pollution controls. You want a job? Expect that the pollution controls won't be perfect.

So, what we have is a trade, with EPA as mediator. All I suggest is that we could have a better, more efficient trade if the maket was involved.

What is leftist about that?

 
At 3/01/2011 9:33 AM, Blogger Hydra said...

But it does not do that. The EPA is a political body that can choose what to enforce, what to ignore and what to exempt.

==============================

I don't disagree. but to the extent that it does NOT do that, EPA is breaking the law. We probably cannot rescind all EPA laws (or any other body) but we CAN insist that they be enforced (or not enforced) equally. we can insist th

That alone will be a big relief in the burdens we carry. And EPA will be so busy auditing fairness, it won't be in our hair as much.

 
At 3/01/2011 9:44 AM, Blogger Hydra said...

You are missing the point. Anything can be a pollutant given the right dose. That means that some things that are controlled should not be because their emissions are well below the dose that would do harm while others that are exempted should be prohibited because real harm is done to real people.

=================================

Well, that is the problem, isnt it?

How do you decide which is which, how clean is clean, and how much asbestos or ground ub rubber tires is OK for someone else to breathe?

And if anything can be a pollutant given the right dose, then eliminating all pollution is impossible. It is not as if a don=se of 10 PPM is a pollutant and 9.999 PPM is not a pollutant.

And, if anything can be a pollutant, why not CO2?

What we are buying and paying for is better health through pollution reduction. My statistical health has the same value as yours, and I demand equal protection for it.

We can put a price on that and we do it all the time. I submit that the only efficient way to etermine what gets controlled and what doesn't is to put a price on it.

If the cost of control is higher then the value of benefits provided, the cost of control is too high, and that money would better be spent controlling something else.

Isnt that the free market argument?

A better way of maining your argument is that we spend too much controlling some things and not enough controlling others.


And notice, that we are not any longer arguing whether there should be any control.

 
At 3/01/2011 9:46 AM, Blogger Hydra said...

The right level of regulation is one where the other guy's finger gets cut off instead of yours :)

================================

Id say it is where he is equally likely to burn his fingers as you are, and pays the same price as you do for the protection both enjoy.

 
At 3/01/2011 9:49 AM, Blogger Hydra said...

The people I describe have plenty of cash flow: all of it in fact.

But they have used up all their freedom of choice. They have almost no more options that someone with no money, and in that sense they are broke.

I don't see why you are picking on me about this: its a pretty easy concept.

 
At 3/01/2011 9:51 AM, Blogger Hydra said...

If you look at the real US economy you will find that net capital accumulation is now falling.

===============================

OK.

Where did all the wealth go that the revolutions created?

 
At 3/01/2011 9:53 AM, Blogger Hydra said...

I other words, you can't support your assertions. You just dribble them out of your ass, as they occur to you.

=================================

I do not have the citation, but that does not mean the assertion is false or unsupportable.

 
At 3/01/2011 10:52 AM, Blogger VangelV said...

You are postulating an impossible situation. No wonder you have no comprehension of politics.

No I am not. That is how a Common Law based system has worked and would work. In such a system the EPA could not allow a polluter to set up shop near people and allow them to be harmed by emissions that crossed boundary lines. In such a system people could not move next to a garbage dump and say that it must be shut down because of the smells.

Your ignorance of actual political and legal systems is showing again.

"In a society that protected rights no actual harm would be compensated ..."

How would rights be protected if you cannot be compensated when your property (rights) are damaged?


Sorry, that was a typo. It should have read, "In a society that protected rights no actual harm would be UNCOMPENSATED."

 
At 3/01/2011 10:58 AM, Blogger VangelV said...

I am far from the left, but the extreme right is a losing proposition with no means to negostiate.

Actually, the extreme right has been driving many of your policies for years. Take a look at Afghanistan, Egypt, Israel, Iran, Iraq, etc., and you see that the far right got a lot of what it wanted by doing an end run on the traditional conservatives in the Old Right. But that is an argument for another thread.

For example: my county claims that every new (average) home that is build costs them $2700 a year more in services than it pays in taxes. Every home, they claim, is cash negative unless it is valued at $710,000 or more.

