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 …
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? ….”
_________________________________________________-
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.