Guest Post by Willis Eschenbach
Last night I saw Carol Browner, ex-head of the EPA, make an astounding statement on the Colbert Report TV show. I was so amazed, I tracked down the video to make sure I’d heard her right.
Before I tell you what Ms. Browner said that so bemused me, let me take a moment to talk about broken windows.
In economics theory, there’s a famous parable called the “Broken Window Fallacy”. There’s a good description over at the Investopedia:
The broken window fallacy was first expressed by the great French economist, Frederic Bastiat. Bastiat used the parable of a broken window to point out why destruction doesn’t benefit the economy.
In Bastiat’s tale, a man’s son breaks a pane of glass, meaning the man will have to pay to replace it. The onlookers consider the situation and decide that the boy has actually done the community a service because his father will have to pay the glazier (window repair man) to replace the broken pane. The glazier will then presumably spend the extra money on something else, jump-starting the local economy.
The onlookers come to believe that breaking windows stimulates the economy, but Bastiat points out that further analysis exposes the fallacy. By breaking the window, the man’s son has reduced his father’s disposable income, meaning his father will not be able purchase new shoes or some other luxury good. Thus, the broken window might help the glazier, but at the same time, it robs other industries and reduces the amount being spent on other goods. Moreover, replacing something that has already been purchased is a maintenance cost, rather than a purchase of truly new goods, and maintenance doesn’t stimulate production. In short, Bastiat suggests that destruction – and its costs – don’t pay in an economic sense.
OK, so we’re clear about that part. There’s absolutely no net gain, there is a net loss, from the breaking of the window.
Now, suppose that instead of breaking a window, the EPA orders the man to replace the window with high cost anti-UV coated glass to protect his workers from the sun. Once again the glazier makes money, once again, the man loses money, so once again there’s no gain or loss.
Clear so far?
Given that as an introduction, here is Carol Browner, former head of the EPA, explaining how the EPA helps the economy, transcribed from the video:
Carol Browner: The EPA creates opportunities. The EPA creates jobs. When the EPA says “that dirty smokestack needs a new scrubber”, someone has to engineer that scrubber, someone has to build that scrubber, someone has to install it, maintain it, operate it. Those are American jobs.
I leave it to the reader to draw the obvious parallels.
But in fact, this is good news if looked at the right way. Two facts.
First fact.
Think about this.
Obama and the Republicans both want to create jobs.
Second fact.
Add this in.
EPA regulations create jobs.
Well, duh, folks, don’t you get it yet … all we have to do is keep jacking the number of EPA regulations, and watch the unemployment level drop week by week as people are hired to build filters and install scrubbers and climb chimneys and inspect lawnmowers, and check window shades and re-calibrate your sphincter and measure trace gases and do that vital EPA work all over this great land of ours! And the beauty part is, we don’t have to specify in advance how many regulations we’re going to impose.
We’ll just gradually impose more and more EPA regulations, until unemployment has dropped down to say 6%. Then we can take off and add regulations as necessary, subtracting or adding jobs to maintain it right there in the sweet spot.
So America, all those proposed new EPA regulations on CO2? Understood correctly they’re not really a problem and an un-necessary wasteful PITA like you think. That’s the short-sighted view.
When you take a mature, long-range view, EPA regulations are a sign that good times and full employment are just around the corner. The EPA itself said that to implement the full CO2 regulations on all emitting point sources would require a quarter million new federal employees … I mean, all those shiny new jobs will whack ugly old Mr. Unemployment on his head right there!
…
…
I suppose I should put in [sarcasm] tags in there somewhere, but the whole thing is such a parody of itself, I don’t know where to start. Sometimes I just sit quietly and bump my head against the desk to think that in America, it’s gotten to the point where
BUREAUCRATS THINK REGULATIONS CREATE JOBS.
Sigh …
w.
PS—Colbert, as usual, got off the best line of the interview, viz:
You want to protect the air and water, right? You know what the air and water have done to us lately? Hurricanes. Tornados. I think it’s time we fight back, OK, give’m a taste of their own medicine.
Brilliantly demented.
PPS: Regulations are absolutely necessary for us humanoids, including environmental regulations. Otherwise, we’re pigs as a species, every river would be full of filth. It is a question of degree, not underlying need or justification for regulations. We need them, there’s no doubt of that.
So don’t abolish the EPA, that would be a huge mistake. Instead, fix it. It’s out of control. Whack its knuckles with a ruler. My favorite scam?
The EPA funds agencies that then sue the EPA to enforce ridiculous regulations. Then the EPA can wash their hands and say “They made me do it, I couldn’t help it.” That government branch is way off the reservation, fire half the employees and start over or something, it is sick to the core. It is in bed with the groups it is funding, using them to sue itself in a never-ending orgy of symbiotic green greed. Why is the EPA funding anyone at all? They’re an enforcement agency, they shouldn’t be funding anyone. That’s nuts.
Most importantly, take the EPA out of the trace gas business. Regulating CO2 is an incredibly stupid idea, but even if it weren’t, the EPA is not set up to handle it. Congress, you need to act here …
This sounds like something the OWS people should be protesting. I mean government handouts for legal firms sounds like milk for the 1% to me. Too bad they’ve been co-opted already into defending anti-corporate regulations.
Fantastic analogy Keep up the good work Willis. I am thinking I should start breaking some windows for fuller employment ! !
Not a true analogy. Unlike the window, which was not broken before, the dirty smoke stack is already broken.
I’ve heard that phone sanitization is an upcoming, promising career. Where do I apply?
I love how these whack jobs can simplify things like this and say them with a straight face, as if speaking to kindergarten children. Whoa….now stay stay away from that little button….
I’m really disappointed that Colbert didn’t ask Ms Browner what she thought a safe level of the evil CO2 would be in the atmosphere.
“Congress, you need to act here…”
They could start by disallowing the EPA from bypassing Congress. In fact, it could probably just end there.
Willis, there you go again using perfectly clear logic. It will just cause the Leftists to foam at the mouth.
I knew you yanks had it all wrong. Your creating regulations. See, if you were clever, like us, you’d create a Tax on Co2 Emmissions.
We’re so good at it that we’re all going to be better off after we’re taxed.
So your right Willis, regulations aren’t the answer taxes are, taxes create wealth apparently.
Well, they do in Socialist Australia.
Willis, another great piece. Obama’s Cash for Clunkers program was a multi-billion dollar example of the broken window fallacy. Why junk out older cars which are still usable? Why not just pay people to throw rocks through windows? Debt-laden consumers were encouraged to take on even more debt and buy a new car when they really couldn’t afford it. I wonder how many of those cars were repossessed or the cause of losing one’s home.
I don’t usually bother to watch Colbert’s show. His best work was done in the Mr. Goodwrench commercials. “That’s how I roll” was just classic. Although he never had the title, I will always think of him as “Mr. Goodwrench.”
Steven Chu certainly thought so when demanding the phase out of the incandescant light bulb.
Folks, please remember these people when you vote next year.
The wealth of a nation is measure by its per capita production of those goods and services that raise the standard of living. Make-work jobs take away from that productivity. It could be argued that EPA-created jobs improve standard of living by reducing pollution. There is a trade-off, however. How much more would those workers enrich people if engaged in productive endeavors.
The facts support Browner’s assertion that a clean environment and a robust economy are not mutually exclusive: Since the Clean Air Act was enacted, US GDP has grown by over 300%. A recent study also showed that proposed EPA rules on mercury arsenic and other toxic air pollution from power plants will “have a slightly positive impact on job growth in coming years.”
Since 1977, the Clean Air Act has created over 1.3 million jobs and had a benefit to cost ratio of 26:1. As Holtz-Eakin noted, the EPA’s Acid Rain program, which established a cap-and-trade mechanism for reducing Sulfur dioxide emissions, was “a triumph of market policies to improve the environment.”
[SNIP – Please do not cut and paste long sections of someone else’s text … or even your own from another blog. If it’s already on the web, link to it. Otherwise, the electrons get tired from all the copying and pasting, and the text starts to fade … -w.]
Actually his best work was in Strangers with Candy…
Careful, Willis. You’re in dire danger of becoming a lapel-grabbing libertarian.
Studying free market (especially Austrian School) economics back during the Carter Malaise is how it happened to me.
Last summer I read a book called “the scheme for full employment”
An introduction from the UK amazon site:
“The Scheme for Full Employment” is a grand program that, well, guarantees full employment. Eight hours’ worth of work for eight hours’ pay. Grand days await those who join the scheme, what with an easy job that pays extremely well and has lots of benefits and perks attached to it.
The Scheme relies on a network of depots/distribution centres, with all that goes with it: a mechanical, almost flawless organisation, workers for every kind of task (from key keepers to gate guards), and, obviously, van – pardon, UniVan – drivers wheeling some kind of materials to and fro, in an never ending merry-go-round of transportation.
As the book progresses we find out that nothing happens to the merchandise being carried… it simply gets carried around from depot to depot on and off UniVans. And, most strangely and comically, that the goods are, well, UniVan parts. Now how stranger can the book get?
Seems they have started to implement the idea.
On the other hand Willis , I would be interested to see in some future post of yours how you envisage the world future when robots and nanotechnology lead us to the point where all menial and easy intellectual jobs are taken care of by robots. Part of this is happening in the US, where outsourcing is replacing robots ahead of time, but the writing is on the wall. The great shift in advanced countries of cultivating with only 1 or 2% of the population because of mechanization of cultivation when more than 80% were occupied by land jobs a hundred years ago has resulted in the great expansion of cities, and jobs grooming and feeding each other and getting more and more “educated”, which delays adulthood and need for a job. The need for governments to create jobs comes from this, within our economic paradigm. Dig holes and fill them.
We need a different paradigm.
Well then there’s the “why don’t you just butt out” principle.
It turns out that some chemical companies are able to make “effluent” in all colors of the rainbow; some more obvious than others, and in the case of “smoky” effluent, not necessarily good for animals and the little people or just plain ugly.
One such chemical company, was Monsanto Chemical, who got their start making Sacharin, maybe on the Eastern shore of the Mississippi River, in East St Louis. Now I don’t know what color smoke you get from a Sacharin factory; but down through the years, Monsanto, was dishing out a pretty good rainbow of colors, around East St Louis..
Sooner or later, “effluent” can be more trouble than it is worth; and Monsanto eventually concluded that since they were now a diverse chemical company, and somewhat of a major presence in the community; that they should put some effort into sprucing up their public image as a part of their good neighbor policy. Getting rid of that color chart, seemed like a good place to start, so Monsanto set their Central Engineering Department loose on a project to design scrubbers, to rid their skyline of the chemical rainbow; it would probably also lead them to a better control over their processes anyway; sure it would cost them some money; but maybe they would get some back in better process control, and certainly in public image. After all, who wants to be a public nuisance.
So the scrubbers were desinged and installed, and then Monsanto found some other of their plants, where they could use the same basic design to good effect; so now they had to build a bunch more scrubbers.
Well some other people besides the residents of ESL noticed the big improvement; and they asked Monsanto; ” Say where’d you get that stuff anyway ?”. Well we just built it ourselves, was the response. “Could you build ME some of those things; now that you’ve done the donkey work, I might just as well buy them from you, as try to make my own.”
So that is how Monsanto, acting simply on their corporate good neighbor instincts, built themselves a good business in smoke stack scrubbers for all sorts of industries, besides their own, and cleaned up, not only environmentally, but also at the bottom line.
And that all happened, long before that nutcake Carol Browner was knee high to a grass hopper.
Government is seldom the solution to the problem; government usually IS the problem. I’m probably stealing that and butchering it from someone like probably Ronald Reagan; anyway thanks to him if it was him; it is only too true even to this day.
