The dark reality of "green" jobs

Via O Insurgente, "La negra realidad de los empleos verdes" in Expansión:

A quienes proponen generar empleos mediante energías verdes se les suele olvidar un pequeño detalle. Resulta que a día de hoy las principales formas de producción renovable necesitan enormes subvenciones para existir. De hecho, en lo que va de década, el dinero público entregado o comprometido por el Gobierno español en dar un empujoncito a las renovables se acerca a los 30.000 millones de euros. Con esa lluvia de millones que cae permanentemente sobre la industria renovable nadie se extrañará si generan empleo. La cuestión es a qué coste.

Lo importante, como diría el gran economista francés Frederic Bastiat, no es sólo el empleo que se ve sino, también, el que no se ve o, más bien, el que ya no se podrá ver. Cuando el Gobierno decide gastar el dinero del contribuyente en molinos eólicos o placas solares, en lugar de dejar que cada uno lo gaste en lo que quiera, veremos aparecer muchos empleos verdes, pero el coste será el resultado de otras actividades productivas que no llegarán a tener lugar y los empleos que no se crearán debido a la acción gubernamental.

an uncomfortable word

The Concise Encyclopedia of Economics: "Fascism" by Sheldon Richman:

Where socialism sought totalitarian control of a society’s economic processes through direct state operation of the means of production, fascism sought that control indirectly, through domination of nominally private owners. Where socialism nationalized property explicitly, fascism did so implicitly, by requiring owners to use their property in the “national interest”—that is, as the autocratic authority conceived it.

Peter Schiff is right

Highly recommended:
- "104. Peter Schiff: Why Was Anyone Surprised By the Crash?", Peter Schiff on the LewRockwell.com podcast.

Schiff, Bastiat-style

Obama Puts the Economic Cart Before the Horse by Peter Schiff:

The mere introduction of paper money into this economy only increases the ability of the butcher, baker, and candlestick maker to bid up prices (measured in money, not trade goods) once goods are actually produced again. The only way to restore actual prosperity is to repair the destroyed equipment and start producing again.

The sad truth is that the productive capacity of the American economy is now largely in tatters. Our industrial economy has been replaced by a reliance on health care, financial services and government spending. Introducing freer-flowing credit and more printed money into such a system will do nothing except spark inflation. We need to get back to the basics of production. It won’t be easy, but it will work.

Fed at the root

"The FED’s Unsound Theories" by Michael S. Rozeff:

The FED’s focus on the quantity of credit ignores the quality of credit. We have seen that a vast increase in the quantity leads to a lowering of credit standards. With credit widely available and a boom expected to continue, the quality of credit declines. We then observe the system accumulating loans that fail when the boom slows down or reverses. Again, the FED promotes instability.

Economics students are routinely taught that central banks are a good thing or that they are the highest stage to which banking has now evolved. This is a presumption offered without proof. There is no proof that I know of that central banks are a good thing. The FED offers none. This article presents a few of my reasons why the FED is a bad thing.

faking it

The "Economic Stimulus" Myth by Harry Binswanger:

For instance, I am now trying to spend less because I can't afford as much as I could (or thought I could) before the crisis. So what is the Keynesian solution? Fool me into thinking I can afford more than I can. Print up new, unbacked money and get it to me so that I will (mistakenly) think I can afford to buy more again. To the extent the "stimulus" package is getting inflated currency to consumers, it is attempting to fake them into making purchases that they can't actually afford.

Now take the business side of things. A car manufacturer has machinery laying idle. Why? Because they judge that they can't make a profit by using it to make more cars. The "stimulus" solution is to fool them into thinking there is a demand for those cars, so that they will produce them. It is supposed to work because the consumers will be fooled into thinking they can afford to buy them.

But the double-fake theory doesn't work. There's been no change in external reality. There's only an illusion created by expanded fiat money. The consumers can't actually afford to buy the cars, and the actual profits of the car producers isn't higher than it was. Yes the car-maker's nominal revenues, in dollars, goes up, but not their actual receipts in real terms. And their costs go up as the newly printed money circulates through the system.

For those who are fooled by the inflation, the net result, in real (not dollar) terms is that they make purchases they can't afford and the producers are fooled into producing at a loss.

Obama Declares War on Investors, Entrepreneurs, Businesses, And More

"Obama Declares War on Investors, Entrepreneurs, Businesses, And More" by Larry Kudlow (CNBC)

He is declaring war on investors, entrepreneurs, small businesses, large corporations, and private-equity and venture-capital funds.

That is the meaning of his anti-growth tax-hike proposals, which make absolutely no sense at all — either for this recession or from the standpoint of expanding our economy’s long-run potential to grow.

