Want Social Justice? Create Jobs.

Photo credit: Buz and Ned's
Photo credit: Buz and Ned’s

by James A. Bacon

I’m all in favor of people earning higher wages. I want to live in a society in which people make enough from their labors to live on without government assistance. I just don’t think that mandating a minimum wage is the way to go about it, for all the reasons that foes of the minimum wage usually cite that don’t bear repeating here. A better way to increase wages is to (a) increase the number of jobs in the economy, which would (b) give employees more options, which would (c) prompt employers to offer better wages, benefits and working conditions in order to hang onto their workforce. Crank up the jobs machine, and the wages, benefits and working conditions will follow.

This forehead-smackingly obvious formula can be seen at work in Richmond’s restaurant community. After years of sub-par economic growth following the Great Recession, competition for skilled restaurant employees in the Richmond region is finally heating up. And guess what’s happening — restaurateurs are raising wages.

Thus, we read in the Richmond Times-Dispatch today that Buz Grossberg, owner of Buz and Ned’s Real Barbecue restaurants, is bumping the starting pay to $12.50 per hour for regular employees and to $8 per hour for servers working for tips. That’s up from $8 and $6 an hour respectively.

Grossberg acted for reasons both idealistic and pragmatic. “This has been on my mind a long time, even before it became current politics,” he said. “It’s just gotten worse and worse. It’s gotten hard for people to repay their bills and see their family without working multiple jobs. … How do you attract people and keep people who can’t afford to feed their family? Pay them a living wage.”

But why did he act on his conscience now? Turns out that it’s getting harder finding and retaining talent, particularly kitchen workers, in Richmond’s increasingly competitive and crowded restaurant scene, according to other restaurateurs quoted in the article. Said Grossberg: “The people who would typically work [in the restaurant industry] are going other places.” Paying higher wages will bring them back in.

Bacon’s bottom line: It’s basic supply-and-demand economics. If the economy creates jobs at a faster rate, wages will rise faster. And how do we create more jobs? Once place to start would be to re-think some of the job-killing policies we’ve enacted over the past 15 years, starting with Sarbanes-Oxley, Dodd-Frank, the Affordable Care Act, EPA regulatory overreach, higher taxes, regulation of the Internet and dozens of other initiatives that collectively have gummed up the economy and slowed growth to a crawl.

Defenders of the current regulatory regime tend to blame mysterious “economic forces” beyond their control. I’m old enough to remember those who claimed the “stagflation” of the 1970s likewise was due to some mysterious change in the nature of the economy rather than the policies of Richard “We’re All Keynesians Now” Nixon and Jimmy “Gas Rationing” Carter. Then along came policies that killed inflation, deregulated major industry sectors, cut taxes and enacted and real government spending cuts, precipitating nearly two decades of job creation. The surge in jobs in the 1980s and 1990s made the minimum wage irrelevant in many parts of the country because businesses were so desperate for labor that they were paying more than the minimum already.

I do feel badly for anyone trying to make a living on the minimum wage. But the answer isn’t more of the same “social justice” economics that have created our moribund economy and depressed wages. The best social justice program in the world is a strong job-creating economy.

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  1. CrazyJD Avatar

    I’m really going to be interested in how some on this blog will refute Jim’s post. Jim, I suspect your commentary will be met with the usual social justice tripe. For once, I’d like to see those “some” refute the economics, using something other than the thoroughly discredited Paul Krugman, who incidentally and ironically got tenure at Princeton on the backs of a study he did on minimum wage in restaurants in the Philadelphia area. The study was so bad that even my freshman year niece at Princeton in 1994 could easily refute it. Later on, of course, we all understood that Krugman was not an honest broker of economic theory, but an agenda driven hack who abandoned the pretense of being an honest economist. He got a Nobel from the same agenda driven Norwegian hacks that gave one to Obama for Peace before he had performed task number one toward the ends of peace. Pathetic.

    Oh, I know, I’m sorry. I’m just a hateful right winger who is not contributing dispassionate discourse to the blog and is chasing folks away. At least that’s the usual reaction of folks who don’t want to put two and two together, or when they do, they get three.