I can’t speak for what their public image is these days; but when I used to work for them, they were a very responsible outfit, and made some darn good products. So far as I know, Sacharin is still, after more than 100 years, the ONLY plastic sugar substitute, that has never been indicted for any known health problem; well unless you consider its bitter aftertaste to be a health problem. Me; I use real sugar.
They also make some huge fraction (used to be 85%) of ALL of the world’s Aspirin; sold it by the rail car load. Used to have a big three inch diameter tablet in my desk, that I could scrape a sliver off now and then with my Swiss Army knife. Aspirin actually has a chemical formula; and the formula doesn’t change, just because it says Bayer on the bottle; only the price does.
jimmi the dalek: The smokestacks aren’t dirty. Just CO2 and water. So the window analogy is perfect. Look what the idiot is claiming: By increasing COSTS on Production, we create jobs. By DESTROYING capital, we create jobs to replace it.
You could also hire people to dig holes and fill them in. Jobs! Of course, you are better off just giving them the money, as then they would have the most valuable resource there is: TIME.
I came across Bastiat’s broken window fallacy in Henry Hazlit’s “Economics in One Lesson.” I highly reccomend this little book for those wishing to think clearly about economics. Hazlit has a simplicty that I see in Willis’s writtings.
For fans of Willis it’s a short but sweet read.
Economics in One Lesson is free online here:
http://www.hacer.org/pdf/Hazlitt00.pdf
“””””” Gordon says:
October 20, 2011 at 9:29 pm
The facts support Browner’s assertion that a clean environment and a robust economy are not mutually exclusive: Since the Clean Air Act was enacted, US GDP has grown by over 300%. A recent study also showed that proposed EPA rules on mercury arsenic and other toxic air pollution from power plants will “have a slightly positive impact on job growth in coming years.” “””””
Whoop de do !! that’s one of those “Have you stopped beating your wife ?” things isn’t it ?
“”””” Since the Clean Air Act was enacted, US GDP has grown by over 300%. “””””
So the question is, how much would the US GDP have grown; and how much cleaner would the environment be now; it the EPA had simply butted out, and let competition and free enterprise work their magic.
I have just one simple suggestion for ANYBODY who wants to complain about how company XYZ conducts their business; If YOU don’t like how THEY do things; then PROVE that YOU don’t like it.
Don’t invest your money in their stocks or bonds. Don’t buy ANY product that they make or sell; and don’t EVER work for any division of theirs.
Now I believe that YOU are serious; otherwise, butt out !
Nothing in the articles of incorporation of any corporation, instills it with a social conscience; its function is simply to maximise the return on the investment of its shareholders. It can’t achieve that if it pisses off its customers, or its employees, or the neighborhood, that it does business in.
So we are in control; we just don’t do business with “bad” behaving corporations.
Great post, and great reference to one of the most important economic concepts, the broken window fallacy, and seen vs. unseen.
This idiot Browner represents everything that is wrong with this administration, staffed by people who do not understand this concept.
It is frightening that people like this have staggering amounts of power. 9.1% unemployment is the result.
Here is the full text of Bastiat’s essay What is Seen and What is Not Seen:
http://www.econlib.org/library/Bastiat/basEss1.html
Regulations do create more opportunities for picking winners and losers and shakedowns, generally. It’s the Chicago Way.
I wonder, do they realise that when you increase regulations like this, companies either move to another country, losing you that job, or the company goes out of business, losing everyone that job? Eventually the only growth industry is bureaucrat, pushing memos and forms around in an ever expanding circle.
And you might want to see “The Road To Serfdom”, too many bureaucrats result in consequences due to the inevitable forces present in large bureaucracies, those consequences are economic collapse and eventually dictatorship.
The cost is too high.
For many, the cost of too much bureaucracy is their life.
This has all happened before.
@Gordon Oehler.
What an excellent place to post such a response.
Just like the whole CO2 vs. Global Warming;
You are confusing correlation with causation.
I personally believe the microelectronics revolution had just a wee bit more to do with GDP growth than did new EPA regulations.
Sorry the idea that the EPA can be “fixed” is borderline insane. It needs to be removed and have a law passed banning it from ever existing in any form ever again.
Its the job of the local governments and the individual states to deal with keeping rivers and other things “clean”… the only time the federal government should have any power is when 1 state starts whining that another state is doing X to the rivers, blah blah blah, etc.
“BUREAUCRATS THINK REGULATIONS CREATE JOBS.”
Bureaucracy breeds bureaucracy – which bureaucrats think is job creation. We are in the midst of a large-scale bureaucracy bloom; an economy mortality event. They are pond scum – a red tide. And I do mean red!
“”””” Dennis Ray Wingo says:
October 20, 2011 at 9:23 pm
Steven Chu certainly thought so when demanding the phase out of the incandescant light bulb. “”””
Well he evidently thougth that Solyndra’s way of making solar panels with at least pi times as much glass (which is a very high energy intensive manufacturing process); was a good way to collect solar energy.
Actually it is much worse than just pi times as much glass. It is well kown that cylinders that abutt each other also shadow each other when the sun is not directly normal to the layer of cylinders; so you have to space the cyclinders apart so they don’t shadow each other over the sun angle range; and use up even more real estate area.
It is well known that side by side flat sheets do NOT shadow each other, and they receive exactly as much sunlight as does Solyndra’s cylinders. You would think that a Nobel Prize winning Physicist, whose Nobel was in the field of Optics, would know that; but then you probably don’t know the history of that particular Nobel Prize either.
Anyhow, I dispatched my very last 60 Watt halogen incandescent bulb just last Monday morning, and replaced it with an 8 Watt LED. Don’t have ANY CFLs either; and that means I no longer have any radio interference noise either. I do have one 4 ft fluorescent tube in the garage; but I never go in there much anyway. Did it just for the hell of it. Cost a bit, but the prices have dropped a lot since I did it
No, abolishing the EPA is a great idea, Willis. It is one of the many malignant tumors that we need cut off ASAP from the body that is our Federal government.
jimmi_the_dalek said on October 20, 2011 at 8:58 pm:
Not true. The smokestack scrubber was made to existing standards, maintaining those standards became normal maintenance. Then the EPA comes up with stricter standards and insists there must be a new scrubber that meets their new standards. It’s like taking a 1950’s automobile, then mandating it has to meet the latest California emissions standards. The smokestack was in no way “broken” until the EPA declared it was “broken.” Does that make sense?
I’ve seen that happen locally. My father worked maintenance at a Celotex fiberboard plant. They spent a lot of money installing a new scrubber system. Under five years later, the EPA changed the rules and they had to install a brand new multi-million dollar scrubber system.
And now, there is no fiberboard plant there. Recently cleared empty lot, they might be putting up a warehouse there, but currently no plant and no plant jobs. Yup, that was a good day for the EPA when that place shut down, eliminated a whole lot of emissions in one stroke!
Well, there is need for some regulation. But this has gotten way out of control. Nebulizers? For the past quarter century all I have done is clean up toxic cocktails, some really big ones, in several countries, I’ve gotten really good at it. In the end though, for all that time, I may have been a sort of leach.
So when I ponder the “public trust”, I take into consideration the age of the concept in human civilization, until recently evolved into protection of our common water resources. I may have been one of the very first ecoterrorists (that story I will not tell), so in a lifetime of often intense comprehension, I take pause to consider such things as the Clean Water and Air Acts, and I contemplate the cost-benefit relationship.
If you had only seen the things I have seen…….and fixed. It brings perspective.
And a not inconsequential part of that perspective is perception, now long established, of overreach.
I ponder the “public trust climate”, here, at possibly, maybe probably, the end-Holocene and I wonder……….if climate, at an end extreme interglacial, at least from previous end extreme interglacials, is known to be so unstable as to have resulted in a ~+6M sea level highstand at the end of the last one (the Eemian), and perhaps as much as a ~+21.3M highstand near the end of the Holsteinian (that pesky 3rd of only 3 extreme interglaciations, and the last half perhaps our closest orbital analogue), what might we expect as this one approaches what might be its curtain call?
Would this envelope of natural climate noise, at an end extreme interglacial, constitute what is really the “public trust climate” at this point in post-MPT time?
@Gordon Oehler October 20, 2011 at 9:29 pm
Please show a causal relationship between the clean air act and the job growth…or were you trying to ironic?
Jimmi the Dalek has it right regarding smoke stacks and in the general case some things that we humans make are broken on day one by design. Smoke stacks that don’t lift the effluvia out of the atmosphere to be carried away by the solar wind are not working right. Shipping it from Detroit to Odessa via the jet stream is not acceptable. Really.
The other thing that is not acceptable is to expect that the effluvia can be created and then rendered back to original state. There isn’t enough energy in the universe to do that. We can’t scrub our way out of by-products. What we keep out of the air goes into a landfill. How’s that been working out for you?
Now we’re deconstructing Jimmi’s theme – no matter what we do, animate features on this planet create by-products. Drawing squarely on first principles we can now conclude that animated terraform features, generally, are incompatible with the inanimate terraform features. Jimmi’s Postulate becomes clear: Life, being incompatible with inanimate planetary features, sux, Daleks rule.
We now have entered the problem resolution phase of Jimmi’s postulate: Are the needs of the inanimate features of a terraform planet greater than the needs of the animate features of the planet? Some would say so, and in fact certain governments are even now enacting laws that preserve the inanimate features at great expense to the animate features.
And finally, what is the end game? One given is, animate planetary features can reduce the inanimate features to a level incompatible with continued animation. I’ll need some grant money to discover if this is a forcing or a feedback, and what the role of Daleks will be going forward.
“So don’t abolish the EPA, that would be a huge mistake. Instead, fix it. It’s out of control. Whack its knuckles with a ruler.”
The EPA started small, then grew “out of control”. If by some miracle it gets its “knuckles rapped” (whatever that means), what prevents it from growing out of control again?
Excellent article, Willis! However…
“Once again the glazier makes money, once again, the man loses money, so once again there’s no gain or loss.”
…is not quite correct. When the window is broken, or when the window is discarded because of an EPA requirement, there is a net loss.
Nobody who gets business as a result of the breakage or EPA requirement actually has a profit equal to all of what they are paid for the work or product. If you follow all the supply chains back as far as they go, you end up with the sum of all the profits from all the transactions coming to less than what the man had to pay for his new window.
Now, it is theoretically possible for government regulations, even EPA regulations, to have a net positive economic impact. If, for example, air quality regs reduce the incidence of respiratory ailments, there’s no fundamental reason that the resulting savings in healthcare expenses and worker disabilities could not exceed the cost of implementing the regulations.
Nevertheless, you are certainly correct that what Carol Browner said is purest nonsense. She obviously has an appalling ignorance of basic economics.
anna v says:
October 20, 2011 at 9:38 pm
“I would be interested to see in some future post of yours how you envisage the world future when robots and nanotechnology lead us to the point where all menial and easy intellectual jobs are taken care of by robots.”
============================================================================
A long time ago I read a SF short story, whose title and author I don’t remember. But it took place in a future time that anna v describes. The consumption problem was taken care of by requiring people to consume a certain amount of goods. The higher up the social ladder you were the LESS goods you had to consume. People like judges and professions had to consume only moderate amounts, But bus drivers, ditch diggers, etc. had to consume staggering amounts of goods. Of course you had to turn in (recycle?) the used goods to prove they had been consumed. Those that kept the statistics noted one individual that consumed several times his quota of clothes. He was awarded “Consumer of the Year.” It turned out he had taken several of his household robots, put them in his basement wearing his clothes, and had them doing things that would wear out the clothes.
The real answer is that people will find something they can do that others will pay a living wage for. It would have been hard for a farmer 400 years ago to imagine that 4 percent of the population could produce enough food for the remaining 96 percent(and what would that 96 percent do to make a living, if not farm?).