Wage gap

Every Feminist’s Nightmare? by Thomas J. DiLorenzo

In The Politics of American Feminism (pp. 128–129) Professor Bennett paraphrases more than twenty reasons why men earn more than women, as discussed and documented in great detail in Why Men Earn More. Cumulatively, they go a long way towards explaining the "wage gap," although neither Bennett nor Farrell believes that wage discrimination by gender is completely nonexistent. The reasons, based on generalizations that are supported by voluminous statistics, are:

• Men go into technology and hard sciences more than women.
  
• Men are more likely to take hazardous jobs than women, and such jobs pay more than cushier and safer jobs.
  
• Men are more willing to expose themselves to inclement weather at work, and are compensated for it ("compensating differences" in the language of economics).
  
• Men tend to take more stressful jobs that are not "nine-to-five."
  Many women prefer personal fulfillment at work (child care professional, for example) to higher pay.
  
• Men are bigger risk takers than women, in general. Higher risk leads to higher reward.
  
• The worst working hours pay more, and men are more likely to work these hours than women.
  
• Dangerous jobs (coal mining) pay more and are more male dominated.
  
• Men tend to "update" their work qualifications more than women do.
  
• Men are more likely to work longer hours, and the pay gap widens for every hour past 40 per week.
  
• Women are more likely to have "gaps" in their careers, primarily because of child rearing and child care. Less experience means lower pay.
  
• Women are nine times more likely than men to drop out of work for "family reasons." Less seniority leads to lower pay.
  
• Men work more weeks per year than women.
  
• Men have half the absenteeism rate of women.
  
• Men are more willing to commute long distances to work.
  
• Men are more willing to relocate to undesirable locations for higher-paying jobs.
  
• Men are more willing to take jobs that require extensive travel.
  
• In the corporate world men are more likely to choose higher-paying fields such as finance and sales, whereas women are more prevalent in lower-paying fields such as human resources and public relations.
  
• When men and women have the same job title, male responsibilities tend to be greater.
  
• Men are more likely to work by commission; women are more likely to seek job security. The former has more earning potential.
  
• Women place greater value on flexibility, a humane work environment, and having time for children and family than men do.

The Insolvency of the Fed

The Insolvency of the Fed

Since the crisis broke out, the Fed has continuously weakened the quality of the dollar by weakening its balance sheet. In fact, the assets the Federal Reserve holds have deteriorated tremendously. These assets back the liability side of the balance sheet, which mainly represents the monetary base of the dollar. The assets of the Fed, thereby, hold up the value of the dollar. At the end of the day, it is these assets that the Fed can use to defend the dollar's value externally and internally.

the quality of the balance sheet of the Fed is deteriorating

clearning up the house

Banks Should Raise Prices in a Recession (Bob Murphy)

After working on these issues for my book, it suddenly became obvious to me: the high rates of the 1920–1921 depression had certainly been painful, but they had cleaned the rot out of the structure of production very thoroughly. The US money supply and prices had roughly doubled during World War I, and the record-high discount rate starting in June 1920 was a pressure washer on the malinvestments that had festered during the war boom.

Going into 1923, the capital structure in the United States was a lean, mean, producing machine. In conjunction with Andrew Mellon's incredible tax cuts, the Roaring Twenties were arguably the most prosperous period in American history. It wasn't merely that the average person got richer. No, his life changed in the 1920s. Many families acquired electricity and cars for the first time during this decade.

How Government Prolonged the Depression

How Government Prolonged the Depression (WSJ):

The New Deal is widely perceived to have ended the Great Depression, and this has led many to support a "new" New Deal to address the current crisis. But the facts do not support the perception that FDR's policies shortened the Depression, or that similar policies will pull our nation out of its current economic downturn.

So what stopped a blockbuster recovery from ever starting? The New Deal. .... New Deal policies .... violated the most basic economic principles by suppressing competition, and setting prices and wages in many sectors well above their normal levels. All told, these antimarket policies choked off powerful recovery forces that would have plausibly returned the economy back to trend by the mid-1930s.

buy American, destroy jobs

"Buy American" plan could cost U.S. jobs: study

"Buy American" provisions under consideration in Congress as part of a huge economic stimulus bill could create only 1,000 new steel industry jobs and might cost as many as 65,000 across a number of sectors, a new study said on Tuesday.

tradewarmongering

Out of Gaps In Treaties, First Salvos Of Trade War:

In 1930, Congress fired the first shot in a protectionist battle that prolonged and deepened the Great Depression. After passing a bill aimed at saving American jobs by effectively barring 20,000 imported goods, including French dresses and Argentine butter, other nations retaliated by raising their own barriers on U.S. products, effectively bringing global commerce to a halt.

