11 comments on “Timmy Elsewhere

  1. You’re being politically naive.

    Lots of Iraqis distrust the West and think the US invaded was to get their hands on Iraqi oil. This deal is likely to increase that sentiment.

    Furthermore, *in the context of Iraq*, creation of jobs is a benefit not a cost — one of the reasons their was so much violence after the invasion was that lots of unemployed young men joined militias because threy had nothing better to do.

  2. Pingback: White Sun of the Desert » Seamus Milne on Iraq’s Oil

  3. Lots of Iraqis distrust the West and think the US invaded was to get their hands on Iraqi oil. This deal is likely to increase that sentiment.

    It will if they rely on Seamus Milne for their information. See here.

  4. Also, Statoil is by far the most efficient of the national oil companies, but it is still giving people concerns over its safety and efficiency. There was a recent article on it, but I’ll be damned if I can find it. By far the best way for a government to make money from its oil is:

    1. License blocks for development
    2. Tax production

  5. “Furthermore, *in the context of Iraq*, creation of jobs is a benefit not a cost — one of the reasons their was so much violence after the invasion was that lots of unemployed young men joined militias because threy had nothing better to do.”

    That does not move jobs from the cost side of the equation to the benefits side. All that means is that you now have an extra term to add to the benefits side (ie less men joining militias). It may affect the cost benefit analysis, but jobs themselves will always be on the costs side; any benefits that derive from those jobs (either in direct, or indirect ways) go on the benefits side.

  6. If I deposit money in a bank, it’s an asset for me and a liability for the bank. It depends on which set of accounts you’re preparing.

    Jobs are always a cost for the entity that creates them, but they can be a benefit for another entity, such as the broader society they are created in.

    I keep trying to find the clip of Milton Friedman talking about this in the context of the Great Depression.

  7. “Jobs are always a cost for the entity that creates them, but they can be a benefit for another entity, such as the broader society they are created in.”

    This seems to be a variation of the broken windows fallacy. If a society needs 100 people to do something but then a way is found to do that something with 50 people, then those other 50 people can go do something else. And in fact jobs are a cost to the people doing them as well. Their pay is the benefit. If a job was not a cost it would not be called a job, it would be called a hobby. That is why we have to pay people to do them. If I could spend my days on a beach, drinking margaritas I would prefer to do that to working. Its just I value the pay check even more.

    “If I deposit money in a bank, it’s an asset for me and a liability for the bank. It depends on which set of accounts you’re preparing.”

    Hmm yes, but that is a zero sum situation. As one sides figures go up, the others go down by the same amount. So not quite analogous. In economics, we are often interested in whether a particular situation increases total wealth to a society. In this situation one parties “loss” can lead to an overall increase in societal wealth. Here loss can mean having to pay out wages, or having to spend some of one’s own time doing stuff for othe people. These are both costs, but everyone is better off.

  8. It’s actually simple–it really is. The entire squabble is over particular verbal descriptions of what’s “going on” in the matter, in particular a type of (mis)descriptive propaganda favored by those wishing for increasing levels of state control of economic affairs.

    I’d like to make the side comment here that the very same matter is highly illustrative of the
    continuing but virtually never-mentioned link between state control of education and the formation of succeeding cohorts of economic ignorami. My kids (both fairly bright and, from an early age, very industrious) understood the concept (and its politically-inspired mangling) while still in elementary school. I’m of the opinion that the adult population would be far more difficult to mislead if their early education included even a smattering of such elementary matters.

    To “Cabalamat” I’d point out that just because some Iraquis will misunderstand is no reason not to do something in the best manner of which you’re able, though it might mean that a bit of attention ought be expended on PR. Nor are Iraquis uniquely ignorant in this regard–a significant portion of the US population (and others around the world) are in complete agreement with the “it’s all about the oil” storyline and are unlikely to be persuaded otherwise by even the most cogent arguments.

    There’s no “benefit” to the jobs whatever other than the market value of the end product (s) less the costs (including labor). If the job pays more than is needed to get the work done properly–the excess is a waste and a burden on a variety of others; it may also be a form of payoff to assure “labor peace,” in which case (if truth be known) the entire enterprise would likely be better off with an entirely different set of employees, whether high-paid Americans from the “oil patch” or hands imported from poorer SE Asia. You’re off to a poor start–maybe even failure or worse–if the wages offered are more than just enough to get people anxious to earn a living to do the jobs needed. Those who don’t understand that aren’t merely ignorant of economics–they don’t understand people.

  9. > And in fact jobs are a cost to the people doing them as well. Their pay is the benefit.

    If you’re going to separate jobs from wages (which is reasonable), then surely jobs aren’t a cost to employers. Jobs are a benefit, as they involve people doing work for you. Their wages are the cost.

    > If a society needs 100 people to do something but then a way is found to do that something with 50 people, then those other 50 people can go do something else.

    I don’t think anyone was disputing that. Obviously. The argument is about what that something else is.

    In Northern Ireland, the IDB did frankly incredible work in persuading big international firms to invest here during the Troubles. The reason they did this was the theory that people with jobs and all the responsibilities that come with them are less likely to spend time on terrorism than the unemployed. Added to which, of course, there’s the rather obvious point that, regardless of whether an employer sees a job as a cost or a benefit, an individual, especially an unemployed one, sees it as a good thing, and the fewer good things in an individual’s life, the easier it is to persuade them to blame someone else for their misfortune. And, indeed, that theory was pretty much proven right: as employment increased, paramilitary activity and support for it decreased. The areas in NI with the highest levels of segregation, inter-communal bitterness, and paramilitary activity are the ones where everyone’s in council housing, which also of course have the lowest levels of employment.

    I’d be surprised if the Iraqi Government haven’t studied various areas in the world which have suffered from terrorism, especially those that have had some success in fixing the problem. Under such conditions, employment is a clear and major benefit.

  10. “Jobs are a benefit, as they involve people doing work for you.”

    No, the result of the work is the benefit. The work part is neither a cost nor benefit to the employer.

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