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Samizdata quote of the day – lower productivity is the government’s objective As I keep saying jobs are a cost not a benefit. We do not want to go around the world – or even our own country – creating costs now, do we?
No, no, jobs really are a cost, they are not a benefit. Think on it. We have some amount of human labour available to us. So, if we use that labour to do this thing here then we cannot use it to do this other thing over there. The cost to us of using the labour to do this thing is therefore losing the opportunity to do that other thing over there.
Yes, I know, people like to be able to consume. For most of us that means having an income with which we can purchase our consumption. But even to us that job is a cost. The work we’ve got to do is the cost of gaining the income. And, obviously, a job is a cost to the employer – the production is what they desire, the job is a cost of gaining it.
It’s entirely true that renewables require more human labour than other forms of energy collection and or generation. But that means they make us *poorer*.
– Tim Worstall
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This is a point that a lot of those who defend tariffs and non-tariff barriers, as well as certain forms of controls such as union restrictive practices, draconian controls on even legal immigration, seem to overlook when it comes to defending “our” jobs. The point of economic exchange under freedom is to obtain more of what we want; to boost the sum total of human satisfaction.
We can see the idiocies of statist thinking in areas such as hikes to minimum wages. Understandably, firms affected by this substitute capital for labour when the marginal costs of adding labour offset revenues, etc. Hence all those self-service petrol stations, kiosks in supermarkets, etc.
According the new Prime Minister of the United Kingdom, Prime Minister’s Question Time yesterday – in answer to the last question, “economic growth” and “jobs” are to be created by building prisons, roads and housing estates on the fields of farmers in Kent and other counties.
I am not sure how this is supposed to work – farms produce food, how do “prisons” produce “economic growth”? Is the idea to charge other countries money for taking in their criminals? And what “economic growth” do housing estates, warehouses for imported goods, and the roads for them produce? Although “think tanks” down in London do not seem to have noticed – vast numbers of housing estates have already been built and are being built (thousands of houses in my own town alone – and Kettering is very much a typical, average, place for the south east of England – other nearby towns are much the same) – ditto lots of warehouses for imported goods, and roads for the trucks carrying imported goods and the cars for the new housing estates.
This may create “jobs” in construction and in the warehouses for imported goods, and for all the, very much subsidised, “wind farms” and “solar farms” (with all that imported kit from China) – but it is hard to see what real economic growth it produces.
Meanwhile both farming and productive industry (there still is quite a lot of productive industry in the United Kingdom – but Ed Miliband and associates intend to destroy it with high energy prices and lots and lots of “worker’s rights”) is to be destroyed – as this does not matter for “GDP” (Gross Domestic Product) – all that seems to matter for “GDP” is SPENDING – spending financed by creating money-from-nothing (“financial services” – i.e. creating money from nothing and using the money created from nothing in various complicated book keeping trick exercises).
I am told that I am old fashioned for thinking an economy of almost 70 million people needs to produce such things as food, raw materials and manufactured goods – all that matters, I am told, is SPENDING as we are now all “consumers” rather than producers.
I do not believe this will work out well.
Even Liechtenstein has both a farming and an industrial (yes industrial – manufacturing) base – and if low tax, and TINY, Liechtenstein can not survive by financial services alone – what chance has the high tax United Kingdom got? Especially as the United Kingdom has a population which, thanks to mass immigration, is heading towards 70 million people.
How are all these “jobs” compatible with high energy prices and lots and lots of “worker’s rights”? Will that not undermine British manufacturing industry?
Or are the “jobs” going to be in building endless “wind farms” and “solar farms” (all that imported kit from China – producing unreliable energy sources), and housing estates needed because of the mass immigration, and warehouses for imported goods, and roads for all-of-the-above?
“You forgot about the prisons Paul”.
Oh yes – the new prisons (to be built on the fields of farmers in Kent and elsewhere), which, according to the Prime Minister yesterday, are going to produce lots of “economic growth”.
As I have mentioned above – I am not sure how that is supposed to work.
But perhaps I will find out – when I am in one of these prisons myself, which (as I tend to write un “Woke” things under my own name) is likely to be quite soon.
A job with low productivity that would not be created in the unregulated and unsubsidized market is essentially a form of welfare. It’s just sugar coated with an outward semblance of economic utility. But the effectiveness of that sugar coating depends on the public, and perhaps the “job” holders themselves, not realizing that what they’re actually doing is participating in a huge cargo cult.
Hey Siri.
Define 50% of the UK public sector.
Spot on.
The whole purpose of employing someone is that they produce more value than you pay them, which is a net benefit.
If there are two jobs and one worker, then the worker should be put to work in the job that produces the most value. Comparative advantage, I believe. If on the other hand there are two workers and one job, you have to pay one to work and the other to sit at home watching daytime television. If only there was something for the other worker to do, so he was producing wealth instead of consuming it, eh?
I don’t know why Tim has such a bee in his bonnet about this. Nobody disputes that jobs are a cost to the employer, but in the bigger picture people working and paying tax rather than being idle and drawing benefits is clearly a benefit to the nation.