While it is not hard for us to imagine how robots could produce enough manufactured goods that only 4% of the population could produce enough manufactured goods for the rest of us, we really need to explore what the remaining population would do to earn a living. Robots could build the CO2 control devices. Maybe the rest of us could write EPA regulations.
Hurricanes, tornadoes, floods and earthquakes create jobs in the same manner new EPA regulations create jobs. Any lunatic out there see those natural calamities as a net benefit for the national economy?
With Carol Browner’s logic, you could justify a Ministry of Silly Walks.
One of the reasons that the 90’s roared is that, thanks to Ronald Reagan, we were able to slow down the stock piling of better and bigger rocks to throw through Soviet windows.
Brilliant engineers all over the world turned their thoughts from GPS for targeting to GPS for navigation. Every segment of civilian industry benefitted by the shift of resources from ‘window breaking’ to things useful.
The focus of the EPA is 97.3% window breaking.
“Otherwise, we’re pigs as a species, every river would be full of filth. It is a question of degree, not underlying need or justification for regulations. We need them, there’s no doubt of that.”
The problem with idea that business fill every river with filth, is business doesn’t want to risk being sued for damages from said filth.
So said regulations usually protect a business from lawsuits if complying to regulation.
A second part is govt should provide means of taking out the garbage.
If you didn’t have garbage service, you would live in filth, regardless of number of regulations imposed upon you. One can’t have a city without a sewage system- if you don’t want plagues in said city.
Generally businesses should be no different than any other citizen of a city.
“someone has to build that scrubber, someone has to install it, maintain it, operate it”
And someone has to pay for it.
You have oversimplified this considerably.
The problem with your model is that it assumes a static state. If windows lasted forever, and windows installed 500 years ago were just as good as modern windows, and where and how we want them to be, that would be fine.
It is a microcosm of Schumpeter’s ‘creative destruction’ in reverse.
Obviously, it is a fallacy to assume that replacing a broken window in itself constitutes real economic growth. But replacing it with a better window, or a window in a better place, might. This is quite independent of regulation – it is just plain economics.
It is not necessarily about replacing like with like, or about being compelled to do so.
If a cyclone destroys a bunch of infrastructure, and it is replaced with infrastructure that is better able to withstand cyclones, that is not a zero sum game for the economy. Your ‘economics’ are just a touch Malthusian. Everything has to be replaced sometime, hopefully with something better.
Compelling people to to this because of the latest enviro fad is a different thing altogether, and is to be deplored. You are correct, it does not ‘create’ jobs or industries at no cost. But you need to study economics a bit more before you start using analogies like the broken window, which is about something quite different. No-one broke the window and forced the homeowner to do something afterwards in that example.
I used to like those shows when I was younger, but now I see them for what they are – ridiculously exaggerated strawman arguments that are so easy to knock over a paraplegic could do it.
By the fate of my dvr, my tv happened to be on Comedy Central and I caught that segment. I was mentally screaming all the points and counterpoints that propagandistic tripe wouldn’t dare give voice to, because, heaven forbid, some young liberal somewhere might be persuaded to disagree with the party dogma.
“First fact.
Think about this.
Obama and the Republicans both want to create jobs.”
Obama and the Senate, 74 against 26 votes, just appointed a Rino Eco Fascist in the function of Secretary of Commerce who’s only mission in life is to destroy commerce and expand California’s carbon suicide pact nation wide.
Soylant Green has quite emotional rant on the subject so only read it if the F-word doesn’t offend you. I only read the headline and clicked the links in the article to find out what made him so mad.
http://cbullitt.wordpress.com/2011/10/20/senate-confirms-eco-fascist-as-commerce-secretary/
Obama nor the Republicans, at least the Rino bunch of traitors that voted in favor of the new Secretary of Commerce don’t care a heck about jobs but their own.
And all Obama wants is to look good with his eco fascist friends from Europe, Australia and the UN. He wants to sign Kyoto II and finally introduce the nation wide carbon tax the new World Order is waiting for.
That’s why Browner was selling her snake oil with Colbert in the first place.
That’s why we have another wave of climate hubris to cope with and that’s why we have the OWS ‘protesters’ calling for climate justice and solar panels.
And that’s why Bank of America started trading carbon credits in California even though the start of the scheme was set for 2012.
http://www.mybanktracker.com/bank-news/2011/10/12/bank-america-start-trading-carbon-ca/
and
http://cbullitt.wordpress.com/2011/10/20/so-who-bails-out-bank-of-america-when-the-ca-thermageddon-market-crashes/
The reality is that Obama and the banksters are in a hurry because of the “Agenda”, the elections and the banking crises which is why the banks now badly need the business as the ‘window’ of opportunity is getting smaller by the day.
I really hope they all fail.
“We need them, there’s no doubt of that. So don’t abolish the EPA, that would be a huge mistake.” We need a gov’t of laws not regulation. If we had a system w/ objectively defined property rights and a gov’t willing to protect said rights then we wouldn’t need such things as the EPA which can only violate a person’s rights. Certainly we should abolish the EPA.
very good articole, Willis!!!!
Here in Italy, we are facing the same thing; our ARPAs (kind of mini-EPA at a regional government level) are actively trying to DESTROY our economy through a series of regulations and controls…
This is not bureaucracy, it’s CLEPTOCRACY, as stated by J. Diamond in his Pulitzer-winning “Guns, germs and steel”….
The Browner quote is awful, as you point out.
The usual justification is that the costs of regulating the pollutants (costs that are focused and easy to measure) are outweighed by the benefits (which are diffuse and hard to measure, being improved health to many nonidentifiable people.) Browner does not seem to acknowledge costs at all.
There is a school of thought (you have probably read this elsewhere) that people with control over capital are unwisely sequestering it in bank accounts where it performs no useful service. For the government to take it and invest it anywhere the government wants does not, according to believers, take investment money away from other business. Supposedly, America has in excess of $1.5 trillion of this idle wealth, just waiting for the government to liberate it from its prisons. My guess is that Browner is one of these believers.
At 11:01 PM on 20 October, old engineer had written:
The name of the short story was “The Midas Plague,” written by Frederick Pohl. It was originally published in Galaxy magazine, April 1954 (when H.L. Gold was still the editor), and had been reprinted many times thereafter, most notably in The Science Fiction Hall of Fame, Volume Two: The Greatest Science Fiction Novellas of All Time (1973, which is probably where you’d read it).
A damned nice anthology, that. Anybody else recall a work collected therein, written by Pohl’s frequent collaborator, C.M. Kornbluth? A tale for our times titled “The Marching Morons.”
While the analogy isn’t a bad one, it isn’t entirely accurate either. The original window does not represent the negative externality that a “dirty” smokestack does. If the smokestake is emitting gases that have a negative impact on other parties, then it might be appropriate to internalise the externalities (the costs to others of the pollution). Having said that, it is a huge stretch to suggest that the EPA somehow creates jobs … the additional costs of pollution abatement would have been additional profits received by the factory owner(s) or reduced prices of the output enjoyed by the consumers of their wares.
To work out the benefit:cost would be an involved exercise, but one thing is certain… if the cost of abatement is greater than the benefit of reduced pollution, then the money would be better spent elsewhere.
There are entire volumes written on this subject…
johanna at 11:54pm
500 year old windows like these?
http://www.world-city-photos.org/Paris/paris_notre_dame/Paris_Notre_Dame_stained_glass.jpg
No, nobody lives in Notre Dame, but most folks don’t replace the windows in their house just to replace them(and folks with 100+ year old houses are likely to call you a blasphemer for suggesting it!). Yes replacing older windows with newer technolgy windows does help the homeowner, but it is still at the cost of the loss of those windows. Most newer technology windows go into new construction(or major home remodels), which in terms of windows can not be considered “destruction” at all(Your not static model). Broken windows (and cyclone destruction) even if you replace with newer technologies are still destruction and a loss, which have to be considered/subtracted from the gain to come up with a true amount of gain/progress.
And then we come to the EPA and Browner…new regulations for the sake of new regulations, which seems to be SOP for the EPA, that don’t do anything for the economy, nor necessarily for the environment IS breaking the window without any gain in replacing it, and could very easily be a large economic loss.
“…and re-calibrate your sphincter …”
Hey!, I don’t want no one, no-how re-calibrating any of MY sphincters.
Applegate said (October 20, 2011 at 9:28 pm):
How much more would those workers enrich people if engaged in productive endeavors?
Aye, there’s the rub. Economists have a term “opportunity cost” which, when a business chooses to make a certain investment, is the lost opportunity of doing something better with the money. So when Person A says, “Hey we can make a 5% profit if we do this” it seems a no brainer until Person B says, “But this alternative project will make us 10%”.
Windmills and solar plants, whist not a total dead loss, are broken windows writ large.
But the story forgets that when the economy is stimulated the boys father will be able to earn more income so everyone gains! So breaking windows does work! It only breaks down when the broken window is replaced with an old Cereal packet by the father!
There are standard methods of doing environmental economic analyses and it has to start from technical information of physical, chemical and biological processed.
This representative of the EPA does not seem to know that the main purpose of scrubbers is to remove fine solid particles from smoke and that the main economic benefit results from the improved health for those downwind from the stacks.
[I regard such a person too uninformed ever to head the EPA, which after all is Federal Agency we all rely upon, even those of us who do not live in the USA.]
Financial analysis would treat the window replacement as maintenance cost, but economic analysis works on different principles. Essentially, the economic benefit has to be the benefit to the community as a whole, not to the glazier who replaces the window or the company that makes the glass.
Referring to the “Broken Window” concept is appropriate, except that in economic terms replacement of the window glass is not a maintenance cost but a capital cost because capital was destroyed and has to be replaced. Now if the paint on the window frame had had to be repainted because of normal wear and tear, that would be maintenance.
The real impact of spending money on the scrubbers is to reduce the capital available for distributing dividends to the shareholders, mainly via pension funds and annuities or endowment funds by insurance companies Alternatively, public utility commissions will allow the companies to pass on the cost of scrubbers to customers in the form of high electricity prices.
None of this has anything to do with CO2 because CO2 is not a pollutant but a gas that has no adverse health impact. And unlike the sulphur removed by scrubbers, CO2 is beneficial for plants and thus indirectly beneficial for animals because they rely on vegetation for their existence.
A different technology is needed for removing CO2. And a different economic justification is needed. We just are not sure enough yet that reducing CO2 in the atmosphere will pay off.
Reminds me of trying the tell the time by writing it on a piece of paper. http://www.youtube.com/watch?v=VSSGiA4f5cs You know it’s true because it’s written down before your eyes and verified by the person who wrote it down that it was a true record of the time.
James Bull
Any power given to any bureaucracy for any purpose will be stretched far beyond that purpose.
… if you like Bastiat, you might like Lew Rockwell:
“The EPA – a quintessential big business welfare agency – was founded by Richard Nixon through an unconstitutional executive order. Ever since then, it has achieved bureaucratic success by handing out special-interest construction contracts while catering to the most anti-capitalist, indeed anti-human, forces in our society. The EPA should be dismantled, not exalted. We have yet to learn that the environmental vision is just as impossible as the socialist one, and just as dangerous in the attempt.”
dp says:
October 20, 2011 at 10:47 pm
I always do a double-take when somebody adds “Really” after an obtuse, inane statement. Becuase if you applied it to yourself, you’d have to be piping your breath up into the “solar wind” every time you exhaled.
BUt what you’re saying just isn’t possible and apparently it take a judicious mind to ascertain the difference. Really.
Truly some things, like CO2, aren’t typically toxins like the Supreme Court considers it. Not at all. I could easily argue that salt or even water, in sufficient abundance, are death-causing toxins. THe same can be said of oxygen, and most of us can’t get by easily without that life-giving substance. So when reason and accountability are gone, what you’re left with is something like your epic failure analysis along with a failed EPA–that’s truly what’s broken now, not smokestacks.