  2. LifeOnTheFallLine Avatar

    There is a lot of nonsense to unpack here, but I’m short on time so I’ll try to keep it local.

    In your opinion, part of the misguided policies of the last 15 years that have gummed up the economic works are higher taxes. But within the past 15 years, the city of Richmond instituted a meals tax on top of the existing sales tax. And yet the restaurant industry in the city – according to your own assessment – is thriving to the point that certain restaurateurs can pay staff in excess of the minimum wage. If taxes – and local regulations such as zoning, food inspection, etc. – were so destructive how are we at a point now where a city that has a meals tax can support salaries above the minimum wage?

    Also, deregulation and low taxes didn’t end staglfation, Volcker put the rap game in a chokehold and helped induce a straight ahead recession to ease inflation. And there was no comparative surge of jobs in the 1980s…Carter was so terrible but under his term the job growth rate was higher than any president since him. Further, federal government spending was increased during the 1980s as was the total amount of federal government employees.

    What helped two decades of job growth was an emerging technology economy that used tools created by the federal government to turn profits. Without ARPANET there is no Amazon, no Google, no Uber…

      1. So, Reagan created “only” 5 million net new jobs during his first term. Of course, as you note above, he also endured a sharp — and necessary — recession in order to break the back of inflation. That’s actually a pretty darn good record.

        1. LifeOnTheFallLine Avatar

          Where did I say “only?” My point is that Reagan’s job growth rate in either term wasn’t as good as Carter’s so your claim that there was a “surge” in jobs in false on its face.

      1. I lived through that era. I remember Reagan submitting budgets that would slash government spending. And I remember the Democrats in Congress declaring the budget “dead on arrival.”

        1. LifeOnTheFallLine Avatar

          So, Reagan did slash government spending in your initial post, but then when it’s pointed out that didn’t happen it’s the fault of the Democrats in Congress, which is fine, but since it didn’t happen your initial point is still invalid.

    1. LOTFL, do you believe that regulations costing tens of billions of dollars to implement have any impact on the economy?

      1. LarrytheG Avatar

        do you think regulations that require you to have car insurance “costs” money and harms the economy? How about regulations that prohibit you dumping Kepone in the James. Do you think that harms the economy?

      2. LifeOnTheFallLine Avatar

        No, and if you could point out where I implied otherwise I’ll be glad to move forward with this discussion.

  3. NoVaShenandoah Avatar

    Jobs is necessary. But it is jobs that pay WELL that will change things. That’s what unions did, but unfortunately they have fallen on hard times.

  4. LarrytheG Avatar

    You can’t have social justice when you don’t provide a 21st century education to kids.

    it’s dumb.

    we make excuses. we blame parents. we blame teachers. we blame academic standards.. but the real bottom line is that if you graduate from high school and you lack the education you need to find a job in the 21st century – you’re screwed = and so are taxpayers because we’re then pick up the tab for entitlements.

    blaming minimum wages is also ignorant.

    If you think higher wages kills jobs then consider what happens when your cable or cell phone bill goes up. Do you think that kills jobs? How about when your health care costs go up. Do you think that kills jobs?
    How about college tuition? Do you think when college tuition goes up, it kills jobs.

    Time to get off the doctrinaire libertarian mythology and lunacy and onto reality.

  5. NoVaShenandoah Avatar

    “Bacon’s bottom line: It’s basic supply-and-demand economics. If the economy creates jobs at a faster rate, wages will rise faster.”

    Demonstrably false, despite the market experts and ‘CarzyJD’. Since 1980 many jobs were created and worker productivity has increased at a rapid rate. Yet most compensation has declined. The reason I believe is that the tax code has been changed to favor executives whose compensation has far outstripped anyone else’s, since their personal incentive is to pocket the money.

    1. NoVaShen, It’s not a one-to-one relationship. There has been a broad secular trend in the past couple of decades in which a greater share of the economic surplus (or whatever you want to call it) has gone to capital and/or the top income earners. But a strong connection between job growth and wage growth is nonetheless undeniable. Let’s put it another way: How often do people enjoy real (inflation-adjusted) wage gains when the number of jobs is shrinking?

      1. LarrytheG Avatar

        Jim how can you string these things together like you do? You’re creating things out of whole cloth with little more than some belief system based more on beliefs of some with precious little real evidence.