Roué: It seems to me that your analysis displays what Frédéric Bastiat called “What is seen and what is not seen.”
So you have a worker doing something, rather than sitting at home, and earning wages that are taxed, instead of drawing benefits. Who is paying those wages? If it’s the employer, then the employer’s profits are reduced, which is a cost to the employer, but the taxes they pay are also reduced. And that reduction might actually be severe enough to force the employer out of business, which would do away with both the employer’s profits and the government’s revenues. On the other hand, if the “job” exists because of government subsidies, then it is paid for by tax revenues, and the tax on the worker’s earnings will be less than the cost of the subsidies (it had better be, or the worker will starve).
And there is also the cost to the worker of having to be a worker, rather than idle. Clearly they do prefer idleness; if not, they could go out and do volunteer work and not worry about being paid. So you are inducing them to do something they prefer less, which is why there’s a cost for wages or subsidies in the first place.
All this is, perhaps, made up for by the fact that the worker produces something of value. But what if their output has no value, or even negative value (because it wastes the employer’s resources to make up for the problems they create)? Makework jobs are not in any sense a benefit to the business, or its customers, or thus to the country.
Re the “two workers, one job” scenario, if the one job is well filled by the one worker but not the other, that hiring decision is easy, assuming it is left to the employer to decide.
It seems to me that no matter the skill level of the less qualified worker, there is some other job, at some lower wage, that will be profitable for a second employer.
If the worker is extremely inept or otherwise unproductive, this lower wage might be very low, so low that the worker won’t have incentive to take the job. Unless there is no alternative!
If unemployment benefits and welfare were reserved only for those temporarily out of work, with strict time limits on the benefits paid out, workers would quickly find work once the benefits ran out (it is well and widely known how most people “game” the unemployment systems: “did you look for work last week?” “yes, diligently, now please give me my check”).
So, I don’t see an issue with this alleged “extra” worker who cannot be employed…there is always work that needs to be done that no one is available to do…at a given price (but is available at a higher price). Right?
The minute you start to have “meta-workers” like government regulators…? You’ve lost your grasp on reality, because once you start “employing” those people to do extraneous and unnecessary BS, you’re warping economic reality entirely out of frame.
I’d submit that much of our problem with all of this is that we’ve allowed a whole lot of economic “cruft” to build up, and something has to happen to break that up and bring the vicious light of reality onto things.
In the end, what the hell is an “economy” in the actual reality of things? It’s a behavioral modification and control system that is supposed to be working via incentives and negative-space “punishments” (is it really a punishment if your contribution to society isn’t rewarded…?). That’s all it is; the net product of human endeavor boils down to behavior and behavioral incentives. You like those ripe mangoes? Great; Joe over here will provide them, if you’ll provide him with those baskets you make, so he can carry them…
When you get down to it, that’s what the economy does, at all levels. The problem we’ve got today is that we’ve allowed so much abstraction and separation of things to build up that it’s nearly become totally dysfunctional. We’ve also lost sight of the essential purpose of it all, which is that the economy is supposed to reward and encourage what we see as “positive” endeavor… Which it isn’t, in all too many cases, these days.
I see government funded make work to be a problem. The taxes that go to pay for it are not being left in people’s pockets. If they were, those people could spend that money on things that they actually wanted. Work would then be needed to be done to supply those things. It wouldn’t be quite so bad if the government made work by building and maintaining infrastructure, at least then the roads would be maintained which they certainly aren’t at the moment.
That work is a cost is why welfare should be workfare. Getting the dole for no work screws up the incentives.
But if there was work the dole recipents could do, then they wouldn’t be on the dole, they’d be doing the work.
There’s only one job in the whole economy?
That guy can’t get another one? In which case why would you think he’d be productive at a government-created fake job?
And sure, he might produce something at his fake job – is it something we want? Tons of people in government produce nothing of value. Indeed, they *reduce value* and we’d be better off paying them to do nothing.
I’ve had the misfortune to work with very productive negative-work generators – people who are so useless everything they do makes more work for others.
They *could learn to do the work*.
They’re on the dole not because they can’t – these people aren’t retarded – but because the options available to them, like the dole, mean they can choose not to.
Feeding me is a cost to one system.
Feeding me is a benefit to my system.
I think it all depends on where you’re standing.
What is “productivity” in regards to prisons?
Or housing estates for the influx of millions more immigrants? Or warehouses for imported goods? Or wind farms and solar farms – of imported stuff from China, subsidised by the taxpayers. All “paid for” by creating money-from-nothing, creating money from nothing-at-all.
These are the things the government wishes to build. Destroying vital farmland to do so – as if food supplies were not insecure enough already.
Talking of “productivity” in this context makes no sense.
Sadly it is more and more likely that Conservative and Reform Party politicians talking about what they will do in five years time is pointless – as there is not going to be much of a country left in five years time.
The half hearted resistance to officials and “experts” that the last elected government showed, has been replaced by eager agreement with the officials and “experts” by the newly elected government.