(Have you ever wondered what the CO2 content of the atmosphere would be if every smokestack (and we’ll include exhausts on automobiles and trucks in this) actually did what you propose? We’d have a biosphere bereft of that life-giving substance the EPA is trying to regulate and demonize, which by itself gives some measure of how incredibly stupid they are. They;re a great example of Solyndra “logic”. Really!)
Carol Browner would have required that we put new fuel efficient engines in our cars rather than just applying fuel efficiency standards to new cars. Of course that would have had a direct and immediate effect on each and every adult citizen, caused an outcry and failed.
What is really important here is what could be called the ‘Hygiene Principle’
If there is a dirty smelly drain then it can and should be cleaned. Hose it down with a detergent then some disinfectant and all is well. It is not necessary to medically sterilize the drain, just clean enough. There comes a point at which there are diminishing returns: the costs of cleaning the drain any more far outweigh the benefits of a sterile drain.
The EPA (and some posters here) have not understood this principle. So the Clean Air Acts were a benefit – like cleaning the drain. The current batch of regulations are sterilizing the drain and cost far more than any benefit.
However, to say that these regulations don’t create jobs is incorrect. Willis is using the incorrect ‘broken window’ analogy which is too simplistic. The EPA is a bureaucracy and they create more bureaucrats. So first if windows are to be broken, then there needs to be an official window inspection and assessment group (and trainers, HR, etc) whose job it is to assess if a window has been broken, then another group who call for the repair and yet another who regulate the glaziers with a licensing and training scheme, and a quality group who check the repairs and categorize and report to the Federal Central Windows Agency, with offices in every town. Not create jobs? Of course they do, but every job is parasitic as nothing is created.
This very thing is happening now with the EPA regulations. Regulations and enforcement are being imposed and taken too far ‘sterilizing the drains’ – on the basis of ‘scientific evidence’ that is so weak and contrived it would make a climatologist embarrassed. The number of parasitic bureaucrats is growing rapidly and industry in the US is being crippled by the imposition of the regulations.
Now look here, Willis! Browner is absolutely right & I give you an example. Between 1997 & 2007 650,000 UK guvment jobs were created, snoopers of various sorts checking up on everyone else. Of course you have to ignore the 750,000 – private sector manufacturing jobs that were lost in the same period, but that’s irrelevant! Sarc off 🙂
In the “Door into Summer” Robert Heinlein thought of a similar scheme as the protagonist, Dan Davis gets his first job in the future: even though I am familiar with his work, I don’t know whether he was serious or not!
But I got along. The job I found was crushing new ground limousines so that
they could be shipped back to Pittsburgh as scrap. Cadillacs, Chryslers,
Eisenhowers, Lincolns-all sorts of great, big, new powerful turbobuggies
without a kilometer on their clocks. Drive ‚em between the jaws, then crunch!
smash! Crash!-scrap iron for blast furnaces.
It hurt me at first, since I was riding the Ways to work and didn’t own so much
as a gravJumper. I expressed my opinion of it and almost lost my job . . . until
the shift boss remembered that I was a Sleeper and really didn’t understand.
„It’s a simple matter of economics, son. These are surplus cars the
government has accepted as security against price-support loans. They’re
two years old now and they can never be sold, so the government junks them
and sells them back to the steel industry. You can’t run a blast furnace just
on ore; you have to have scrap iron as well. You ought to know that even if
you are a Sleeper. Matter of fact, with high-grade ore so scarce, there’s more
and more demand for scrap. The steel industry needs these cars.“
„But why build them in the first place if they can’t be sold? It seems
wasteful.“
„It just seems wasteful. You want to throw people out of work? You want to
run down the standard of living?“
„Well, why not ship them abroad? It seems to me they could get more for
them on the open market abroad than they are worth as Scrap.“
„What!-and ruin the export market? Besides, if we started dumping cars
abroad we’d get everybody sore at us-Japan, France, Germany, Great Asia,
everybody. What are you aiming to do? Start a war?“ He sighed and went on
in a fatherly tone. „You go down to the public library and draw out some
books. You don’t have any right to opinions on these things until you know
something about them.“
Tucci78 says:
October 20, 2011 at 9:31 pm
> Careful, Willis. You’re in dire danger of becoming a lapel-grabbing libertarian.
In Willis’ hitchhiking post, I was going to comment I occasionally picked up hitchhikers back when I still voted Republican. However, that was before I discovered I was a Libertarian. It’s one reason I like Willis’ posts so much.
An engineering panel from Ford, plus the relevant Ministers from the Australian States, was disinterested in some excellent new anti-theft and post-theft identification methods I presented, based on laser writing on automobile glass. As I was leaving the presentation, a young engineer lass told me “We have a saying, that a car stolen is a new car sold. They are not interested in theft reduction”. So, it’s rather like the broken window. Should we have an agency that assists the theft of motor vehicles? Beats cash for clunkers. Either way, the logic is all screwed up. Australia has an estimated loss of $600 million pa from car theft, in the primary accounting sense. That size of activity cannot exist without official corruption. So watch for corruption signs in the US EPA.
BTW, much of this sense of productivity misuse is also brilliantly explained by Ayn Rand, “Atlas Shrugged”, 1957.
Nick says:
October 20, 2011 at 9:10 pm
I knew you yanks had it all wrong. Your creating regulations. See, if you were clever, like us, you’d create a Tax on Co2 Emmissions.
We’re so good at it that we’re all going to be better off after we’re taxed.
So your right Willis, regulations aren’t the answer taxes are, taxes create wealth apparently.
Well, they do in Socialist Australia.
===========
yeah we also throw out perfectly useful TVs because someone wanted us to go digital, with NO sane Reason ever given,
now we all have to go buy new radios because some idiots swapping that over also, then theres the scrapping of an ok coppernetwork for the Not Bloody Needed and not going to help, NBN internetwork..above ground glass fibres? recipie for disaster, and massive cost hikes for another govvy funded monopoly nightmare.
and yeah JuLIAR also considered the clunkers idea.
so we waste all the embodied energy already expended and far more to scrap recycle and make new plastic toycars to suit some expert…opinion..
funny thing?
the CSIRO found we could have used the defuct TV analogue netwrok already IN place to run better braodband on! got a TV an aerial you got network.
a lot of our xcars trucks and buses already use gas and have catalytic converters to stop pollution(they say)
I despair.
Well, philisophically speaking this is a transfer of money from businesses to green busisnesses. Money is being swapped around with net gain to the green industry. Someone has to pay for it after all, but there’s only one winner.
The green industry is a scam, supported by governments worldwide, using bastardised science of climate change as an excuse for this. Why more people do not speak out about it is beyond me.
jimmi – At what point does it make sense just to move everything to China or India and just leave an empty factory instead? I suppose hiring somebody to tear down the now uses factory creates jobs, too?
JamesD – Under the Obama administration, hiring somebody to dig a hole and somebody else to fill it in counts as two green jobs, because no fossil fuels are used.
The fallacy in the case of increasing regulations to spur job creation is in the loss of competitiveness in a world marketplace. Increasing a factories operating costs reduces profits or increases prices to the consumer. If it is cheaper to import the same product because the EPA does not have global regulatory power then the factory will cease to be competitive and close. In this case the EPA has actually increased emissions and increased pollution because the products are made in factories where emissions are the equivalent of 1950s America. Also, the extra energy that it takes to move products in some cases half way around the globe increases the energy consumption per unit of production.
The real problem with the EPA is that it does not take an America first approach to regulations. Since it is funded by Americans and they don’t change their ways, Americans will force changes at the ballot box. The EPA has adopted an earth first mentality that at the heart is good. But given the lack of global cognizance, their regulations are bad for America.
If the EPA chose to make American competitiveness the primary factor in regulatory decisions, their benefits to America and to the world would be realized in a far greater measure. Their would be ample budget in the treasury to support their purpose, and America would be stronger.
Furthermore, they could push a cleaner agenda in foreign markets by throttling imports through competition. By creating a competitive environment for a specific product where the cost of labor, production facilities, energy use, taxes, and other factors were all taken into account in regulatory decisions then their power in a world market would be maximized. Although this is a very short essay and the problems are extremely complex in scope, I think that this is the right direction to improve the economy in the U.S. and bring production jobs back to America.
No, do not just whack the EPA’s knuckles. Shoot the other heads that have been growing on this Medusa of an agency. Put in one person who is not politically compromised and reports directly to Congress each year for permission to exist for another year. AND there would need to be real, tested science behind any new proposed regulation change or adjustment.
We should not forget that the EPA is not the only agency that has gone regulation crazy. The FDA Food Safety Act is another regulation salad designed to kill our agricultural industries, hand seed control to Monsanto, and destroy small farmers and farmers’ markets.—it promotes corporate farming big time for no gain in food quality.
This needs to be repealed ASAP!
Without arguing the back and forth of the relative benefits of an EPA in relation to what it costs to have one, whether we refuse to rein in the current monster or vastly expand it to make “jobs”, the one unavoidable nut at the base is that government is not an economy!
Certainly we can “create” as many government jobs as we want–it does not mean we will actually be producing anything of value that can be taxed to pay for them!
Money/capital/wealth must be injected into the closed circle of government “jobs” for them to exist at all–it is not a “sustainable” system without someone else’s value to “create” it with.
Government growth is unsustainable, but they would never use that pejorative on themselves, would they?
Impressive!! This is the first post at WUWT I have seen that has just 1 star!!
Clearly, this site is overrun by people who don’t understand economics 101 aka Opportunity Cost aka Broken Window Fallacy aka Law of Scarcity. I thought it would be hard to deny that government regulations do not create productive jobs, and that it would be harder at WUWT (the hangout of self-proclaimed “skeptical” people … )
But then wonders never cease..
What is lost in the push for more regulations is that there needs to be a intelligent, reasoned balance in the decision making process. When we have our leader saying ” GOP Wants “Dirtier Air, Dirtier Water, Less People With Health Insurance” we know that he cannot justify the raft of regulations with scientific, factual information. Many don’t care if jobs are lost because they are zealots and they loose sight that we will be importing more and more product instead of Crude oil.
One thing bothers me is the expression “smokestacks” since what you currently see in the US is typically water vapor not smoke. Sure there used to be lots of smoke in the distant past and we all agree that cleaning that up was good for all. In the refining industry scrubbers are primary being mandated to capture extremely fine particles of oxides of aluminum or calcium. These are expensive projects and some smaller refiners are electing to shut down rather than undergo the expense. Other mandatees by the EPA are to reduce the oxides of Nitrogen for which different equipment is required downstream of the scrubbers.
One clean Refinery in California recently underwent an extremely expensive project to replace their electrostatic precipitators (that also removed fines) with scrubbers that removed more fines. One needs to decide if going after the last PPM is justified. There is no end in sight for the zealots such as Browner and Lisa Jackson.
BTW many of the biofuels plants are very dirty and will ultimately need scrubers to comply with the EPA mandates when reality sets in.
Not all of us.
Dave in Canmore says:
“I came across Bastiat’s broken window fallacy in Henry Hazlit’s “Economics in One Lesson.” I highly reccomend this little book for those wishing to think clearly about economics. Hazlit has a simplicty that I see in Willis’s writtings.
For fans of Willis it’s a short but sweet read.
Economics in One Lesson is free online here:
http://www.hacer.org/pdf/Hazlitt00.pdf ”
Thanks for that link. I read Hazlitt’s Economica In Onre Lesson in the ’70’s. It had a great effect on my thinking.
Now, suppose that instead of breaking a window, the EPA orders the man to replace the window with high cost anti-UV coated glass to protect his workers from the sun. Once again the glazier makes money, once again, the man loses money, so once again there’s no gain or loss.
