there is a difference between creating wealth and creating jobs
by Tom Evslin
There is only one woman visible in this CNN picture of a Chinese factory. Since the article is about a decline in Chinese factory orders, I think it is meant to be an illustration of layoffs. But look more closely; her chair is on a rail so she apparently can tend all those spools by herself. This is a highly automated factory. Looked at another way, whether this factory succeeds or fails has little to do with the cost of labor in China; the labor component of cost is low. Put more positively, productivity is high.
Now look at the second picture from a Daily Beast article about the failure of Evergreen Solar, a builder of solar panels heavily subsidized by the state of Massachusetts, which shipped its manufacturing from the Bay State and Michigan to China – and then went bankrupt with the loss of 1000 US jobs. Notice that the man in this picture from the Massachusetts plant appears to be putting solar panels together by hand. Even though there was indubitably some automation in this factory, the picture illustrates low productivity and a high labor cost per unit produced. Of course Massachusetts subsidized this factory because of the number of jobs it would create; so, in the search for subsidies, high productivity and low job count is a negative. Trouble is that, in the real world, low productivity and high job count leads to business failure. Exactly what happened here.
The European banking system and stock markets – and therefore ours – are sinking from the increasing doubt that sovereign EU countries can pay their bondholders. It’s worth taking a minute to consider the effect of public debt.
Is public debt a good thing? Yes, if incurred to defend the nation (e.g., Civil War, World War II), or to build infrastructure that greatly increases the economic productivity of the people (Interstate Highway System.)
But no, if the government merely borrows now to spend on current programs and benefits, leaving future generations to come up with the taxes to service the debt.
The U.S. government is now $15 trillion in debt, and borrows 40 percent of every dollar it spends. That doesn’t include the unfunded liabilities of Social Security and Medicare “entitlements”. The former will exhaust its funds in 2036, and the latter in 2024. Each is at least politically obliged to keep paying benefits until 2085, but both programs are totally unsustainable.
Vermont’s economy has always been challenged. Geography plays a big role; we’re not exactly located in the heart of the nation’s, or region’s marketplace. We’re not at the crossroads of anything. That’s the way we like it, but there’s a price to be paid. We’re kind of stuck off to the side, an historic afterthought, squeezed between New Hampshire and New York.
Natural resources? Not many which don’t require large amounts of value added. Energy, the life blood of industry, not much domestically. The old dams by the grist or woolen mills are long gone, and today’s economy demands electric energy which is both reliable and full-time, and priced competitively. And our young Vermonters, who hold the future of this state in their hands, too few, and leaving the state too fast.
In California, an increasing percentage of the state's electricity must be generated by renewable methods ... wind and solar, mostly. And consumers must pay the price which is ... well, whatever.
In the next three years, many long-planned solar plants and wind farms will come online, bringing California closer to its goal of getting one-third of the state's electricity from renewable sources by 2020. As soon as they start delivering power to utility companies, the utilities' customers will start paying for that electricity.
But the public doesn't get to see the prices the utilities are paying. And without that information, assessing the impact on consumers is difficult at best.
Few doubt that higher bills are on their way.
The part about keeping prices secret is an especially nice touch.
The position taken by those who want to impose a green regime – and not just in Vermont – is that costs and prices are not a consideration. More important things are at stake. In Vermont, the argument has taken the form of a fetish. We could get more non-polluting electricity from Hydro Quebec. We could buy all the electricity we need from a non-CO2 producing nuclear facility that our political class wants shut down. Still, we erect wind turbines on the mountains to generate intermittent and expensive electricity.
We must, it seems, have electricity generated by the wind and the sun because ... well, because we must. And, like the people in California, we will pay more for it. At least there is no secret about that.
We may be as irrational as California but we are right up front about it. Difference between pleasure-seeking hedonists and ascetic Puritans, one supposes.
Is this headline of an opinion column in The Financial Times by Wolfgang Munchau, associate editor of the FT:
The eurozone really has only days to avoid collapse.
To be specific, Mr. Munchau concludes his piece with this:
Italy’s disastrous bond auction on Friday tells us time is running out. The eurozone has 10 days at most.
In other euromess news, Bernard Connolly, an economist and euroskeptic who once worked for the European Commission, does a back of the envelope calculation and says that if Germany is to act to save the euro
it would cost Germany, as the main surplus-generating country in the euro area, about 7 percent of its annual gross domestic product over several years to transfer sufficient funds to bail out Europe’s debt-burdened countries, including France.
That amount, he has argued, would far surpass the huge reparations bill foisted upon Germany by the victorious powers after World War I, the final payment of which Germany made in 2010.