“Policy” will now proceed without any resistance – and the results will be horrific.
A country the size of, and with the natural resources of, Russia can survive terrible policies – even for long periods of time. Even France has less the half the population density of the United Kingdom (let alone England), France has vastly more good farm land (and so on) than the United Kingdom does.
A country as densely populated as the United Kingdom, especially England, is very vulnerable to terrible policy – a country like this one is much less difficult to destroy.
There’s only us humans here. One of Tim’s sayings; the invention of the tractor created the NHS. If 80% of the population were grubbing food out of the soil, there would be nobody available to be nurses and doctors. If you’re pouring people into Green Jobs were are the people going to come from to do other stuff? Such as the oft repeated chronically understaffed NHS?
Nobody likes prisons Paul. But we prefer criminals in prisons than in society. That’s the benefit. They may not grow GDP but they do make the UK a better place to live for those not in prison. I don’t like bridges either, but it sure beats swimming across a river, or taking the long way round.
The cost of inputs required to securely support prisoners. If you can do this effectively on a per prisoner basis at lower cost (such as less people. for example), that means you are getting more productive.
The cost of building & maintenance to produce and sustain the accommodation provided.
Security & throughput for the goods people want to buy, if your warehouse adds less cost than before, you are becoming more productive.
Production and maintenance costs per MW/hr presumably.
Not sure what point you are trying to make.
jgh : But if there was work the dole recipents could do, then they wouldn’t be on the dole, they’d be doing the work.
No, because as Agamemnon says, they can choose not to do the work if they can get the dole without working. Let us assume that they are capable of doing work that someone would voluntarily pay them 100 to do. But currently they get 80 on the dole without working and choose that option. If you now insist, as a condition for dole, that they do some totally useless work (ie that no one would pay the anything to do) but which to them is as tiresome as the work they would have to do to earn the 100, then they’d do that work and earn 100 instead of having to work for their dole of 80.
So, don’t give them 80 as dole, give them 80 as wages.
“I don’t know why Tim has such a bee in his bonnet about this.”
Because the entirety of politics marches around shouting that “We’re going to create jobs”. That is, impose more costs upon the economy.
Caroline Lucas – among others – has been known to shout that solar is better than nuclear because it requires more labour. Now, solar could be better than nuclear – depends upon your prejudices perhaps – but it’s not going to be *because* it requires more about.
My bee in bonnet is because we’re ruled by an entire class, Tories as well, who ignore this simple fact.
Governments increasingly prioritise wellbeing of their people and communities as a measure of overall health alongside more traditional GDP. In place of production, it’s a job that is delegated to everyone with the objective of future increased productivity.
I’ve got no idea what that means.
In many cases, where politicians and political pundits specifically talk about ‘jobs’, and you don’t quite undetstand how what they’re saying relates to reality, try replacing the word ‘jobs’ with the slightly-more-cumbersone but ever-so-much-more explanatory ‘votes for me and/or money extracted from the economy exclusively for me to spend.’ Clarifies matters immediately.
llater,
llamas
jgh : So, don’t give them 80 as dole, give them 80 as wages.
Kinda. The distinctions I would draw are these :
1. An actual job typically comes with a package of employment law and “rights.” Not so the dole.
2. An actual job typically involves work that creates value for the employer in excess of the payment (or at least is intended to.) Not so the dole. Indeed some care is required to avoid dole work displacing actual workers from actual jobs. So digging holes and filling them in again is fine. The object of the exercise is not to win VFM for the dole payment, but to impose fatigue, tedium and irritation on the dole claimant marginally in excess of that involved in an actual job. Thereby incentivising the dole claimant to seek an actual job with more enthusiasm than hitherto. One could use whips and scorpions instead of labour, but that would be uncivilised.
Ofnir, Traditionally, production was the sole responsibility of a dedicated team. Now, the responsibility is distributed among all employees.
Tim Worstall has a point.
“It will cost jobs” is the cry against every labour saving innovation.
The Emperor Vespasian reacted to an inventor who produced machines for moving stones about more effectively, with the line “please allow me to feed my people” – not all construction workers were slaves, many were free men and these machines threatened-their-jobs.
The Emperor Tiberius reacted to an inventor who created damage resistant glass – by having the inventor executed (as a threat to the jobs of the glass blowers).
Such rulers, over the long term, helped doom Roman civilisation.
I sometimes think that if an inventor had come up with firearms to hold back the Germanic tribes – he would have been executed as a threat to the arms (sword and spear) factories that the Emperor Diocletian had set up.
The Austrian Empire did something close to that.
They were offered rifles that were as effective as the “Needle Gun” of the Prussians – but they rejected them, because important Austrian factories depended on producing the old slower firing rifles.
This decision did not turn out well in 1866 – the Austro-Prussian War.
Problem is, while creative destruction works, it has rather large individual costs. What enhances an overall system can hurt individual parts of that system, and those parts VOTE.
We’re lucky there were actually very few buggy-whip makers.