Clear so far?
This is another example of what I call the Broken Window Fallacy Fallacy. The BWF is true in most limited circumstances, but it doesn’t always hold that destruction necessarily creates a net loss. Someone will lose for sure, but in the case of a smoke stack scrubber or any effective and cost efficient environmental or workplace protection, there should be a net gain. Less loss of life and health in a large number of people can turn into a net economic gain. The BWF work well for things like war and natural disasters most of the time, but it’s not (IMO) some immutable axiom of nature that always holds true in every situation.
Pls correct the use of ‘your’ above before I read the remainder of your post …
(Psst: “your” =/= you’re or ‘you are’)
.
Another thing the EPA does is to insist that its regs are very cheap to implement and have huge benefits to health. The claimed benefits of all the parts of just the clean air regs are nearly the US GDP. Economics research shows that companies spending the most on pollution control take a hit in the stock market and similarly after a new reg is passed the share of a product that is imported goes up. But EPA is anti-business and economically illiterate. Some recent regs attempt to regulate things that can’t be regulated, or to call milk and “oil” so that a milk spill at a dairy needs a hazmat containment barrier, or trying to ban “dust” which is an inevitable part of farming (of course, ironically, herbicides and GM crops have reduced the amount of tillage needed by farmers by probably 80%, but these same people want all herbicides banned).
Geoff Sherrington said, … a young engineer lass told me “We have a saying, that a car stolen is a new car sold. They are not interested in theft reduction”.
And “they” were right from their point of view. That is why we have a system where a competitor can do something better for the customer and gain sales from the old dinosaur.
(of course) False on it’s face; EPA established by a GOP administration (Nixon).
.
http://en.wikipedia.org/wiki/United_States_Environmental_Protection_Agency
.
Full Employment
An American was being toured by the manager around a Russian state factory that made tractors. It was a huge facility. They looked down from the mezzanine at the thousands of people operating lathes, milling machines and welders. Others served food, swept and stood around the water cooler.
“Full employment!” proclaimed the manager. “This is how an economy should be run! Everyone has a job. Everyone is productive.”
Looking straight down over the railing the American saw three men pushing an empty waste cart past, one of those with two larger wheels in the centre that rocks front to back as it goes. “Why are there THREE men pushing that empty cart? That is a very odd way to do things.”
“Ah, I can explain that very easily,” said the manager. “The other three are off sick.”
All you need do is some more computer modelling and you’ll find families are on average $2.40 better off than you thought they were going to be with the old computer model-
http://www.smh.com.au/environment/climate-change/families-to-get-more-cash-from-carbon-scheme-20111018-1lyt8.html
So naturally if you double the carbon tax they’ll be $4.80 better off and treble the tax….. Wheee! Aint all this economics and computer modelling grand folks? Keep it up and we’ll all be on easy street.
Rocky Road sez:
You got the point but missed the irony of the post. My fault – forgot to turn on the sarc tag.
Juice,
“Someone will lose for sure, but in the case of a smoke stack scrubber or any effective and cost efficient environmental or workplace protection, there should be a net gain.”
That must be decided on a case by case basis. It is true that many earlier clean air regs were responses to real problems. Heavy sulphurous and NOx emissions caused real respiratory injuries. Where there is no actual problem to address, then the regulations cause a net loss, just as the broken window fallacy describes. Somebody already mentioned “cash for clunkers”, which represents one of the most recent perfect examples of BWF. Some may argue that the replacement cars were better – more efficient. The point is, one has to balance gain against cost.
The marketplace is the best mechanism to do this. If the savings made by trading in old cars for new exceeded the cost, people would have been doing this on their own, without government subsidies. The point is, they didn’t, so it perfectly fits the broken window. New regulations to mitigate against CO2 emissions have to have the same cost-benefit analysis applied. Nicholas Stern attempted to do this, in order to justify the mitigation costs. If you accept Stern’s report then you stand with the argument that the window needed replacing. If you reject the Stern report, then the only conclusion is that CO2 mitigation costs are another example of the BWF.
Bulldust says:
October 21, 2011 at 1:45 am
That would make sense if the smokestack were emitting pollution, although it still wouldn’t create jobs, at least we’d end up with less pollution. And at that point it might, I emphasize might “be appropriate to internalise the externalities”.
But we’re not talking pollution. We’re talking CO2. So your argument doesn’t apply.
w.
Ian W says:
October 21, 2011 at 4:32 am
You misunderstand both my point and the “broken window fallacy”. Sure, EPA regs create jobs as you say, just as the broken window created a job for the glazier.
But you missed the point. There is no net gain to the economy from those jobs, for every job created one job (or the equivalent in $$) is taken away. And thus, overall, it is not a net gain. It is a net loss to the economy, everyone on average ends up poorer.
Go through the fallacy again, you haven’t gotten the sting in the tale yet.
w.
@ Willis Eschenbach
Per your post as I have copied below, I could not agree with anything I have ever seen written more that that.
The Dept of Interior works in a similar way with regards to the National Forest Lands and Park Service lands. Same goes as well with the ESA (Endangered Species Act), USFWS (U S Fish & Wildlife Service), and too many others to mention.
Absolute spot on!
Congress, are you listening? You better be!
++++++++++++++++++
PPS: Regulations are absolutely necessary for us humanoids, including environmental regulations. Otherwise, we’re pigs as a species, every river would be full of filth. It is a question of degree, not underlying need or justification for regulations. We need them, there’s no doubt of that.
So don’t abolish the EPA, that would be a huge mistake. Instead, fix it. It’s out of control. Whack its knuckles with a ruler. My favorite scam?
The EPA funds agencies that then sue the EPA to enforce ridiculous regulations. Then the EPA can wash their hands and say “They made me do it, I couldn’t help it.” That government branch is way off the reservation, fire half the employees and start over or something, it is sick to the core. It is in bed with the groups it is funding, using them to sue itself in a never-ending orgy of symbiotic green greed. Why is the EPA funding anyone at all? They’re an enforcement agency, they shouldn’t be funding anyone. That’s nuts.
Most importantly, take the EPA out of the trace gas business. Regulating CO2 is an incredibly stupid idea, but even if it weren’t, the EPA is not set up to handle it. Congress, you need to act here …
@Juice
“This is another example of what I call the Broken Window Fallacy Fallacy.”
I think you are misunderstanding the BWF. The BWF focuses attention on opportunity costs. These opportunity costs are the ones which are most often left out in analysis of public policy. Once you are reminded of the existence of opportunity costs, you need to figure out how to compare the costs of various actions – via a central planning agency or via a market.
People in the USA prefer the bureaucratic dictatorship model where “wise overlords” who read from the Holy Models make cost-benefit analyses using flawed numerical macro-economic models, climate models, etc.
People in the older USA used to prefer the free market, but those people are all dead now.
Willis Eschenbach wrote “BUREAUCRATS THINK REGULATIONS CREATE JOBS” and “The EPA funds agencies that then sue the EPA to enforce ridiculous regulations.”
You have two very valid points there, Willis.
The bureaucrats are partially correct. Unfortuntely, regulations create jobs for bureaucrats and regulators. Somebody has to write and enfororce all the regulations and those people need managers, and budget departments, etc. This just sucks up taxpayer dollars without producing anything (other than more regulations and killing trees to publish them on paper and wasting electrons to publish them online.)
Funding non-government organizations to sue is even worse than you indicate. The EPA will also fund NGOs to sue so that the EPA can promulgate new regulations. Also, the EPA often ends up paying the groups’ legal fees under the Equal Access to Justice Act
Juice says:
October 21, 2011 at 7:23 am
Julian, we’re not talking about an “effective and cost efficient environmental or workplace protection”. We’re talking CO2. We’re talking, as someone said above, about un-necessarily sterilizing the drains rather than just cleaning them. We’re not talking about “loss of life and health in a large number of people”. We’re talking about hiring a quarter million workers (NEW JOBS!!!) to regulate a trace gas …
So yes, the Broken Window Fallacy does indeed apply to most all of the EPA’s new regulations. They cleaned up the country. Now they want to sterilize the whole thing, at huge cost and tiny gain.
w.
Theo Goodwin says:
October 20, 2011 at 9:08 pm
Willis, there you go again using perfectly clear logic. It will just cause the Leftists to foam at the mouth.
—————————–
You got that right! Take a look at the number of ‘votes’ rating this post. 515 votes as of now and it is being rated low. This is a record number of votes as far as I know.
The cage has been rattled!
Ric Werme says: October 21, 2011 at 4:45 am ….”However, that was before I discovered I was a Libertarian. It’s one reason I like Willis’ posts so much.”
Rick, I too have traveled a path in my political thinking- from a party orientation to an individual liberty one. I also enjoy Willis’ posts as they are thought provoking. You might enjoy hearing Maria Vargas Llosa’s thoughts on social organization at the upcoming Alexis De Tocqueville Awards-
“The Independent Institute’s 25th Anniversary Dinner- Presentation of the Alexis de Tocqueville Awards- a Gala Reception and Dinner is being held on Nov. 15th in SF. http://www.independent.org/events/detail.asp?eventID=152 “We will honor Nobel Peace Prize Laureate and former President of Poland, Lech Walesa, Nobel Laureate Mario Vargas Llosa, and Dr. Robert Higgs with the Alexis de Tocqueville Awards in recognition of their exceptional contributions to humanity in advancing the ideas and ideals of individual liberty, entrepreneurship, personal responsibility, civic virtue, and the rule of law.”
The first thing we should do is split the EPA into at least three separate agencies. One would be the environmental science bureau, another would be the economic impact bureau, and the third would be the regulation bureau. The three bureaus should be put under separate deputies appointed by the President. The EPA commissioner should be replaced by a commission of 5 Presidential appointees no more than 3 of who belong to any one party. This business of regulating by litigation should be stopped and all previous settlements should be revoked.
At 4:41 AM on 21 October, Chuck L had written:
I suspect that because science fiction fandom has been overwhelmingly libertarian ever since (at least) the 1970s, we assume today that the superiority of free market economics had always been understood, acknowledged, and hammeringly advocated by SF fen.
After all, “fans are Slans.” We’re better than those cement-headed mundanes.
But digging into stefnal social and political history can deliver a helluva jolt to the fannish system. I’d long known that the Futurians of First Fandom had been a buncha goddam New York City pinkos (Frederick Pohl had been a member of the Young Communist League, Donald A. Wollheim saw socialism a l’outrance as “a political ideal,” Judith Merril was a Trotskyite, and James Blish was a Spenglerian enamored of H.G. Wells’ “liberal fascism“), but I suppose that I’d resisted acknowledgement of just how deeply committed to Woodrow Wilson’s hideously evil “progressivism” – America’s home-grown predecessor to what would become National Socialism in Europe – Robert A. Heinlein had been from his very youngest days.
I’m in the process of reading the first half of William H. Patterson’s massive biography, Robert A. Heinlein: In Dialogue with His Century: Volume 1 (1907-1948): Learning Curve (2010), and it’s gut-wrenching. Patterson is pretty obviously himself a “progressive,” and gushes sickeningly over the cancerously invidious political poison inflicted on these United States by vicious bastiches like Wilson and William Jennings Bryan and the rest of those “smartest guys in the room” sons of socially diseased random inseminators who postured and bloviated and meddled without consequence or respect for human rights to arrogantly begin the process of forcing our regional and national economies at gunpoint into the condition of debilitation we’re presently experiencing.
