Learn some economics, please!

The technology could have generated up to 5% of Britain\’s electricity requirements, and created hundreds of jobs and develop technology that could have been exported around the world.

Instead it is likely that new nuclear power stations will be approved, which will doubtless be financed and owned by foreign companies and produce fewer jobs.

Jobs are a cost, not a benefit.

10 thoughts on “Learn some economics, please!”

  1. Is I the only one who contrasts this silly scheme with the Oosterscheldewerken in the Netherlands, where it was proposed to install a barrage across the mouth of the delta of the Scheldt and alleviate the flooding that had plagued the Netherlands since time immemorial?

    And the original plan for a barrage which would significantly alter the tidal nature of the estuary – was fought tooth and nail for 20 years by hardcore Greens, adding immeasurably to the cost?

    But now, a barrage which will significantly alter the tidal nature of the Severn – is just fine with the Greens?

    Truly, it is a changeable belief system.

    llater,

    llamas

  2. Although construction would undoubtedly involve a large number of workers, the Severn Barrage would have operated with a very low number of employees, so I can’t see that he is right even on his own terms. Plus I love the nationalism of these “progressives”.

  3. Anthony,

    Tim will be meaning all jobs. I can’t point you to any one place to read; it’s an idea integral to pretty much all of modern economics. It’s so integral, in fact, that it doesn’t get spelled out very much. (It’s also, I should point out, completely agreed on by both ends of the spectrum. There’s no debate, no conflicting theories, and no disagreement with the copious amounts of empirical evidence we have.)

    Short form: People are a resource, just like any other. Being told that adding a megawatt of generating capacity will take 10% more labour than expected is just as bad as being told it will take 10% more steel. If that’s what it costs, then fair enough – but we need to be damn sure that there’s no cheaper way, because wasting those resources through inefficient allocation is wasteful, and makes us poorer.

    Long form: We all *want* to live in a world where we can all laze about all day, enjoying wealth beyond the dreams of avarice. But sadly we aren’t quite there, and we aren’t even getting closer to that point very quickly, because all the people who SHOULD be working on researching flying cars and cancer cures and a robot that will cook me a pizza when I snap my fingers and all the other bits and pieces needed for the dream are busy doing boring things like maintaining sewer systems or listening to a baby boomer describe his problems getting an erection.

    Now, obviously having a functioning sewer system or providing medical care is important, and as a society we WILL spend the resources needed to obtain these goods (within reason). But equally obviously spending those resources has an opportunity cost, and if we can reduce the resources needed on boring things like running a sewer system that’s pure win, because it expands the resources we have available to research flying cars (or whatever).

    The flip side of the equation should also be obvious: Anything that increases the number of people needed for boring things like running infrastructure is pure cost. It makes us measurably and inarguably poorer as a society, and pushes off the day we’ll have that cure for cancer, or Playsation 10s (so smart they play the game for you, and let you know if you won).

    The greens are basically saying that we’ve been underinvesting in our power system all along, and hence we haven’t been as rich as we thought we are. They may well be right, but we should all hope that they’re not. If they’re right, then we WILL need to do things like build tidal barrages, it WILL require more people than the ways we’ve been generating power in the past, and we willl no longer benefit from all those things the people in question used to be doing, and thus we WILL be worse off as a society, but…well, if that’s how things are that’s how they are.

    But if we’re lucky, it’ll turn out they haven’t done their sums quite right, and we don’t need to build tidal barrages, and we won’t need to pull people off whatever valuable thing they were already doing, and hence will be, if not richer, then at least no poorer than we are now.

    And that’s why stuff about green jobs is so utterly bat shit insane, but also why it’s so incredibly attractive to green activists: If you can redefine your schemes biggest cost as a BENEFIT, then your mad schemes suddenly look brilliant. Sadly, reality doesn’t care about word games…

  4. Thanks for that explanation Cody. I think I get it.

    But what about the situation where the choice is between spending 10% more on raw materials or 10% more on labour? Supposing that the two options cost the same and produce the same output would it not be better for the economy as a whole to have the extra money spent on labour who can then spend the money elsewhere? Or should we view it that it makes no difference because equally buying the extra raw materials leaves those potential extra labourers free to work on some other project?

    What about in times of recession when resources are not being fully utilised anyway?

  5. The more people who work on ‘green’ stuff, the more people are dependent on environmentalist ideology and the more power greens have.

    It’s empire expansion

  6. Anthony,

    Actually, if raw materials and labour cost the same but have the same value add then it would still be better to spend the money on raw materials precisly because the labour would be free to do something else.

    Recessions are temporary so the fact that people are not fully utilised during them is of little importance.

  7. Anthony, also when you buy 10% more raw materials, then someone has to be selling the extra 10%. So they have more money, which they will hopefully either invest or spend, employing people elsewhere. (Ignoring for the moment macro-economics arguments about idle resources because of uncertainty about the future or the paradox of thrift).

    As for recessions, if you want to employ people temporarily during a recession, they should be employed doing something that can be quickly dropped once the labour market starts to pick up again and they can move on to whatever makes the best use of their labour in an economy at high employment. Multi-year capital projects typically don’t fit the bill.

  8. As the other commenters have said…

    Every transaction has two sides. The factors of production (land, labour, capital, and entrepreneurial ability, most textbooks would say) are all valuable. Having any standing idle is troublesome; increasing the utilization of any increases the amount of money flowing in the economy.

    The question of whether labour is somehow a “special” factor is a troublesome one. Emily above reckons that it’s better to prioritize other factors before labour so that labour may be free to be used in other productive areas. And yet if we prioritize using labour, doesn’t that free up the other factors for use in other productive areas? And don’t we care a lot more about unemployed workers than underutilized iron ore?

    The best response I think is to turn to empirical data: Most resources are actually usable in production because of human ingenuity, and what counts as a resource – and how valuable it is – is constantly changing. What was once an odd reddish hill is now an iron mine; what was once an extremely valuable reserve of charcoal is now “just” a forest. Times change – except for labour.

    Labour is the one factor which always seems to be in the highest demand. Outside of Great Depression-style events, labour is always being used at more-or-less the maximum possible rate. When we clever monkeys find a new way to make widgets, the need for some old material may plummit, but for all of recorded history the value of labour has been on inexorable march upwards.

    Once almost all of us were employed working on the soil. When we got better at farming, we started using a lot less land and labour. The land, in many cases, stayed idle or reverted to forest, but the labour was instantly snapped up by a growing manufacturing sector. And this is a pattern we see over and over again…

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