If the county privatized the delivery of services it will see what the true costs are. Most government provided services cost 50 to 70 percent more than they would if delivered by the private sector.

 
At 3/01/2011 11:01 AM, Blogger VangelV said...

Besides, what good is it to give them zero pollution if it also means zero jobs. It means they cannot do anything either, because they would also have to meet the zero pollution standard.

You are missing the point. Pollution is something that does actual harm so we do not want it. But to do harm you have to look at doses. That means that emissions of materials that would be harmful at much higher doses do not have to be controlled and you do not have to stop job creation for some imagined harm.

 
At 3/01/2011 11:51 AM, Blogger Walt G. said...

VangeV1,

Just because you have no use for politics, or me, does not mean they do not exist and that I don't know how they work. Too few people who have great ideas get involved in processes that can make a difference. How many elections have you worked on?

 
At 3/01/2011 12:01 PM, Blogger Walt G. said...

Ron H.,

The people I know describe people as affluent by what they can see such as cars, boats, planes and other outward possessions (status symbols). Since we would have no idea if the person can pay for the item, we would have no idea whether their income could support their lifestyle unless we see the car repossessed. Affluence is more a lifestyle statement than a bank statement to us.

I'll keep my definition of affluent, and you can keep yours.

 
At 3/01/2011 12:07 PM, Blogger Walt G. said...

Hyrda,

The guy who gets his finger cut off pays in body parts, and usually the risk is not equal. Ask a non-union miner if the mine he works in is as safe than a union mine. People should be able to make choices but they should know the risks they are taking.

 
At 3/01/2011 12:18 PM, Blogger Hydra said...

Ask a non-union miner if the mine he works in is as safe than a union mine. People should be able to make choices but they should know the risks they are taking.

===================================

Walt, you are making my point exactly.

One way to make the risks and choices apparent is to put a price on them.

It is easy to say "eliminate all asbestos" not so easy when you realize the price is aid in miners lives, because youspent all the safety money someplace else - with less benefit.

 
At 3/01/2011 12:38 PM, Blogger Hydra said...

You are missing the point. Pollution is something that does actual harm so we do not want it. But to do harm you have to look at doses.

===========================

No, you are missing the point.

Pollution is any adulterant. It is not only something that does actual harm. And anyway, even if we accept your argument and look at doses, we have wildly differnt ideas of what that means.

Some people will gladly take massive doses of diet supplements, to the point where they become toxic. But they percieve them as "natural" chemicals.

Sometimes, pollution is doing harm, and we are not smart enough to know it yet. There is a reasonable argument to make all pollution (in the sense of contaminants or adultaerants) as low as possible as a precaustion.

I beleive that is a stupid argument. We cannot eliminate all risk, but the way we get the most for our risk reduction dollars is to start with those that are easiest and cheapest to fix, per risk allevieated.

That turns out to be a nonlinear curve, the more a risk is reduced the harder it is to eliminate the next increment.

So, if potoles turn out to be the biggest risk, you can fix most potholes but not all of them. Eventually you are spending more on searching for new potholse than reparing actual ones. Now youare fighting percieved risk, instead of actual risk (potholes that have not happened yet). You are also spending more on potholes than the damage prevented, and more than it would take to solve some other problem, like tse tse flies.

So, as soon as youare spending more to reduce risk than you are reducing the risk ( for a given problem) you start diverting resources to the next most espensive risk. and that is how you maximise risk reduction, for the dollars spent.

Instead, we have mine safety cheerleaders and construction safety cheerleeders, each advocatng maximum safety for THEIR costituents.

And the result is some get more protection per dollar of their money spent than others.


Here is a question for you. If union mines are safer, is it because the unions are contributing their own funds to additional safety efforts, or is it because they have been successful in getting more government surveillance (at the expense of other mines)?

 
At 3/01/2011 12:52 PM, Blogger Hydra said...

That means that emissions of materials that would be harmful at much higher doses do not have to be controlled and you do not have to stop job creation for some imagined harm.