And in case you think that what goes on across the pond doesn't affect us here, the article also includes this:
American financial institutions are also at risk. According to the Institute of International Finance, they have $767 billion worth of exposure through bonds, credit derivatives and other guarantees to private and public sector borrowers in the euro zone’s weakest economies.
My weekly look at interesting sites, economic and otherwise, on the web.
1. Robert Hahn and Peter Passell on the administration's decision to punt on giving approval to the Keystone XL pipeline from Canada oil fields to the U.S.
This is being heralded as a great victory for environmentalists. It’s not clear what they’ve accomplished, though, apart from the psychological and financial lift of beating the pipeline lobbyists. The alleged risks to groundwater in Nebraska, now averted, were minimal. Moreover, Canada is almost certainly going to develop the tar sands anyway, if necessary spending a bit more to ship the product across the Pacific to energy-hungry Asia. Remember, too, that Americans aren’t going to conserve oil just because supplies from Canada are restricted. What doesn’t get pumped across the American Great Plains to refineries in the American south will thus be replaced by imports arriving on supertankers from Africa and South America – a far riskier way to move oil as well as one that increases CO2 emissions.
The broader message here is that, with a federal government badly weakened by partisanship and a public ever less inclined to defer to planners in Washington, the chances of productive compromises on controversial environmental issues is approaching zero. And that will leave all sorts of changes that many environmentalists really want – everything from the expansion of wind power to mandated increases in energy efficiency to a sensible solution to nuclear waste storage – in limbo. Not a message most of us want to hear.
I'll be one of the panelists on Vermont Public Television'sVermont This Week on Friday. The subject is the state of the Vermont economy. The show airs at 7:30 pm and repeats on Sunday at 11:30 am. You can also watch it online right now!
The year that is drawing towards its close, has been filled with the blessings of fruitful fields and healthful skies. To these bounties, which are so constantly enjoyed that we are prone to forget the source from which they come, others have been added, which are of so extraordinary a nature, that they cannot fail to penetrate and soften even the heart which is habitually insensible to the ever watchful providence of Almighty God. In the midst of a civil war of unequaled magnitude and severity, which has sometimes seemed to foreign States to invite and to provoke their aggression, peace has been preserved with all nations, order has been maintained, the laws have been respected and obeyed, and harmony has prevailed everywhere except in the theatre of military conflict; while that theatre has been greatly contracted by the advancing armies and navies of the Union. Needful diversions of wealth and of strength from the fields of peaceful industry to the national defence, have not arrested the plough, the shuttle or the ship; the axe has enlarged the borders of our settlements, and the mines, as well of iron and coal as of the precious metals, have yielded even more abundantly than heretofore. Population has steadily increased, notwithstanding the waste that has been made in the camp, the siege and the battle-field; and the country, rejoicing in the consiousness of augmented strength and vigor, is permitted to expect continuance of years with large increase of freedom. No human counsel hath devised nor hath any mortal hand worked out these great things. They are the gracious gifts of the Most High God, who, while dealing with us in anger for our sins, hath nevertheless remembered mercy. It has seemed to me fit and proper that they should be solemnly, reverently and gratefully acknowledged as with one heart and one voice by the whole American People. I do therefore invite my fellow citizens in every part of the United States, and also those who are at sea and those who are sojourning in foreign lands, to set apart and observe the last Thursday of November next, as a day of Thanksgiving and Praise to our beneficent Father who dwelleth in the Heavens. And I recommend to them that while offering up the ascriptions justly due to Him for such singular deliverances and blessings, they do also, with humble penitence for our national perverseness and disobedience, commend to His tender care all those who have become widows, orphans, mourners or sufferers in the lamentable civil strife in which we are unavoidably engaged, and fervently implore the interposition of the Almighty Hand to heal the wounds of the nation and to restore it as soon as may be consistent with the Divine purposes to the full enjoyment of peace, harmony, tranquillity and Union. In testimony whereof, I have hereunto set my hand and caused the Seal of the United States to be affixed.
Done at the City of Washington, this Third day of October, in the year of our Lord one thousand eight hundred and sixty-three, and of the Independence of the Unites States the Eighty-eighth.
The time for the judge's ruling on the fate of Vermont Yankee draws closer. The ruling will almost certainly be appealed, however it goes. But that does not stop some from attempting to divine the future after a shutdown.
Vermont Tiger is a non-partisan, non-profit advocacy and media enterprise. Through a web site, print publications, symposiums and other events, we promote policies and political action aimed at sustained, environmentally-sound economic growth and prosperity in the Green Mountain State. Vermont Tiger is about the future of Vermont … and insuring that it has one.
Only a crisis—actual or perceived— produces real change. When that crisis occurs, the actions that
are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable ....