The trouble with the minimum wage

Speaking of the minimum wage, Kevin D. Williamson at National Review pointed out that the minimum wage is not $15.00 an hour or whatever but $0.00. I fear that many fast food workers going on strike will find this out at first hand.

One does not have to worship the free market to realize that the value of potential employees to employers is a continuum; i.e., the abilities of people that make them valuable as workers - knowledge, experience, likeability, reliability, "inter-personal skills," etc. - vary on a continuous scale  from what some call "unemployable" to superstar level. For fast-food jobs, let's face it, we're talking about the lower end of the scale, but there is no doubt that there is a difference between workers who qualify, according to the market, for $8/hour jobs and $15/hour jobs. In fact, I have read that some new college graduates have had to take jobs in the $15/hour category.

Now consider the situation where the minimum wage is raised to $15 per hour. Workers formerly paid $8/hour will now face competition (if any jobs left at all) with people in the $15/hour level on the scale of ability, including even some with college degrees (if that has any real value, but that's another subject). Another way to put it is that employers will all of a sudden have their choice of potential employees with higher skills - people who are more productive and more reliable - things that justify the higher wage. In fact, it will be a business necessity to get more productivity from workers at the higher wage. The result will be that some workers will wind up at the real minimum wage of $0.00/hour.

In a game of chicken, who's at fault?

Suppose A and B engage in a game of chicken where a crash can be avoided by either party. Unfortunately, neither swerves and they crash. Who's fault is it?

That's easy: the Republican, of course.

The Myth of Green Jobs

I don't claim special qualifications in the science of economics, but it seems obvious to me that the claim that green jobs are a benefit to the economy is plainly false. Here's my analysis:

Taking a macroeconomic view, it is a truism that the grand total of what we value - our homes, cars, cell phones, etc. - is the sum total of what we produce. A key word in that sentence is "value." Someone who goes into the business of making buggy whips today is not producing anything that adds to the economy because nobody will buy them - in other words, they have no value.

The same can be said of John Maynard Keynes (reputed) recommendation that in times of a depressed economy the government should hire people to dig holes and fill them in. Aside from the charitable aspect, this measure obviously doesn't add anything to the economy. The same can be said of "green jobs" because their incremental value in an economic sense is zero, or, more likely, negative.

Take the example of jobs associated with wind turbines for generating electricity. Wind energy is more expensive than other forms of energy, hence electricity generated by wind turbines doesn't add anything to the economy that cannot be generated at lower cost by other means.  The excess cost of the "green jobs" associated with wind energy is therefore no different in principle than hiring people to dig holes and fill them in.

Environmentalists will argue that wind energy has value because it contributes to saving the planet. OK, good enough, but let's be honest: the only value a consumer who is paying higher energy bills gets for his increased cost is the satisfaction, if that's the word, of knowing that he's contributing to "saving the planet." Whether the average consumer would be willing to pay the extra cost if it was explained to him that way (and he had a choice) would depend on how much the extra cost is and how tenuous the connection is between the cost and the environmental benefit. (A cost/benefit analysis is a topic for another day.)

What I object to is the claim that the green economy is a net benefit, what they call a "win-win." It is no such thing, and to claim otherwise is a fraud.

IPCC Report released September 27

The IPCC (Intergovernmental Panel on Climate Change) released its Summary for Policy Makers on September 27 as the first part of its fifth report on climate change called for short AR5. Its 4th report (AR4) was published in 2007. There is much commentary already by warriors on both sides in the "climate war." Two of the calmer commentators I like among academics are Judith Curry and Roger Pielke, Jr.

In Roger's post of today, he points out (among other things) that we can't know for certain what effect that efforts to curtail CO2 emissions will have until mid-century. That is true because the ranges of predicted earth temperatures for the best and worst cases overlap. Here are the numbers: In the best case (i.e., the most aggressive policy to curtail GHG (green house gases), the predicted temperature increase for 2046-2065 is 0.4 to 1.6 deg C (mean 1.0). For the least aggressive mitigation (i.e., no curtailment of GHG), it is 1.4 to 2.6 (mean 2.0). So, to the extent that we believe these predictions, it is possible that the increase in temperature could be 1.5 deg C regardless of what policy we follow.

Since the response to mitigation measures takes so long, it is silly to talk about short-term effects. He gives one example of such silliness in a quote by Al Gore of eight days ago:

Three years ago, Congress failed to put a price on carbon and, in doing so, allowed global warming pollution to continue unabated. We have seen the disturbing consequences that the climate crisis has to offer—from a drought that covered 60% of our nation to Superstorm Sandy which wreaked havoc and cost the taxpayers billions, from wildfires spreading across large areas of the American West to severe flooding in cities all across our country—we have seen what happens when we fail to act. 

Criticizing 'climate science'

I responded to an op-ed by Mark Buchanan in the San Diego Union-Tribune on 9/25 as follows:

Mark Buchanan puts up straw men in his article (“Uncertainty on climate is a sign of good science,” September 25), one an anonymous friend who claims that “global warming couldn’t possibly be caused by humans.” The other is skeptics who savaged the upcoming report, “as if trying to be accurate was an offense.” If these exist at all, they are certainly what some call “outliers” – i.e., very rare.

 

The IPCC report and the process through which it is produced is roundly criticized, however, for good reasons, the main one being that the IPCC has become so politicized as to be practically useless. A good summary of the problem was well expressed by Roger Pielke, Jr., this way: “A difficult question for the climate science community is, how is it that this broad community of researchers -- full of bright and thoughtful people -- allowed intolerant activists who make false claims to certainty to become the public face of the field?” I’m not accusing Mr. Buchanan of being one of the “intolerant activists,” but he might want to be careful about who associates with.