==================================

But that is exactly what we do. We say, this substance is harmful at x level. The best practical technology will reduce this to x/5, but we use it anyway on the off chance that we are wrong on the dosage info, and on the assumption that if x reduction is good, 5x reduction is better.


Which it is not. But not for the reason you state (it is below the danger level)

It is not better because we could have spent the money on something else which is cheaper to control (once you reach some control level on the first pollutant).

But you are right, we do have people who are lobbying and suing to reduce some imagined harm. They think they are cahmpions of the environment. But they are not champions of the environment, if they are promoting activity which is wasteful.

Not only that, but they are not good citizens, because they are insisting on more protection for their pet project (their porperty) than someone else gets.

 
At 3/01/2011 12:54 PM, Blogger Hydra said...

Actually, the extreme right has been driving many of your policies for years.

==================================

Why are you arguing with me then?

 
At 3/01/2011 1:03 PM, Blogger Hydra said...

If the county privatized the delivery of services it will see what the true costs are. Most government provided services cost 50 to 70 percent more than they would if delivered by the private sector.

============================

But the public sector delivers services to everyone and the private sector would not. if the contract to private services required that each subscriber get an equivalent level of service, a lot of the private sector savings would disappear.


But this is beside the point. No matter who is providing the service, there will be limits imposed (as in servicemaster).

So the question is still, how do you know the limits are reasonable? Whether the limit is on pollution, or housing, or setback requirements.

Involve the market.

County needa a new jail. No one wants it in their district. Have each district declare a site, good bad or indifferent.

Then each district bids for the right NOT to have their site chosen. Low bidder gets stuck with the jail, AN all the money bid by all the other districts.

Put a price on the ability to say no.

 
At 3/01/2011 2:21 PM, Blogger Walt G. said...

"Here is a question for you. If union mines are safer, is it because the unions are contributing their own funds to additional safety efforts, or is it because they have been successful in getting more government surveillance (at the expense of other mines)?"

It's simply because the miners can refuse to go into an unsafe mine and still have a job the next day. I know these guys, and they know mines becasue most of them are second and third generation miners.

The mine safety board levies thousands of fines. If the fine is less than the compliance, the mine pays or appeals it. In the meantime, miners must quit or work in a mine they know is unsafe. What would you do? Of course, the flip slide is the mine is often too expensive to operate safely and goes out of business. I guess it's a lose-lose situation sometimes.

 
At 3/01/2011 6:22 PM, Blogger Ron H. said...

"Of course, the flip slide is the mine is often too expensive to operate safely and goes out of business. I guess it's a lose-lose situation sometimes."

So, there is little actual difference in safety between a union and non union mine?

 
At 3/01/2011 9:30 PM, Blogger Walt G. said...

Ron H.,

A lot of union miners will not work in a non-union mine, and these are not guys who scare easily. I don't know any non-union miner who would not work in a union mine. I will consider them the experts. I don't go in holes in the ground, but I've worked in the steel a few hundred feet up. We all choose our own poison.

 
At 3/02/2011 12:02 AM, Blogger Hydra said...

It is simply because they can refuse and still have a job next day.

=========>>========

I don't think you answered the question.

If they refuse indefinitely, they don't have a job. This is analogous to demanding zero pollution or zero risk.

If they refuse for a time, this is analogous to setting a pollution level below which we accept the risks.


I would say that the union might spend its own money on higher safety awareness and training. Then they can refuse dangerous work within the letter of the laws.

Those in The non union mine deserve the same govt protection, but without union training, they may not know it.

But if the union itself exists because of government protection, then union workers get more Govt protection than none union workers.

 
At 3/02/2011 4:47 AM, Blogger Ron H. said...

"Then they can refuse dangerous work within the letter of the laws."

They can already do this. Anyone can refuse to do something they consider dangerous, with or without laws. The difference is that a union worker can't be fired for making that choice. That's all been explained to you in previous comments on this thread.

As has also already been pointed out to you, forcing total safety compliance might also force the company out of business. Then there would be no jobs. If you are unclear on this, re-read the previous comments.