      2. NoVaShenandoah Avatar

        Granted, if the number of jobs is shrinking, wages suffer. But there is no connection between job growth and wage growth, unless those running the corporations are ‘encouraged’ to raise wages. Since 1980 we have seen executives definitely get rewarded better (in 1980 executive compensation was 4.5% of corporate revenue but it is now more than 10%) but executives have not gotten (2.5 times) more efficient. At the same time labor’s compensation has remained static, despite the gains in productivity, and despite the growth in jobs (thanks to Clinton and Obama, BTW). And not only have wages been static but benefits have declined, as well. The missing component is the ability of labor to demand its fair gains based on productivity, caused by the decline in unions. Along with changes to the tax code that reward accumulated wealth over labor (pray tell what have Walton’s children actually done to be worth $20+ billion each?) we are rapidly becoming a serf-based economy.

  6. LarrytheG Avatar

    The problem with supply and demand economic theory is the simplistic concept that there is only one supply and one demand and there is a push-pull relationship.

    that’s fine for theories but it don’t work when you start adding in other things that affect the equation.

    In math this is known as multi-variable polynomial relationships.

    what it means is that if the price of a burger goes up – in theory less burgers are sold – but in reality – something else might be not purchased so the burger can still be.

    it works with gasoline .. electricity, kumquats and prostitutes.

    Does anyone really believe that when gasoline goes up that WaWa lays off people or that when gasoline goes down, they hire more?

    Does Dominion lay off workers when electricity goes up?

    you know what US schools really fail at compared to our overseas competitors?

    It’s called critical thinking – and it shows up in discussions like this about supply and demand …

    1. Larry, do you believe there is any connection between the supply and demand for labor and the compensation paid to labor?

      1. Your thesis disproving any connection between supply/demand of labor and compensation for that labor is so startling that I think you should get it published. You’ll go down in history for overturning a cornerstone of classical economics. We’ll have to come up with a new name for this new body of theory — larrinomics. You’ll be in great demand by politicians all around the world!

        1. LarrytheG Avatar

          Jim – simplistic soundbites is not a way to understand economics.

          Do you really think Exxon lays off people when the price of gasoline goes up?

          do you think Verizon lays off people when they increase the price of cell phone plans?


      2. LarrytheG Avatar

        I do – but it’s not the simplistic one that you favor.

        there’s a lot more to it when more than one supply and one demand is involved.

        see my other comments.

  7. LarrytheG Avatar

    re: ” Oh, I know, I’m sorry. I’m just a hateful right winger who is not contributing dispassionate discourse to the blog and is chasing folks away. At least that’s the usual reaction of folks who don’t want to put two and two together, or when they do, they get three.”

    well anyone who thinks they can be an armchair economist is joining the ranks of many now days who think they can read a soundbite and become”learned”.

    the study you’re alludes to was not Kruger – it was . . . Alan B. Krueger along with a fellow named Card

    Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania
    David Card, Alan B. Krueger


    gotta go deeper than sound bites

  8. LarrytheG Avatar

    do ya’ll think when regulation prohibits using an ingredient that causes death or maims people – it increases prices and cost jobs?


    1. It all depends on the regulation. If a regulation averages $10,000 per life saved, then it’s socially beneficial. If it averages $100 million per life saved, then it’s socially destructive (because that money could have been invested alternatively in other ways, including things that would improve safety and/or health).

      1. LarrytheG Avatar

        now you’re ADMITTING that SOME regulation is beneficial but then you are assuming you know which are and which are not.

        nice work if you can get it, eh?

        you’re choosing sides based on what folks you align with – say

        not necessarily the actual facts.. that’s a big problem

    2. Moreover… regulations that protect the public health and safety tend to be the easiest to justify. But Sarbanes-Oxley did not protect the public health and safety. Either did Dodd-Frank. Either does Internet regulation. And many aspects of Obamacare had nothing to do with public health and had everything to do with rent seeking by the pharmaceutical, hospital and health insurance industries.

      The trouble with you, Larry, is that you never met a regulation you didn’t like! You defend rent-seeking regulations by invoking the benefits of regulations that protect the public safety and health.

