To understand economics it is necessary only to grasp the two points – incentives matter, there are always opportunity costs. Grasp just those and you’ll be doing better than most people who actually work as economists.
An implication – a result really – of that second is that jobs are a cost, not a benefit. Human labour is a scarce resource – that’s why we’ve got to pay for it. There’s not enough of it to go around to do everything that we’d like to do with human labour. So, if we use it to do one thing then we cannot be using it to do some other. The cost to us of using human labour to do one thing is therefore the less of what we’d gain by it doing that other.
As Dominic Lawson is pointing out today:
[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]The advocates of such a policy, especially on the Labour benches, say this is all good extra expenditure as it will create “millions of green jobs”. This is reminiscent of Soviet-style economic planning. It is based on the belief that the only thing that counts is output, and that productivity — actually the only thing that raises living standards — is irrelevant. It is like arguing it is better to build a motorway with spades, rather than mechanical diggers, as that would “create” hundreds of thousands more jobs. Better still, why not supply the workforce with spoons instead of spades? Then we would create millions more jobs. No matter that we would return to pre-industrial penury.[/perfectpullquote]The UK currently has both the lowest unemployment rate and the highest employment to population ratio we’ve had since the Beatles were still recording in the same room as each other. We’ve not got any mass of spare labour just lying around. Thus if we go and create a million – just as an example – green jobs in renewables then we’ve got to take people away from what they’re currently doing.
Sure, some of them will be taken away from choking seals by forcing plastic bags down their throats, this will be a good thing. Others of them will be taken away from fixing the electrical systems in NHS hospitals which we might think to be a less good thing. Yet others will stop being diversity advisers, ballet dancers, Sure Start aides and train drivers. We lose all those outputs by shifting people over to hand crafting our electricity supply.
Hey, maybe it’s all a good idea? Absolutely everything does have an opportunity cost and what we’re looking for is the optimal answer, not the chimera that doesn’t have such costs at all. If the social cost of carbon were $1,000 per tonne CO2-e – it isn’t, Jim Hansen was wrong – then it might well be that we should have all that labour running renewables and bugger the diversity, dancing, fresh nappies and transport.
But that doesn’t change our basic fact here at all. Those jobs are a cost of renewables, not a benefit of our having them.
It really is true – jobs are a cost, not a benefit.
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Jim Hansen sure is wrong, the social cost of not having carbon is death.
He was rather more specifically wrong than that.
Michael Mann once challenged me on Twitter. Showed me the Hansen paper where he calculates that the social cost of carbon is $1,000. Mann asked me, can you do a better science paper than that? To which I responded "No, but I can correct this one".
Hansen had actually proved that, under a certain set of circumstances, the social cost could be as high as $1,000. And he had other estimates for other sets of circumstances. The correct social cost being those outcomes dependent upon those circumstances, times the probability of the circumstances, then averaged.
Which is what I said.
Mann went quiet and hasn't challenged me since.
Impressive, quietening Mann is something not many achieve.
It's here. Not quite the Hansen paper but something very close, misremembered, sorry:
https://www.forbes.com/sites/timworstall/2014/05/31/michael-mann-calls-me-out-on-climate-mitigation-a-response/
Despite not being more than basically economic literate, getting only so far as The Road to Serfdom, I found your argument from an economic perspective irrefutable, as well as from a policy making perspective, where I do have some experience.
And that's the rub, if increased CO2 emissions are going to lead to a rise in temperature (which I strongly expect they are not but assuming that they are), will that be bad, what should we do and how should we do it?
Those who study climate could be right about temperature rise, but they are almost always going to be wrong in how to respond, being neither policy makers nor economists.
Too much of the "settled science" justifies too many political leanings toward de-industrialisation, reducing the power of the west and preferring equal poverty over increased but un-uniformly distributed wealth.
The suspicion that desired outcomes influence and corrupt both the science and the policy responses is hard to shake off.
Could diversity advisers actually do anything useful? About as much chance as Owen Jones being usefully employed I would say.
Only thing I can think of that you could do with the diversity advisers is to choke the seals with them instead of plastic (as it's more environmentally friendly).
I'm a lump of spare labour just lying (ok, sitting) around. I spend hours every day going through job vacancies that I don't have time to get any real work done. The things I'm skilled at they turn me down because I'm not already being paid to do the exact same job, ideally, already for them. The unskilled things I apply for I don't get because I don't have any experience of doing the unskilled stuff being advertised. A few years ago I had an actual reply from Burger King turning me down for a dead-end job flipping burgers as I had no experience of being in a dead-end job flipping burgers.
This week I've been hovvering by the phone being updated by an agency "we're still waiting for the go-ahead" then finally got a call on Friday "they've decided not to fill the posts", then get a targetted email on Saturday advertising the posts again. And these are the people screaming to the heavens that they can't get any staff, while ignoring the applicants metaphorically queuing around the block outside their front door.
The Job Centre keep promising to force somebody to pay me to work, but naturally, as a state agency, they have been lying through their teeth.
I think your headline is a little too specific. I doubt there’s a single politician of any party who would argue that jobs are a cost not a benefit ( at least, not in public).