"But if the union itself exists because of government protection, then union workers get more Govt protection than none union workers."

No, they get the same government protection. Union members pay for any extra protection they get.

 
At 3/02/2011 6:08 AM, Blogger Walt G. said...

"If they refuse indefinitely, they don't have a job."

People can decide to become something else besides miners. My wife's dad left the mines to work in the auto industry after a mine collapse he survived.

"Those in The non union mine deserve the same govt protection, but without union training, they may not know it."

Unions can force compliance by the failure to enter the mines and still have a job the next day.

OSHA standards can be negoitiated up in contracts and changed with statitsical data collected that shows a greater risk than known when the standard was promulagated. Union collected data that showed the linkage betweeen metal working fluids and cancer resulted in a change in the OSHA standard.

Ron H.,

The customers pay for the extra protection (or just OSHA compliance), and the company cannot survive unless the customers are willing to pay. If one company cuts cost by cutting the corners on safety and reduces the price to the customer, the company that complies can go bankrupt.

100% risk prevention is unaffordable and impossible anyway, so it is always a matter of what degree of safety you want and can pay for.

 
At 3/03/2011 11:56 PM, Blogger VangelV said...

Just because you have no use for politics, or me, does not mean they do not exist and that I don't know how they work.

You are wrong on both counts. First, I have a use for politics and understand exactly how they work because I make a good living by betting on what politicians will do. If you understood politics you would not be teaching it because you could make a much better living taking advantage of the stupidity of it.

Too few people who have great ideas get involved in processes that can make a difference. How many elections have you worked on?

One. There was this very nice looking but confused young lady that wanted me to help her work on a campaign shilling for some idiot who could never win. I had no problem working on it because he had no hope. While there was no pay the benefits were great.

 
At 3/03/2011 11:57 PM, Blogger VangelV said...

The guy who gets his finger cut off pays in body parts, and usually the risk is not equal. Ask a non-union miner if the mine he works in is as safe than a union mine. People should be able to make choices but they should know the risks they are taking.

When adjusted for all factors it usually is just as safe as a union mine.

 
At 3/04/2011 12:04 AM, Blogger VangelV said...

Pollution is any adulterant. It is not only something that does actual harm.

Adulterant? How is something that exists in nature naturally, like CO2 or SO2 an adulterant?

And anyway, even if we accept your argument and look at doses, we have wildly differnt ideas of what that means.

No more than calling something an adulterant because you don't like it.

 
At 3/04/2011 12:32 AM, Blogger VangelV said...

Some people will gladly take massive doses of diet supplements, to the point where they become toxic. But they percieve them as "natural" chemicals.

Being stupid is not against the law. You can overdose on many natural substances. Salt is more toxic than DDT. Do we ban it because some idiot could eat so much of it that he will die?

Sometimes, pollution is doing harm, and we are not smart enough to know it yet. There is a reasonable argument to make all pollution (in the sense of contaminants or adultaerants) as low as possible as a precaustion.

Well, given the fact that there are around 1,000 chemicals in coffee that are carcinogenic at a high enough dosage perhaps we should ban it. Just to be safe. While we are at it let us ban broccoli, Brussels sprouts, and apples because they also contain natural chemicals that can cause cancers at a high enough doses. Let us stop eating because every single natural food that we consume contains natural chemicals that can cause cancer at a high enough dose.

I beleive that is a stupid argument. We cannot eliminate all risk, but the way we get the most for our risk reduction dollars is to start with those that are easiest and cheapest to fix, per risk allevieated.

You are right. Yours is a very stupid argument because it ignores the reality. What matters is dose. That is true whether we are talking about chemicals found in broccoli, salt, DDT, or caffeine. We already have taken steps to remove the pollutants that were most dangerous or the biggest nuisance. A city like London has cleaner air today than at any point in the past 300 years. Most of the improvements came before there were any federal rules about emissions just as most of the pollutants in most Canadian and American cities were reduced before there were any federal rules about emissions.

There is no argument that would justify guessing about imagined health harm being done while ignoring the very real economic harm done by idiot bureaucrats who ban low level emissions that do no harm.

 

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