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As seasonal as the first snowfall of the year, or the smell of the crackling wood fires coming from a neighbor’s chimney, the myriad articles telling us how wasteful the Christmas season and holiday season is are an essential and memorable part of each and every December.

Here is the (seemingly innocuous) latest from our Eco-Reps on campus (note, it’s not a permalink, but it’s the article on 12-14-16):

The pressure of great sales during the holiday season encourages Americans to go on huge shopping sprees, especially on Black Friday. From Thanksgiving to New Year’s Day, household waste increases by more than 25%. Food waste, shopping bags, packaging, wrapping paper, bows and ribbons combined all add up to an additional 1 million tons of waste a week to our landfills (EPA). In the U.S., annual trash from gift-wrap and shopping bags totals 4 million tons, most of this likely discarded during the holidays (EPA)

Now, what should be understood is that if all Americans reduced everything they consumed, there would presumably be less “waste.” I say presumably for two reasons. First, if someone does not spend resources on a consumer good, is there any guarantee that what they choose to otherwise do with their time would be more “sustainable?” What if every American decides instead to become a world traveler? Second of course is that there can obviously be wasteful NON-consumption, but we’ll leave that idea unexplored today.

What I wanted to focus on is the assumption that all of this shopping during Christmas and holiday season actually generates more waste in the conventional sense of the term than otherwise. Does holiday shopping actually just MOVE the timing of consumption that would have otherwise occurred at other times during the year? For example, I needed to secure parts to fix a toilet in my house, but I went out on Black Friday and got a great deal on them! Same for our linens in our house. Economists have in fact measured such things and a few clicks away on a library research site would surely reveal such information, would it? Well, I’m too lazy myself to do it. For example, we know that Cash for Clunkers, aside from the horrific destroying of cars, did not change the overall trajectory of car purchases, it simply changed the timing. I see little reason to expect things to be different around holiday time. Maybe we would not be buying gifts for each other were it not for holidays, for sure.

Finally, if we do assume that holiday shopping simply reflects a movement through time for when you would otherwise be consuming, you may then want to draw a conclusion that holiday shopping is not only “wasteful” but actually “sustainable” (whatever that word means). How so? Well, if I am taking fewer trips over the course of the year, and if I am putting more items into each shopping bag, which clearly is the case when we go out for “Black Friday” type days, and we take fewer trips from our homes to the stores and instead stay out at the stores most of the day, you clearly are reducing your fuel use, your pollution, and wear and tear on our infrastructure.

My sense of course is that all of these “efficiencies” do not compensate for the increased overall level of consumption induced by the fact that we have a holiday, nor the lights and decorations and wrapping and such. But such things are surely measurable and worth knowing, no?

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Saturday Trivia Time

I would love to run a series of posts that simply ask readers to guess whether or not the information is from the Onion. Maybe this one is too obvious, but here goes.

Suggestions for Eliminating Food “Waste”

“Avoid impulse buying by only going to the grocery store for one ingredient at a time.

Hire an impoverished family to sit at your dinner table and guilt you into eating every last morsel.

Make sure to eat the oldest items in your fridge first, as listeria will deter you from additional grocery purchases for the next seven to 10 days.

Instead of buying a whole tub of strawberries and an entirely new can of whipped cream, use the remaining half can of tomato paste, last serving of chicken piccata, or whatever other leftovers you have in the fridge to spice up your love life.

Try not to prepare more food than you can eat, unless you are entertaining the Lady Carroway for supper and must impress her with your bounty.

Make use of expired food by reaching out to any neighborhood kids who can be dared to eat it for a few bucks.”

Here are just a few of my thoughts on the issue of food “waste.” Here is a little bit more.

Via David Gattie, because I am too lazy to update my Environmental Economics slides for my 2017 course:

I’ve had a number of students ask me for letters of recommendation to help them secure their summer internships. Almost all of these internships are unpaid. Three quick observations:

(1) It seems to be that high-end jobs have completely outsourced basic training to their future employees instead of it being done by them. You should see how much work my students have had to do in order to secure an internship on Wall St. – they have basically abdicated their basic status as students for a couple months in their preparations to learn everything about investment banking on their own.

(2) It seems to be that high-end jobs have virtually stopped screening candidates on their own – universities do all of the hard work in screening and selecting students, and then they just pick among them. I find this somewhat depressing.

(3) Do you think it is “ok” to have an unpaid internship? If so, then how can you also support a minimum wage at the same time? I hereby propose that we ban all unpaid internships and that no college student needing work experience should ever suffer the indignity of earning no wage – all internships must pay a minimum of $15 per hour.

Via Coyote without comment.

 

DD sends me the following article which suggests that Uber is losing quite a bit of money, is not going to turn profitable, and presumably is the worst thing to ever happen to America. Two quick points, should you care to read through the article.