I suspect that by the mid-1950s, Heinlein had more than sufficiently begun coming to terms with the bankruptcy – moral and political as well as economical – of the “Liberal” fascism embodied in the New Deal and every other manifestation of dirigiste “government-as-Santa-Claus.” By the time he wrote The Door Into Summer, he was demonstrating that, unlike his protagonist in that novel, economics was not “too esoteric” for him to grasp the real sense of it. From a point earlier in The Door Into Summer we read his cynical observation:
The effects of sustained decades of currency debauchment – institutionalized “legal counterfeiting” by the Federal Reserve System – were being appreciated by the 1950s, and if Heinlein wasn’t fully aware of the efforts of the Foundation for Economic Education and hadn’t yet read works like von Hayek’s The Road to Serfdom (1944) or Henry Hazlitt’s Economics in One Lesson (1946), he was certainly aware of the currency of free-market, individual rights ideas growing in American intellectual circles.
Remember, when Heinlein wrote The Door Into Summer, he and Virginia were living in he house they’d designed and built in Colorado Springs, just down the road from Freedom School founder Robert M. LeFevre.
From the postwar years forward, Heinlein took enormous pains to minimize (and, to the extent possible, suppress) public awareness of his early commitment to socialism. There was both the McCarthy tendencies of the ’50s to be appreciated as well as what I strongly suspect had been his utter humiliation in his confrontation with the inescapable fact that his Upton Sinclair “EPIC” enthusiasms had made of him the very archetype of the well-intentioned but utterly idiotic parlor pink he now realized was so thoroughly deserving of contemptuous scorn.
It’s no surprise at all that publication of his first novel – For Us, the Living: A Comedy of Customs (2003) – was so scrupulously suppressed by Heinlein during his life and by his widow, Virginia, and only got dragged out and put into print after she had died.
Well, let’s see how badly I’ve screwed up the HTML this time. Oh, for an “Edit” capability on this Web site….
With the air and water so darn dirty, it’s a wonder we all aren’t dropping like flies. After, we have the worst health care system in the world, and the eat the worst diet and have the fattest population. It’s just a miracle!
But then again, our average lifespan keeps going up. Maybe it’s the preservatives in all the junk food we eat? Or maybe the EPA has largely succeeded in achieving the goals it was originally created for and is now just making stuff up so it can have a big say in controlling our lives?
@More Soylent Green! says: October 21, 2011 at 11:26 am
Absolutely spot on! Brilliant!
Does anyone else think that economists are a bit like climate scientists – after all, they seem to make up an understanding of something so large and complex (and relatively chaotic IMO) and then make predictions…..hmmmm…..and how often are their predictions right?
The GOP is trying to act but the idiot Democrats are spinning it to look like the GOP supports pollution. Boxer and Waxman were out of the gate like a shot a week or so ago.
The country should simply dismiss any politician from California without thought, California left reality behind a long time ago.
The entire situation is an absurd waste of tax dollars.
I can’t resist piling on here:
Just think of all the jobs O could create if he required all stimulus projects to be done sans power tools. It would take thousands just to prepare a road for resurfacing ot to build a bike path. Clearly the road to prosperity is built with shovels!
I got to thinking about this broken windows thing. Private enterprise creates wealth by producing things or services. Government doesn’t produce anything, and in fact slows production up. So if you look at jobs from a parasite view, government is the parasite and private enterprise is the organism that hosts it. For each person hired for the government, that is one person no longer producing anything. Production goes down, and with more regulations, it drops even further. So when employment data are announced, I’d find it useful to see a breakdown on where the jobs are increasing. If overpriced government jobs increase, that’s bad for us, if private jobs go up, that’s good. It isn’t jobs per se, but rather which kind of job is increasing.
If employment is up 100,000 it makes a big difference whether it is a government job or private wealth producing job.
The real tragety of this idiot being in the limelight is that every claim that CO2 is causing a problem is false. The “atmospheric greenhouse gas effect is a hypotheses that has never been proven. The hypothese was first proposed in 1824 by Fourier and has never been proven by “creditable experiment” In fact the concept has been disproved by several reliable experiments performed in 1909 by Robert W. Wood and reproved in 2011 by Dr. Nisfe Nahle a promenent physicist.
When major university physics departments are afraid to tell the truth that the “greenhouse gas effect” has never been proven with “creditable experiments & data” We are in trouble.
List of references:
The paper “Falsification of the Atmospheric CO2 greenhouse effect within the frame of physics” by Gerhard Gerlich and Ralf D. Tscheuschner is an in-depth examination of the subject. Version 4 2009
Electronic version of an article published as International Journal of Modern Physics
B, Vol. 23, No. 3 (2009) 275{364 , DOI No: 10.1142/S021797920904984X, c World
Scientific Publishing Company, http://www.worldscinet.com/ijmpb.
Report of Alan Carlin of US-EPA March, 2009 that shows that CO2 does not cause global warming.
Greenhouse Gas Hypothesis Violates Fundamentals of Physics” by Dipl-Ing Heinz Thieme .
R.W.Wood
from the London, Edinborough and Dublin Philosophical Magazine , 1909, vol 17, p319-320. Cambridge p340.1.c.95, i
The Hidden Flaw in Greenhouse Theory
By Alan Siddons
from:http://www.americanthinker.com/2010/02/the_hidden_flaw_in_greenhouse.html at March 01, 2010 – 09:10:34 AM CST
After 1909 when R.W.Wood proved that the understanding of the greenhouse effect was in error and the ghg effect does not exist. After Niels Bohr published his work and receive a Nobel Prize in Physics in 1922. The fantasy of the greenhouse gas effect should have died in 1909 and 1922. Since then it has been shown by several physicists that the concept is a Violation of the Second Law of Thermodynamics.
University of Pennsylvania Law School
ILE
INSTITUTE FOR LAW AND ECONOMICS
A Joint Research Center of the Law School, the Wharton School,
and the Department of Economics in the School of Arts and Sciences
at the University of Pennsylvania
RESEARCH PAPER NO. 10-08
Global Warming Advocacy Science: a Cross Examination
Jason Scott Johnston
UNIVERSITY OF PENNSYLVANIA
May 2010
This paper can be downloaded without charge from the
Social Science Research Network Electronic Paper Collection:
ssrn.
Israeli Astrophysicist Nir Shaviv: ‘There is no direct evidence showing that CO2 caused 20th century warming, or as a matter of fact, any warming’ link to this paper on climate depot.
Web- site references:
Slaying the Sky Dragon – Death of the Greenhouse Gas Theory [Kindle Edition]
Tim Ball (Author), Claes Johnson (Author), Martin Hertzberg (Author), Joseph A. Olson (Author), Alan Siddons (Author), Charles Anderson (Author), Hans Schreuder (Author), John O’Sullivan (Author)
Wood is correct: There is no Greenhouse Effect
Posted on July 19, 2011 by Dr. Ed
Repeatability of Professor Robert W. Wood’s 1909 experiment on the Theory of the Greenhouse (Summary by Ed Berry. Full report here or here. & PolyMontana.)
by Nasif S. Nahle, June 12, 2011
University Professor, Scientific Research Director at Biology Cabinet® San Nicolas de los Garza, N. L., Mexico.
http://www.americanthinker.com Ponder the Maunder
An additional treatise on the subject is available on http://www.GreatClimateClash.com, archives: December,2010 G-3 The greenhouse gas effect does not exist. by Berthold Klein, The main section of interest is Section 10: The demonstration.
..
The only thing more dangerous than ignorance is arrogance.”
—Albert Einstein
Willis – sorry but I don’t quite see your point. Yes, private citizens can’t spend the same money twice – if the father pays the glazier then the amount he can afford to pay for other goods or services is reduced by the same amount (at least at micro level).
But at economy-wide macro level, isn’t it rather more about the savings ratio – if savings are increasing overall (worried people are paying off their debts) the overall effect is a reduction in economic activity – economic growth declines, or the economy goes into recession. If the savings ratio is reducing (confident folk are incurring more debt and spending their money relatively freely) the economy will improve.
What is, however, for sure (but has little to do with the savings ratio) is that government-directed expenditure (eg under regulatory requirements) is similar to that of a command economy – it produces false markets and inefficiencies, as compared with letting citizens keep and spend their own money, in the way they themselves choose in a free market.
Gene L. said @ October 21, 2011 at 1:11 pm
“Clearly the road to prosperity is built with shovels!”
Shouldn’t that be hammers and sickles? 🙂
Geoff Sherrington said @ October 21, 2011 at 4:57 am
“An engineering panel from Ford, plus the relevant Ministers from the Australian States, was disinterested in some excellent new anti-theft and post-theft identification methods I presented, based on laser writing on automobile glass…
BTW, much of this sense of productivity misuse is also brilliantly explained by Ayn Rand, “Atlas Shrugged”, 1957.”
Mrs Git’s Subaru has Data Dots sprinkled invisibly throughout the vehicle, so some manufacturers at least care about car theft.
I found Rand’s collection of essays, “Capitalism: The Unknown Ideal” even more brilliant. Back in the late 60s I read all her then current work. It’s kinda wierd reading Alan Greenspan’s essay and comparing it to his more recent utterances.
FWIW,
I used to record Colbert and John Stewart, for the humor.
It seems, lately, they have forgone humor in an all-out rush to promote an ideology.
Which begs the question;
Where does comedy, cross the line into activism.
I stopped their shows long ago, with regret.
TimC says:
October 21, 2011 at 2:55 pm
“But at economy-wide macro level, isn’t it rather more about the savings ratio – if savings are increasing overall (worried people are paying off their debts) the overall effect is a reduction in economic activity – economic growth declines, or the economy goes into recession. If the savings ratio is reducing (confident folk are incurring more debt and spending their money relatively freely) the economy will improve.”
When people pay their debt, the money is available, for instance at the company that receives the payment, to be re-invested by that company. At the moment, lots and lots of small companies in Greece go broke (says the BBC, for instance) because their customers can’t pay the outstanding debt.
When the savings ratio is reducing, the banks have less capital to make loans. Assuming that people don’t save by stashing the money under their matress but carry it to the bank, their savings become available for loans.
You have to save money to have money to invest.
Carol Browner is hot! If she was AGW she’d be the upper curve on the grid shooting straight toward 40 C! If she was a volcano, she’d be an active volcano. I’m just saying, she may be a damned Commie at heart, but she’s the hottest 55-year-old Commie in America!
[NOTE: We are letting this go through because Carol Browner might appreciate the sentiment and we try not to moderate heavily, but if anyone takes offense, please direct it at Robert. Carol Browner does need to be taken seriously. -REP]
TimC says:
October 21, 2011 at 2:55 pm
Well, my point is in capital letters at the end of the post, so I’m not clear how you didn’t get it. To repeat, it is that REGULATIONS DON’T CREATE JOBS, even though bureaucrats think they do. There is no secondary beneficial effect of job creation from the EPA regulations as Browner speciously claims.
Nor do I understand why the broken window fallacy would be different between the local level (where it is a definite loser) and the macro level (where if I understand you, you claim it is a winner). Since the macro level is just the sum of the local levels, your explanation sounds like the guy saying “The supermarket loses a little bit on each transaction … but they make it up in volume.”
Thanks,
w.
[NOTE: We are letting this go through because Carol Browner might appreciate the sentiment and we try not to moderate heavily, but if anyone takes offense, please direct it at Robert. Carol Browner does need to be taken seriously. -REP]
I apologize in advance to anyone who was offended…not my intent. Let me put it this way: Congressman Keith Ellison said something very similar less than two weeks ago: “Regulations create jobs.” http://www.realclearpolitics.com/video/2011/10/09/dem_congressman_keith_ellison_regulations_create_jobs.html
Congressman Ellison is NOT HOT. And both he and Browner are economic ignoramuses, despite their present or former high positions in government and stellar academic credentials. And that’s very serious, indeed. They and their ilk have put into place the policies that brought us to where we are now, and we don’t much like it.
Robert says:
“Carol Browner is hot!”…..
“I apologize……”
“and we don’t much like it.”