[Now] In the United States, a move to greatly expand Buy American provisions as part of the $819 billion fiscal stimulus package has generated shock waves in other countries, with Canadian and European officials in particular rising up in protest. The provision, passed by the House on Wednesday, would mostly bar foreign steel and iron from the infrastructure projects laid out in the stimulus package. A Senate version still being considered goes further, requiring, with few exceptions, that all stimulus-funded projects use only American-made equipment and goods.

Now more than never Hazlitt is meaningful:

The effect of a tariff, therefore, is to change the structure of American production. It changes the number of occupations, the kind of occupations, and the relative size of one industry as compared with another. It makes the industries in which we are comparatively inefficient larger, and the industries in which we are comparatively efficient smaller. Its net effect, therefore, is to reduce American efficiency, as well as to reduce efficiency in the countries with which we would otherwise have traded more largely.

Turning the Economy over to Politicians

Turning the Economy over to Politicians (David Boaz):

...Even if regulators are as smart as Leonardo da Vinci and as incorruptible as Mother Teresa, they can never have as much knowledge as the decentralized, competitive market process, so planned economies and planned industries fall further and further behind free-market systems.
But in reality, even if they're smart, they're not incorruptible. Political influence always comes into play. What we're seeing with the bailout funds will also happen with the stimulus money.

Government planners claim to be able to aggregate all the available information and make informed decisions for the whole society. But market economies clearly produce far more economic growth than planned economies. It isn't just the United States versus the Soviet Union or East Germany versus West Germany. Consider the customer service and technological advances you get from FedEx versus the post office, or Microsoft and Apple versus the DMV.

If you want money flowing to the companies with good lobbyists and powerful congressmen, then the stimulus bill may accomplish something. But we should all recognize that we're taking money out of the competitive, individually directed part of society and turning it over to the politically controlled sector. Politicians rather than consumers will pick winners and losers. That's not a recipe for recovery.

Some Basic Economics of Public Policy

Some Basic Economics of Public Policy by Peter Boettke:

.... a lot of individuals have been claiming that economics as a scientific discipline has been rocked by our current crisis, both due to our failure to "predict" it and our inability to "fix" it with a consensus on the right public policy. And anyone not deeply read in the history of our discipline, or who received their university education in economics in the second half of the 20th century can be excused for such a reading of the situation ....

But what if the problems are not the dead ideologies, but instead a live political pragmaticism that has forgotten the basic ideology that made possible the great growth of the wealth of nations and provides the foundation for Western civilization? Namely, private property (as Hume put it: a system of property, contract and consent), freedom of trade, and social cooperation under an international division of labor. Government rather than unleashed must be constrained; and constrained in such a binding way that it is not possible for elected officials to pursue the natural proclivities to provide privileges to political favorites (concentrating benefits and dispersing costs).

inflation in Zimbabwe to come to a screeching halt

Zimbabwe opens up to multiple currencies (Reuters):

Zimbabweans will be allowed to conduct business in multiple currencies, alongside the Zimbabwean dollar, in an attempt to tackle soaring inflation, acting Finance Minister Patrick Chinamasa said on Thursday.

"In the hyper-inflationary environment characterizing the economy, our people are now using multiple currencies alongside the Zimbabwean dollar. These include the (South African) rand, U.S. dollar, Botswana pula, euro and British pound among others," he said in a budget speech.

central banks and bubbles

Monetary Lessons from America's Past

synchronized global recession

Myth: path dependence: busted

"Typing Errors":

Stanford University economist Paul Krugman offered the central claim of this literature boldly and with admirable simplicity: "In QWERTY worlds, markets can't be trusted." The reason that he uses "QWERTY worlds," and not DOS worlds, or VHS worlds, is that the DOS and VHS examples are not very compelling. Almost no one uses DOS anymore, and many video recorder purchasers thought VHS was better than Beta (as it was, in terms of recording time, as we have discussed at length elsewhere).

The typewriter keyboard is central to this literature because it appears to be the single best example where luck caused an inferior product to defeat a demonstrably superior product. It is an often repeated story that is generally believed to be true. Interestingly, the typewriter story, though charming, is also false.

printing inflation

Zimbabwe to print first $100 trillion note:

The new 100 trillion dollar bill would be worth about $300 in U.S. currency. A loaf of bread in Zimbabwe now costs about 300 billion Zimbabwean dollars -- and like most commodities, the price increases every day.