  1. The author argues (and I am not sure I disagree at all) that Uber may never make that much money in profits in the future because as basically a human/labor centered business model it is going to be very hard to take advantage of economies of scale as it tries to grow. In other words, the average costs of delivering its product will not fall much or at all as the output level of Uber expands. Uber is no “natural monopoly” in the parlance of old school textbooks. But think about this for a moment given the general thrust of the article. One major thrust in the article is that Uber is a really bad thing because it is trying to drive all of its competitors out of business. But, if you are going to argue later in the piece that Uber can never be profitable because it can never recognize cost efficiencies, then it can never succeed in driving people out of the market. It can’t possibly do it. And even if it does, since the author himself is arguing that the business is not a natural monopoly, then consumers should not be worried given how easy it is to set up and operate a competing mode of transportation. So in this regard, the response to the entire article just has to be, “so what?”
  2. Ignore the first point. Another major thrust of the article is that the reason Uber has been able to sustain large and increasing operating losses for five years now, which is a longer period than other high valuation and successful startups like Amazon, is that they are being subsidized by rich Silicon-Valley venture capitalists. Well, I don’t think he uses the term subsidy the same way that I do. But so what? While I do worry about society “wasting” resources – the resources being wasted here are not ours, they are theirs. It’s not like government subsidies for biofuels which take from all of us, including the poor, to subsidize agribusiness interests and do no good for the environment. Not at all. But really, the point I’d like to make is the following. Aren’t we all so very enthralled with the idea that the rich should pay more? Aren’t we all enthralled with the idea of redistributing income from the rich to the rest of the 99%? Well, here you go. We seem to have a group of extremely rich people transferring billions upon billions of dollars of wealth from themselves to people who are clearly less wealthy than them – Uber drivers and customers. You’d think rather than be worried and scared about these big rich people subsidizing Uber, we would celebrate it. If the author wants to argue that this subsidy means that other really cool and value enhancing projects are not being funded because of these rich guys’ irrational support of Uber, then it would have been a nice point. But I see no such argument being made yet. And wholly aside from the fact that Uber seems to be very popular and the work I have seen suggests it has provided enormous benefits to the consumers who use it … my question here is simply … so what?

We have written a decent amount on predatory pricing here at TUW in the past. If you want to see a more rigorous treatment of the issue please read the following:

We’ll dig down into this Current Affairs vituperation of Trump’s choice of Education Secretary in some more detail later (I’m off to class now). But two points in this article I’d like to make quite clearly and simply. The author starts out by trying to understand and articulate (in true Turing Test fashion) what the arguments made by proponents of school choice are. And then he goes off the rails.

  1. Is this the Mount Rushmore of Straw Men or what?

Introducing a profit motive into schooling offers a powerful incentive for schools to offer a great product. If there is money to be made on being a good school, you can bet businesses will want to provide great schools. Thus private, for-profit schools with vouchers are a highly efficient way of delivering the best-quality education.”

Now, I spent my early career in economics studying the differences between private and public schools, and enmeshing myself in the literature at the time. Where does this Duex ex Machina of FOR PROFIT come from? The argument in favor of school choice is not an argument for running schools for profit. If it turns out that this is what people end up wanting, so be it – but the argument for school choice is exactly that. Allow choices of schools. Allow choices among “public” schools. Allow a diversity of teaching and education methods across schools. Separate government funding and support for schooling from government operation of schooling. Now, I happen to think the author is not quite right on the concerns about the incentives of for-profit schools, but let’s grant that. To introduce vouchers and choice is NOT at all the same as suggesting we create a network of for-profit schools. There are thousands of Catholic schools around the country that are clearly not run for-profit. And think of how choice works in the college sector. What share of overall student enrollments end up in “for-profit” schools (I actually think schools like my own are “for-profit” and should be taxed, but that is for another day). Virtually none, despite what the news hysteria may lead you to believe. So, now that we start with a totally disingenuous argument about the purpose of school choice, it’s hard to consider the rest.

2. He ends the piece with:

“Introducing an incentive to make money will necessarily mean exploiting and neglecting the poor, whose “choices” are highly constrained by their circumstances. I fear privatization not because of some mystical devotion to the inefficiencies of government but because I fear the erosion of the idea of education as something that isn’t win-win, that we give to children because they deserve it rather than because we can profit from it. I worry that the sort of people who run things “like a business” do not really care about children very much, and are motivated by the wrong incentives. I am concerned about what would happen if they ever faced a choice between doing the right thing and doing the lucrative thing. It seems a fragile and fantastical (almost religious) hope to think that a market for schools will produce good schools rather than simply a new means for parasitic corporations to engorge themselves on government money. However bad our public schools may be, I will always trust those who see children as an ends above those who see them as a means.”