      1. LarrytheG Avatar

        not true – but I don’t support or oppose something based on ideology and you ought to know that by now.

        there ARE two sides to Sarbanes-Oxley and Dodd-Frank.

        Do you know the PRO side?

        do you care?

        do you judge the benefit or harm on health and not economic harm to those victimized by predatory or fraudulence?

  9. There are two trends at play here.

    “The spread of nonworking men and underemployed youth. The share of prime-age Americans (25 to 54 years old) who are working has been trending down since 2000. Among men, the decline began even earlier: the share of prime-age men who are neither working nor looking for work has doubled since the late 1970s, and has increased as much throughout the recovery as it did during the Great Recession itself. All in all, about one in six prime-age men today are either unemployed or out of the workforce altogether. This is what the economist Tyler Cowen calls “the key statistic” for understanding the spreading rot in the American workforce. Conventional wisdom has long held that under normal economic conditions, men in this age group—at the peak of their abilities and less likely than women to be primary caregivers for children—should almost all be working. Yet fewer and fewer are.”

    “Labor’s losses. One of the first things we might expect to see in a period of technological displacement is the diminishment of human labor as a driver of economic growth. In fact, signs that this is happening have been present for quite some time. The share of U.S. economic output that’s paid out in wages fell steadily in the 1980s, reversed some of its losses in the ’90s, and then continued falling after 2000, accelerating during the Great Recession. It now stands at its lowest level since the government started keeping track in the mid‑20th century.”

    Source: http://www.theatlantic.com/magazine/archive/2015/07/world-without-work/395294/

    The argument in favor of raising the minimum wags is contradicted by the first trend. Raising the price of labor at a time where the demand for labor (apparently) falls below the supply of labor seems suspect at best.

    Jim’s argument of just waiting for the growing economy to increase the reward to workers is contradicted by the second point. Neither the “Bush recovery” (from the “Clinton dot com recession”) nor the “Obama recovery” (from the “Bush great recession”) resulted in a higher percentage of output going to wages. That happened only sporadically over the last 35 years and has not happened over the last 15 years.

    Against this backdrop there is the tepid “Obama recovery”. By mid-2014 the “Obama recovery” reached the average duration for post-WWII recoveries. Recessions are roughly periodic. The time for the next recession may well be drawing neigh.

    I believe that the American economy fundamentally changed as economic growth from the Industrial Revolution lost momentum. That deceleration started around 1970 and continues to this day. The Information Revolution, while having eye popping impact, is not a broad based labor growth trend. It lacks the employment pull to make up for the deceleration in growth from the Industrial Revolution.

    Neither Jim’s thesis of letting market growth increase wages nor the alternate concept of mandating higher minimum wages will work in the new economy. I am afraid that dealing with this new western economy will require a complete rewiring of American society.

    Suggested further reading: Das Kapital, Brave New World

    1. Don, I don’t think that we’re really disagreeing. You’re not denying the connection between employment growth and wage growth, you’re offering an alternative explanation of why employment growth is so weak — because of the “fundamental change” in the nature of the economy due to technology.

      I can buy the argument that technology is a factor in all this. But I’m shocked — shocked! — that you seem to deny any role for excessive regulation in the past decade’s weak job creation.

      1. LarrytheG Avatar

        there are always two sides to any regulation. The revealing thing is how those who hold one view – often cannot give the opposing rationale.

        so you’ll get folks who say ALL regulation is harmful – like Jim starts out.

        then you show some obvious issues

        and he re-writes it to say heath …

        as if economic harm to others is not also valid reason for regulation.

        so it’s okay to regulate if the product harms my physical health but it’s wrong if it harms my financial health.

        so we only need regulations for car insurance for harm to the person – not their car.

  10. LarrytheG Avatar

    At least Don has something OTHER THAN … libertarian knee -jerk blather!

  11. TooManyTaxes Avatar

    As I learned many years ago in law school (from a professor who actually understood economics), it’s the economic incidence of taxes or regulations that is most important.

