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Frédéric Bastiat and then Henry Hazlitt were correct to emphasize that one of the most important lessons in economics is to "see the unseen." Yet still so many news stories implicitly ignore "opportunity cost" -- the value of the best thing given up as a result of an activity.
Yesterday the Washington Post ran a long piece about how a town had built back greener after a tornado. But the article was written in terms that suggested that the tornado was almost a blessing in disguise, w other towns now looking to it for inspiration. https://www.washingtonpost.com/climate-solutions/2020/10/22/greensburg-kansas-wind-power-carbon-emissions/?arc404=true">https://www.washingtonpost.com/climate-s...
A tornado is unambiguously destructive. If the rebuilding really added net social value, it would have been desirable to undertake it irrespective of the destruction wrought from such a damaging storm. What the story missed was all the other things given up in rebuilding effort.
We see a different variant of failing to "see the unseen" through the Presidential election with Joe Biden& #39;s plan to create "millions of green jobs." In this case, moving to power sources that require more workers is an admission of inefficiency, and more expensive energy.
Yes, there is an economic argument that the social costs of carbon make some decarbonisation desirable. But explicit efforts to employ people in these sectors should not be the aim of policy. Again, what matters is the net social value added as determined in markets.
There was a good piece in the WSJ by Andy Kessler yesterday (h/t @David_Boaz) lamenting how politicians such as Biden implicitly push a lot of make work schemes. Again, they miss the desirable productive activities given up by using workers this way. https://www.wsj.com/articles/a-biden-economy-means-litter-jobs-11603658932">https://www.wsj.com/articles/...
This is the mistake of programs such as the "Federal Jobs Guarantee." People talk as if a job, any job, is inherently valuable. But it& #39;s only valuable from a societal perspective if it is producing something that adds net value.
If workers are being employed in less productive activities than they otherwise would be, these sorts of programs are unambiguously bad for society. And that& #39;s even before we consider how funded, and what happens to participants& #39; longer-term propensities to be employed elsewhere.
For more on this important economic way of thinking, here& #39;s a recent column I wrote on Boris Johnson making the same error as Biden: https://www.conservativehome.com/thecolumnists/2020/10/ryan-bourne-johnsons-green-jobs-subsidy-reliant-expensive-price-raising-and-a-job-loser-elsewhere.html
And">https://www.conservativehome.com/thecolumn... here& #39;s Hazlitt& #39;s brilliant "Economics In One Lesson": https://fee.org/media/14946/economicsinonelesson.pdf">https://fee.org/media/149...
And">https://www.conservativehome.com/thecolumn... here& #39;s Hazlitt& #39;s brilliant "Economics In One Lesson": https://fee.org/media/14946/economicsinonelesson.pdf">https://fee.org/media/149...
Of course, the most egregious examples usually come in the form of articles about hurricanes: https://www.cato.org/blog/bad-economics-hurricane-harvey-part-2">https://www.cato.org/blog/bad-...