Well, considering the straw man in quote 1, I suppose I can’t begrudge the thoughts in quote 2. But that said, we are now living in a world where intentions matter. Well, excuse me while I clear the vomit out of my mouth. Who the heck gets to say that the intentions of the current government schooling monopoly are anything other than exactly the same fragile and fantastical hope that government provision of schools sees kids as ends. Is there ANY evidence that government employees, government schools, educrats and the like see kids as anything other than means? Would there be fewer motivated people who care about kids in a private school system? In my Catholic grammar and high schools, the clergy who taught us took preposterous low pay to fulfill their vocations – I can’t imagine any group of people being more committed to seeing the kids develop and as ends to be cared about rather than a means to something else. I suppose Sister Margaret can be accused of seeing me as an easy means to make her way quickly through the pearly gates – but if you want to go down that path, then tell me how the motivated passionate public school teacher who loves children is any different?

I’m sorry folks, but this sort of argument, if that is what you call it, is what is driving the divide in this country. And this guy wants it that way. I will not soften my view on that.

I address all of his other points in various other posts here at TUW, I’ll send up links to those later on.

A surprisingly large number of smart people support raising the minimum wage. In two separate conversations this week with very intelligent people, it was argued to me:

  1. That there is some research (I once wrote a book review of this) suggesting that labor markets are monopsonistic. And I can draw you a picture of how mandating wage floors in these situations would be employment enhancing over a small range of wage changes. The point here is that due to “frictions” in the labor market, there isn’t much flexibility for workers to change jobs, and so are sort of “locked in” to their jobs.
  2. If we allow for an increase in the minimum wage, there will be a reduction in employee turnover since the higher wages will make workers happier and also attract better workers.

Now, we can write books and books about each of these claims. But we don’t have to, because both can’t provably be true. Why? Argument 1 says employees have no flexibility in the labor market and that they are so attached to firms and frictions are so high that they can’t or won’t quit. Argument 2 says a major problem for employers of low-wage workers is that their workers are flighty and not committed to the job.

Which is it, if any? In the comments please do not attack either of the claims, there is plenty to say about them, I’m only interested in the consistency.

There is a well-regarded theory in economics (and popular?) that suggests that during slack economic conditions, we should welcome a bit of unexpected inflation from the Fed. Why? Well, for one, if you believe in a sticky wage view of the world, and the psychological and practical difficulties with employers lowering wages to existing workers, then by having a dose of unanticipated inflation, that reduces real wages without firms actually having to lower the amount on a paycheck.

Think about this for a moment. A very well-regarded (scientific consensus?, I don’t think so, but go with it for now …) idea is that we need to see real wages fall as a way to expand employment. Implicit in this, of course, is that employment is sensitive to changes in real wages. Now, my personal view is that this is NOT the limiting factor in hiring so that even if we halved real wages we would not see a tremendous jump in employment, at least not in the short run.

But think about the implications of this view. Employment is sensitive to decreases in wages.

Now think about the popular view that minimum wage increases do not reduce employment (by the way, I find it odd that people expect a priori that it would, but that makes me weird I guess … a future post is coming about this). In other words, employment is not sensitive to increases in wages.

So, here we have two alternative views of the world. When we are wearing our macro-policy hats, it turns out that wages and employment actually move quite a bit together, but when we put on our micro-policy hats they don’t. I don’t see how these both can be true. OK, I CAN see it, but I find it hard to reconcile without some fantastic jujitsu reasoning.

Today’s post is a sort of variation on the response I would give (and have given in the past) to the slur, “You didn’t build that.”

In political matters, I am sure you have had invoked on you, at one time or another, the idea that the government has legitimate authority to coerce an individual because merely by the act of being born into a “society” you have agreed to the political obligations required to sustain that society. Of course, thousands upon thousands of pages have been written on this, so please excuse my very brief summary here. Further, while it is very obvious that none of us actually “signed” such contract, let’s accept the legitimacy of the theory for the purposes of today’s brief argument.

—-

If we are to agree that “tough, you signed the social contract” is a legitimate response to the concern of folks who worry about the legitimacy of government and the threat of coercion, then how come we do not also see the argument accepted, when people are concerned about what happens in their economic lives, “you signed the social contract!” is not invoked as well? Just as being born into a political world was not chosen, and we are expected to “accept it” the same is true for our economic world. When we enter into ANY form of social cooperation (or attempted cooperation) with others, there are all kinds of practical challenges that simply cannot be handled with affirmative assent. Can you ask all 7 billion people on earth if they would be willing to trade with us, if they would be willing to enagage in the division of labor with us, and so on? No. Of course the same is true of our political bonds. So why are not our economic “obligations” aslo dependend upon some non-written agreement among all possible buyers and sellers to form the economy in which we operate?

After all, you still have the ability to opt out of any economy that you do not wish to be a part, so the force of the “economic contract theory” would seem to be stronger than that of the social contract theorists, wouldn’t it? Furthermore, the economic laws that we have discovered in fact are universal – they apply regardless of what form of social and economic organization that emerges or are chosen. Scarcity exists in ALL forms of cooperation. Prices emerge in ALL forms of transactions. Self-sufficiency is costly in all forms of organization and so on.

Again, I am not here to stand in opposition to social contract theory, though here is a quick note on that, I am merely asking what is different about our economic lives than our political lives that would not permit economic theorists from using the same argument?

 

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