============
Speak for your self 🙂
From Robert on October 21, 2011 at 4:08 pm:
Are you trying to make Pamela Grey jealous? She’s the site’s designated 50-ish hottie. Plus she’s a perky redhead to boot!
Oh, she can also cook a great venison stew, so I’ve heard. Does Browner look like she can cook anything without a (solar/wind powered) microwave?
WRONG WRONG WRONG…..
The Federal Government should NEVER be the enforcer of environmental regulations. Probably shouldn’t even be at state level.
Carol Browner doesn’t need to cook because she’s HOT. On the other hand, if her policies on energy and the environment are taken in toto, our energy will cost twice as much (or more) so we all shall have to cook less. A lot less, since food will also be more expensive. The good news, we will all be slender! And that’s so HOT.
Browner hot?? There are hotter 60 year olds out there. She looks like she has an eating disorder form all her environmental guilt!!
thepompousgit says :October 21, 2011 at 3:30 pm “I found Rand’s collection of essays, “Capitalism: The Unknown Ideal” even more brilliant.”
Thanks for the reference. I was able to read Atlas Shrugged for the first time back in the fall of 1975 on a road trip out to Colorado with some high school friends. We took my first new car – a 1974 Mercury Capri which cost me $3389- on the trip. I turned in my Honda 600, which no longer had reverse, for the Capri. I learned that it is not a good idea to a take a non- 4 wheel drive vehicle on the roads marked with ——‘s on the map.
I recently came across a reference to the Ayn Rand Institute- http://www.aynrand.org/site/PageServer?pagename=index
It seems that Bastiat’s Broken Windows fallacy has become the new liturgy of the Democratic Party, we’ve even seen Paul Krugman pretending that this is a great economic stimulus. But that’s not the surprise it should be as Taranto has illustrated that Krugman will argue with anyone even himself to write a hack column.
In order to save the economy and Obamacare, rather than breaking windows, we all need to break one of our legs each year. Not only would we be supporting a living wage job, like doctor and nursing professions, we would prove for once and for all that we need government intervention in our lives. It would be beautiful, job creating dependence for the greater good of society.
From Investopedia: Thus, the broken window might help the glazier, but at the same time, it robs other industries and reduces the amount being spent on other goods. Moreover, replacing something that has already been purchased is a maintenance cost, rather than a purchase of truly new goods, and maintenance doesn’t stimulate production. In short, Bastiat suggests that destruction – and its costs – don’t pay in an economic sense.
This is sophistry. First of all, any spending decision in favor of one vendor robs all others, whether for your first window, third wristwatch, or sixth Bentley. If I replace a plain glass window with a stained glass one, broken or not, I am replacing one, surely; I am also purchasing a new luxury item; I am favoring one vendor to the expense of all others, whether glaziers, artists, or bomb-makers–my money here is going to exactly one place. If I break a window accidentally, and must needs replace it, I will do so; my $75 dollars to the glazier has exactly the same impact on the economy as if I took that $75 to Trader Joe’s. In fact, the glazier (and the economy) need never know whether I broke the glass, am upgrading it, or am in fact expanding my window inventory, for that $75 to impact the economy equivalently. It also need never know whether I am spending my money willingly or not. And the impact, paid forward, is not informed by the provenance of my money (unless I stole it from the glazier, of course).
The insistence, attributed to Bastiat, that maintenance spending is not economically stimulating is utter nonsense. Ask any of the contractors here in Oregon who build and repair our bridges whether their bottom line is helped only when building new bridges, and whether only new-construction income then makes its way out into the economy at large!
Willful destruction of an item, when its replacement supplants an otherwise budgeted outlay, of course does not contribute to economic growth. However, where maintenance is budgeted in, because (rare) wise planners know that little lasts forever, maintenance spending does indeed help grow the economy, because the money thus spent is not removed from new-construction and other budgets.
Anyway, the “broken window” fallacy is a straw man here. We are talking about infrastructure upgrades being mandated where there is no benefit. Replacing a broken window is not the same as being forced to upgrade it to crystal “just because”. Whether the obvious benefits in the former case make up for the disappointment to the boy’s father because he couldn’t buy his next golf club is unknowable. In the case of EPA’s increasingly negligible benefits for increasingly costly retrofits and new-construction standards, we can easily tell whether there will be an economic shrinkage.
Milton Friedman, upon observing a Chinese construction operation with thousands of men shoveling dirt asked,
“Why isn’t there any modern earth moving equipment here?” His Chinese host replied,
“Oh, we want to create a lot of jobs too.”
“Then you should give the workers spoons instead of shovels” replied Milton.
Bastiat’s was criticising the idea of “purposefully” breaking windows to generate employment. It doesn’t – it’s wilful destruction at its most moronic and a waste of scarce resources.
Of course they do and look no further than Europe to see just how far they will go when “let off the leash”. Here in the UK the “public sector” represents more than 50% of the economy, manufacturing just 11%. Our government is racking up eye watering debt to keep the scheme going. As even the most “stay at home” will have noticed, the cracks are beginning to show!
Willis – thanks for your reply to my posting.
My point was that if the man’s son breaks that proverbial pane of glass – and that’s all that happens in the local (micro) world of glass on that particular day – the local economy declines. However if two of his neighbours decide to spend their money fitting new windows to their houses, the local economy booms – and this is a scalable effect, at national level.
And yes, if you read the last paragraph of my original post I agreed with your main premise – but on a different basis with which the “broken window fallacy” is unconnected.
Willis Eschenbach says:
October 21, 2011 at 8:59 am
Bulldust says:
October 21, 2011 at 1:45 am
“While the analogy isn’t a bad one, it isn’t entirely accurate either. The original window does not represent the negative externality that a “dirty” smokestack does. If the smokestake is emitting gases that have a negative impact on other parties, then it might be appropriate to internalise the externalities (the costs to others of the pollution).
That would make sense if the smokestack were emitting pollution, although it still wouldn’t create jobs, at least we’d end up with less pollution. And at that point it might, I emphasize might “be appropriate to internalise the externalities”.
But we’re not talking pollution. We’re talking CO2. So your argument doesn’t apply.”
Actually the evidence is that it does apply, Bulldust just got the sign wrong. The benefits of CO2, more food with less labor, materials, and water, are known and observed in 100s of real world studies. Also said bebfits of CO2 continue to increase beyond a linear rate to well over 1,000 PPM. The projected “what if” harm (small frogs for instance) decreases logarythmically, and in reality are never or very rarerly observed.
At 12:17 PM on 21 October, Kev-in-UK had written:
As with climatology, it’s the “officially approved” economists in government (and quasi-governmental organizations – the “QUANGO” types with which you Brits are familiar) who have their heads so completely and inextractably wedged up their own arses,
Those of us reading regularly in fora such as Watts Up With That? know full well that there are plenty of climate scientists who have satisfactory understanding of the “large and complex (and relatively chaotic…)” realm of atmospheric physics and therefore the question of whether or not anthropogenic global climate change has happened, is happening, or is ever likely to happen, and how such change might occur. And has not.
They’re simply not “officially approved.”
Similarly, those of us who regularly monitor libertarian Web sites – like Lew Rockwell‘s blog, the online resources of the Cato Institute and the Ludwig von Mises Institute, and who have been following the political career of Dr. Ron Paul – know that there are economists who have a strong and reliable handle on the realities of human action in the marketplace. Hell, they predicted our present “Great Recession” – including the ongoing sovereign debt crises in Europe – with unerring accuracy years in advance.
They’re emphatically not “officially approved.”
Never wonder why so many libertarians are ranked among the “global climate change deniers.” We’ve seen the preposterous bogosity of the “officially approved” all our lives, and recognize it for what it is, whenever and wherever it manifests.
Speaking of the Austraian School – you should check out the Keynes v Hayek Rap videos – best videos ever made – especially part 2
“jim says”
Catcracking says on October 21, 2011 at 6:51 am
…
What is lost in the push for more regulations is that there needs to be a intelligent, reasoned balance in the decision making process. When we have our leader saying ” GOP Wants “Dirtier Air, Dirtier Water,
…
(of course) False on it’s face; EPA established by a GOP administration (Nixon).”
Thanks Jim your reference that a Republican initiated the EPA which confirms my position that the comment stating the Republicans want dirty eater… is totally lacking in a factual basis and is nothing other than blatently false.
Also this highlights the danger of establishing any positive program (initiated to improve the environment) that can later be turned into a destructive activity by the zealots and those lacking reasonable sound judgment. That is the danger of giving the power to the government when subsequently there are not reasonable administrators.
Some examples of latest abuse by zealots is summarized below. Possibly you can defend these edicts by an administration out of control:
“EPA’s new proposed limits are so stringent that no new, state-of-the-art coal-fueled power plant equipped with highly efficient devices to scrub emissions or other pollution controls to meet still other requirements will be able to meet each of the multiple regulations and standards EPA imposes. It’s like forcing an automobile manufacturer to build a vehicle that seats 10, goes 200 mph and gets 60 miles on a gallon of gasoline. It can’t all be accomplished currently in a single design.”
Read more: EPA’s new rules spell economic disaster – Pittsburgh Tribune-Review http://www.pittsburghlive.com/x/pittsburghtrib/s_762921.html#ixzz1bWT4CNfJ
EPA attempt to impose industry killing ozone regulations subsequently overruled by the President.
Requiring cars to get 55 mpg,
Pushing for more ethanol, E 15, in gasoline over engine manufacturers objections, although EPA reports acknowledge no environmental benefit for over 50 years,
Awarding Half a billion dollars to manufacture electric cars in Finland, (one of Al Gores holdings), no jobs in USA factories
Over a half billion $ to failed Solyndra, including not following law regarding subordination of loan,
Failure of taxpayer subsidized commercial production of cellulosic ethanol requiring back off of mandated use of cellulosic ethanol,
7 $ million stimulus to foreign workers in Oregon,
Lawsuit against Texas overruling air permitting,
Shutting down coal mines,
Attacking oil production companies in N Dakota for killing one bird while ignoring thousands of birds killed by windturbines,
Attempts to limit ozone levels that would shutdown US industries, subsequently over ruled by the President
The list goes on and on.
…
It is no wonder that many want to abolish the EPA, DOE and other departments that have turned the government agains our machine that drives the economy and produces jobs. I would prefer to fix it but experience has indicated that this is difficult with government agencies, and with zealots in Congress.
Tucci78 says:
October 22, 2011 at 3:36 am
Ha ha – quite true I suppose – but being as my interest in economics is only slightly exceeded by my interest in toenail clippings, I really cannot comment on your assertion that the recession was predicted before (I vaguely recall the ‘boom and bust’ warnings in respect of the economy being shouted out every now and then).
When one considers that (over here anyways) many/most financial predictions are seemingly wide of the mark and are usually preceded with caveat for investors that ‘investments can go up or down’ or words to that effect – I suppose at least economical prediction/advice is at least more clear in respect of uncertainties! – something that the pro-AGW crowd don’t seem to put out too often? So, yeah, perhaps my comparison is not that valid!
“When the EPA says “that dirty smokestack needs a new scrubber”, someone has to engineer that scrubber, someone has to build that scrubber, someone has to install it, maintain it, operate it. Those are American jobs.”
And someone has to pay for it. That someone is an American. Which means they can’t buy something else from another American, who then loses their job.
From Lisa Jackson
http://www.latimes.com/news/opinion/la-oe-jackson-train-act-20111021,0,1910902.story
“This is not hyperbole. The link between health issues and pollution is irrefutable. Mercury is a neurotoxin that affects brain development in unborn children and young people. Lead has similar effects in our bodies. Soot, composed of particles smaller across than a human hair, is formed when fuels are burned and is a direct cause of premature death. Nitrogen oxides and volatile organic compounds contribute to the ozone alert days when seniors, asthmatics and others with respiratory problems are at serious risk if they do nothing more dangerous than step outside and breathe the air.