    We, of course, need to have tax revenue for government and regulations to protect the public health and safety and to protect against fraud. Generally low-rates and a broad base produces optimal revenues with the least cost shifting. Recall how the congressional Democrats put a high excise tax on expensive boats to get those rich people to pay their fair share. What happened? Not an insignificant number of middle class boat-builders lost their jobs. Congress also put a limit on the deductibility of executive compensation, absent achievement of targets. What happened? Executive pay was tied to target achievement and sky-rocketed even more. And we’ve seen a shift to executives getting more of the pie. It’s the economic incidence that counts.

    There are many good and valid regulations at the federal, state and local level. But there are also many regulations used to prevent market entry and hamstring competitors. And there is a cost to administer. Those costs are first passed along to consumers and lower-skilled employees. “We cannot give a two percent raise this year to the staff or the to the customer service reps because costs are up due to XY&Z regulation.” Companies are not cutting executive compensation to recover those costs. It’s the economic incidence that is important.

    Obama’s explosion of regulations has a cost and those costs are not being passed along to the 1%. We need to reevaluate taxes and regulations, not eliminating them all, but recognizing the costs are largely borne by those with fewer skills, outdated skills and less education.

  12. LarrytheG Avatar

    what Obama regulations? Congress has to approve the laws and the courts can undo regulations not consistent to the law.

    TMT – have you got credible data on regulations under Obama compared to prior POTUS?

    I’m not buying it unless you got some real evidence

    this one says Bush had more high dollar regs than Obama


    why don’t you admit this is a partisan issue with partisan beliefs?

    the GOP and Conservatives ALWAYS make this argument.

    give me a list of the dirty dozen of regulations that have been repealed after we determined they were wrong and too costly?

    where is that list?

    1. TooManyTaxes Avatar

      I’ll not argue the GW Bush had few new regulations. But here’s more material from Forbes on small business regulations. http://www.forbes.com/sites/waynecrews/2013/02/06/small-business-regulations-surge-under-obama/

      As far as the FCC is concerned (my area of expertise), there are many more regulations now than under either Clinton or Bush. The Communications Act includes the concept of carrier-initiated rates. The carrier files rates; customers can protest; the FCC can hold a paper hearing and accept, reject or prescribe new rates. In 2011, the FCC substituted a set of rules that bring rates for terminating calls down to zero over time and directed carriers to get their terminating costs from end user customers, instead of from AT&T and Verizon. Not only do the rules make a mockery of the law, but they are also fostering more and more robocalls as the costs to place them are nearing next to nothing. FCC staff have started citing their own recommendations as precedent for their action, when the law is clear that the recommendation of staff has no standing unless adopted by the agency. Etc. Etc. Etc.

      I’m not opposed to sensible regulations, but many don’t work and are designed to keep out new competitors or, in the case of the FCC’s call termination rules, enrich AT&T, Verizon, Sprint, T-Mobile, CenturyLink et al.

      1. Cville Resident Avatar
        Cville Resident

        Very informative post.

  13. Larry, you’re such a cut-up: “What Obama regulations? Congress has to approve the laws.”

    Please do tell me what new laws Congress passed authorizing the EPA to extend its reach over CO2 emissions. Tell me what new laws Congress passed authorizing the FCC to regulate the internet. Tell me what new laws Congress passed to amend the Affordable Care Act willy nilly. For the past two years, Obama has ruled through executive decree.

    If George W. had ruled the same way, you’d be proclaiming the death of the republic.

    1. LarrytheG Avatar

      Jim – the law that the SCOTUS ruled in favor of.

      have you been away and missed that decision?

      George W? I won’t get into the torture and other ample disreputable illegal misadventures but did you read this:


      ” The year 2014 is not over yet, but what do you know, the old claim still holds with respect to total rules: President Bush issued 23,367 rules over his last six years. President Obama, up until today in the Federal Register, has issued 21,506 rules”

      sounds pretty similar to me..

      how do you get something different?

      1. TooManyTaxes Avatar

        Larry – there are two legal issues here. One, decided a number of years ago, was whether the EPA could regulated CO2. SCOTUS ruled yes.

        The second, not decided by a court, is whether the EPA’s proposed regulations for greenhouse gases and power plants. While we won’t know the answer till SCOTUS finally rules in the future, Obama’s mentor from law school, Lawrence Tribe, who makes Peter look like Bacon, has accused Obama of burning the constitution to prevent global warming. The statute does not allow what the EPA wants to do.