On the other hand what she omitted to tell us
““EPA’s new proposed limits are so stringent that no new, state-of-the-art coal-fueled power plant equipped with highly efficient devices to scrub emissions or other pollution controls to meet still other requirements will be able to meet each of the multiple regulations and standards EPA imposes. It’s like forcing an automobile manufacturer to build a vehicle that seats 10, goes 200 mph and gets 60 miles on a gallon of gasoline. It can’t all be accomplished currently in a single design.”
Read more: EPA’s new rules spell economic disaster – Pittsburgh Tribune-Review http://www.pittsburghlive.com/x/pittsburghtrib/s_762921.html#ixzz1bWT4CNfJ
Strange she comments on the hazzards of Mercury from burning coal while the same administration supports forcing mercury in every house in the form of CFD light bulbs with this warning
http://epa.gov/cfl/cflcleanup.html
Gene L. says:
October 21, 2011 at 1:11 pm
Just think of all the jobs O could create if he required all stimulus projects to be done sans power tools. It would take thousands just to prepare a road for resurfacing ot to build a bike path. Clearly the road to prosperity is built with shovels!
And why not replace the Presidential limo with a hand carried litter? Surely that would create jobs and work better than the current model.
http://www.youtube.com/watch?v=CQzTKYtU7bg
there is a philosopher named (i believe) Kant. his schpiel was that every act is good. that is, it is good for someone.
if a thief steals your money its good for his dependents even though you percieve it as bad for you because you have to replace that money with other money that you would otherwise use for things that you feel that are beneficial to you, AND IN FACT THAT MONEY IS ACTUALLY LOST FOREVER.
in other words the thief forces you to use your money for things that the thief wants you to use if for.
if we continue in the logical train of thought (a few steps left out for brevity) the liberals (THE THIEVES) are using the taxation powers of the govenrnment to benefit their business associates. this is not legal.
the next step is to FOLLOW THE MONEY.
C
The Carbon Cycle is a window that isn’t broken.
Well, it’s not broken yet, but the EPA and other assorted barbarians are gathering at the wall with catapults (green rock throwers).
The similarities are striking..
When it comes to economics, our ridicule of the underpinnings of the dismal voodoo science are well known. Only Ivy league professors can profess to predict the future based on special case equations that isolate a system in vacuum, completely oblivious of the fact that nothing in the world is linear and if anything, a system based on Lorenz attractors and Mandelbrott theory would be far better suited to demonstrate that as far as predicting the future is concerned, it is nothing short of an exercise in futility.
As usual, Ayn Rand, through the agent of Francisco D’Anconia, had it right all along.
“Money is MADE–before it can be looted or mooched–made by the effort of every honest man, each to the extent of his ability. An honest man is one who knows that he can’t consume more than he has produced.”
“When you see that trading is done, not by consent, but by compulsion [health insurance, CFLs]–when you see that in order to produce, you need to obtain permission from men who produce nothing [EPA]–when you see that money is flowing to those who deal, not in goods, but in favors–when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you–when you see corruption being rewarded and honesty becoming a self-sacrifice–you may know that your society is doomed.”
Atlas Shrugged – Ayn Rand
“So don’t abolish the EPA, that would be a huge mistake.”
Says you. The EPA didn’t exist until 1970. As I recall the United States was doing just fine in 1970. In fact that’s about when things started to go downhill. Personally I think we ought to reboot the US federal bureacracy to the way it was in, oh say, 1955. If an agency or federal job didn’t exist in 1955 then abolish it today. The US was in its prime in that decade.
Geoff Sherrington says: October 21, 2011 at 4:57 am
An engineering panel from Ford, plus the relevant Ministers from the Australian States, was disinterested in some excellent new anti-theft and post-theft identification methods I presented, based on laser writing on automobile glass. As I was leaving the presentation, a young engineer lass told me “We have a saying, that a car stolen is a new car sold.”
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Carrying this line of logic a bit further, let’s assume it adds $20 to the price of a new car. That’s a $20 penalty that Ford would have relative to their competitors. Ford’s sales go down. So the government steps in and requires all cars to have this anti-theft device. Does this device really lower the liklihood of theft? I’m skeptical, so show me the cost/benefit numbers. I keep my car in a garage when at home, why should I pay the extra $20 just because the theft rate in some city might be lowered? Heck, for $20 I could have bought something I actually wanted, not some government mandated window glass etching. If I wanted theft insurance, I would have added that to my insurance coverage.
Dave Springer says:
October 23, 2011 at 9:55 am
One of the precipitating events for the creation of the EPA was when the Cuyahoga River caught fire. It wasn’t the first time that a river in the US had caught fire from all the chemicals in it. Heck, it wasn’t even the first time the Cuyahoga caught fire. Nor was this the only huge ecological nightmare going on at the time, see the “Superfund” cleanup sites for a host of examples.
If you can describe a country where the rivers are so polluted that they actually catch fire and burn as “doing just fine”, I fear I don’t know how to answer, other than to say “Read some history.”
w.
Hey Willis, your view of humans seems negative.
People take care of what they have a stake in – the pollution problem occurs when no one is responsible for the property. Some call that the “tragedy of the commons” I suppose.
There are examples of private companies controlling a waterway and keeping it clean, it is in their best interests to do so.
In societies like the US we have tort law, under-used IMO.
The Marxists (Democrats/Liberals+Bloc+New Democrat) and Mercantilists (Republicans/Conservatives) in US/Canada respectively want to control you in different ways but for the same underlying reason – they do not recognize the human mind as capable, and they do not recognize that taking care of things is life-sustaining.
So look at individual rights protected by justice and defense, the demonstrably moral social system proven in history to feed, shelter,and foster humans whereever implemented to substantial degree.
Keith Sketchley says:
October 23, 2011 at 2:37 pm
I hate it when folks don’t quote my words, just jump in and summarize my entire view of humans as “negative”. I’m going to guess that it was this that you are talking about.
You are right, that actually is quite unfair to the pigs …
It’s not just the ecology. Consider a market. People are greedy. Just a fact. Not negative. A fact.
As a result, in any truly free market, the strong will band together in their mutual greed and screw the weak. Why do you suppose we have the laws and regulations we have?
I don’t see any of that as negative, however. It’s just the flip side of what humans are, every bit as real as the idealism and the generosity and the kindness and the sacrifice that humans also exhibit.
However, it all supports my point, that we need regulations to protect us from our baser motives … again, not negative, just a fact. Every society on earth has some form of those regulations to protect the weak from the strong, to protect us from our own darker side… and I doubt that’s a coincidence.
w.
I think we need a new regulation that requires all employees to do nothing but surf the internet for 4 hours every day. That would mean businesses would have to hire more employees to do the work that doesn’t get done during those 4 hours reducing unemployment. This new regulation will generate millions of jobs!
Right?
Geoff Sherrington says:
October 21, 2011 at 4:57 am
“…..As I was leaving the presentation, a young engineer lass told me “We have a saying, that a car stolen is a new car sold. They are not interested in theft reduction”. So, it’s rather like the broken window. Should we have an agency that assists the theft of motor vehicles? ….”
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AHHHhhh, now I understand! YES we DO have an ” agency that assists the theft of motor vehicles”
Some guy stole my semi-truck and 48ft refer. He was caught and I was told by the Assistant DA that while he had a long criminal record including attempted murder his MAXIMUM sentence was 2 to 3 months on probation!!!! No wonder crime PAYS! (The sentence is determined by a federal sentencing guideline I checked)
Now contrast that to what Rosa DeLauro wanted farmers to face as penalties for growing food. (Actual contribution to the GNP) This is from her HR 875 the original “food safety” bill of 2009 (I would not be surprised to see these paragraphs attach themselves to the new safety law sometime in the near future.)
This is cut and paste directly from HR 875 with nothing added.
Civil Penalty
(A) IN GENERAL- Any person that commits an act that violates the food safety law (including a regulation promulgated or order issued under the food safety law) may be assessed a civil penalty by the Administrator of not more than $1,000,000 for each such
B) SEPARATE OFFENSE- Each act described in subparagraph (A) and each day during which that act continues shall be considered a separate offense.
Criminal Sanctions-
(1) OFFENSE RESULTING IN SERIOUS ILLNESS- Notwithstanding section 303(a) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 333(a)), if a violation of any provision of section 301 of such Act (21 U.S.C. 301) with respect to an adulterated or misbranded food results in serious illness, the person committing the violation shall be imprisoned for not more than 5 years, fined in accordance with title 18, United States Code, or both.
(2) OFFENSE RESULTING IN DEATH- Notwithstanding section 303(a) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 333(a)), if a violation of any provision of section 301 of such Act (21 U.S.C. 331) with respect to an adulterated or misbranded food results in death, the person committing the violation shall be imprisoned for not more than 10 years, fined in accordance with title 18, United States Code, or both.
The catch is something called “Traceability” (NAIS) that will allow the big corporations to point the finger at the farmer in cases of litigation.
Paul-Martin:Griepentrog on September 3, 2008 reported that this was indeed the case. He attended “quality assurance training required for Badger Vac 45.” And reported “You [the farmer] will be required to cover ALL expenses in the event of contamination…The bottom line is that after 10 years [note the date] of below normal prices here in Wis because the state allowed Equity Livestock Coop to create a monopoly, our savior has now arrived to burden us with contracts shifting all liability to feeder cattle producers if they can’t prove they are innocent. “ url=http://nonais.org/2008/09/01/bulletin-board-200809/#comment-1395096
The USDA moved their data files for NAIS to Canada to protect the information from FOIA requests so if a farmer gets accused by a corporation he has no way of proving he is innocent since the data files will be “unavailable”
I would suggest to any farmers on this blog that they might want to switch career paths from farmer to car thief you will spend less time in jail!
OH and to add insult to injury “R-CALF says EPA declares hay a pollutant! http://www.cattlenetwork.com/cattle-news/128915148.html
Have the USA politicians gone stalk raving bonkers? Or is it just me?
The broken window fallacy is present in virtually all federal “jobs” programs. Here’s another way to look it:
Everywhere you have significant unemployment, hire people to take some large tract of land and dig a really big hole, piling the dirt up right beside it. Keep digging deeper and piling the dirt higher until you can’t dig any deeper or pile any higher. Then take that big pile of dirt and put it all back in the hole. Look at all the jobs created — people to operate the excavators, dump trucks, people to make lunches for them, build & maintain the equipment, lawyers to sue trying to stop the excavation because it might damage ancient archaeological sites, judges to hear the cases, legal staffs to research & file the briefs, consulting archaeologists to testify, etc., etc. All these people will have income and spend money, creating further benefits.
Repeat as often as necessary any time and any where you have unemployment.
What’s wrong with this jobs program? I hope nobody needs to consider for more than an instant to realize all this “work” has created absolutely no new value. The money to pay for it has been taken out of the economy in taxes and when all the dust settles we have nothing new which is actually worth having. Yes it “creates” jobs, but it has the net effect of sucking capital out of the economy, leaving us all poorer.
You always have to judge the cost of a “jobs” program against the value it produces. The number of jobs “created” is an illusion unless there is net value gain.
Now granted some public expenditures are essentially insurance: we have a military because the historically demonstrated cost of *not* having one is unacceptably high. So although there is no value produced, there is loss avoided.
I see absolutely no basis for a claim that additional EPA regulations will create any new value, and thus in strictly economic terms they would be a net loss. The only proper way to justify them is as insurance against some greater loss (health., etc). This is traditionally the path EPA supporters have taken, and it has often been successful. I guess Ms. Browner figures in this economy promising jobs now will get more support than promising something else later.