        Even my liberal friends agree that Obama has little use for statutes, most especially the Administrative Procedure Act, when they get in the way of executive fiat.

        If everyone, both Ds and Rs, followed the law instead of escalating unlawful conduct, the political tone in this country would be softened considerably.

        1. Cville Resident Avatar
          Cville Resident

          And this is an even better post by TMT that deserves a highlight.

          I agree that if the rule of law was followed by Rs and Ds, the political climate would be healthier.

          There are many administrations one may point to, but I think the vicious political climate really took hold in 2001 with Bush. It’s hard to deny that Cheney and Bush set out on a systematic “winner take all” form of politics that really infected the administrative branch and made it more of a political spoils machine than apolitical bureaucracy. When Obama’s team came in, they did the same…they treated the entire federal government as a political pawn with a “winner take all” mentality.

          If you ask long-time federal employees, they’ll tell you that while Carter, Reagan, Bush, and Clinton all had different priorities, there was still something of an independent administrative state that could push back on politicians. This is part of the rule of law as dictated by the APA.

          But Bush 2 started and Obama accelerated a “Back to the Future” federal gov’t in which Andy Jackson’s spoils system seems to be in full effect as administrations go outside of the rule of law to coerce administrative agencies to do their bidding.

          Very unhealthy.

  14. LarrytheG Avatar

    Jim – I’m not in favor of regulation.. I’m in favor of cost-benefit on every one.

    I’m also pragmatic about the reasons why regulation actually comes about – there are supporters – beyond some guy in govt thinking they are needed. They have hearings – and the pro and con folks come to speak. The proposal is put out for comment. People can and do litigate

    but at the end of the day – how many regulations have subsequently been outright repealed with no replacement regulation.. just repealed and no more regulation on what was regulated?

    got a top 10 list?

  15. This is a late entry after comments have essentially closed on this blog, I’m afraid. But I must say that the criticism that Jim has made about Obama’s regulatory excesses obviously lacks, as Larry notes, basis in fact. The Supremes granted EPA the power to regulate CO2 because they found it to be a pollutant under the Clean Air Act. Only the climate deniers would think otherwise. Moreover, be aware of how industries leading associations and corporations fought tooth and nail against passing both the Clean Air and the Clean Water acts in the early 1970s, and a host of other essential regulatory measures to protect the environment since. They applauded Reagan’s attempts to decimate (yes, to reduce by a tenth) EPA, and essentially eliminate the White House Council on Environmental Quality (that drafted Nixon’s three environmental messages to Congress), until EPA corruption (and a prison term for an assistant admin.) brought in reformers like Ruckelshause. Moreover there is that imitation of Romney’s Mass. health care initiative by Obama Care.

    Jim is resorting to knee-jerk right wing rhetoric that I find most disappointing and not at all what my modest contribution to this blog was meant to support. I expected reasoned argument.

    1. Malcolm, people of good will can debate whether or not the EPA extension of control over C02 was justified. (As you observed, the Supreme Court declared it to be legal, so that debate is settled). But that’s an entirely peripheral point in the context of the blog post. There is simply no denying that implementation of those regulations has or will cost tens of billions of dollars and that, for the most part, rate payers will pay for that implementation. That’s not knee-jerk, right-wing rhetoric. That’s reality.

      Now, you may argue that implementation is justified because the gains in human health and a marginal improvement to global CO2 levels and, thus, to global temperatures 80 years from now, will far out weigh the up-front cost. That is another issue upon which reasonable people may disagree. What is not reasonable is to insist that there is no up-front cost and that the up-front cost has no real world impact.

      1. LarrytheG Avatar

        re: ” There is simply no denying that implementation of those regulations has or will cost tens of billions of dollars and that, for the most part, rate payers will pay for that implementation. That’s not knee-jerk, right-wing rhetoric. That’s reality.”

        that’s patently false and YES IT IS wrongheaded right wing idiocy,

        It’s the same exact argument used to argue against lead in gasoline and dioxin and PCBs in the rivers.

        that’s like saying that getting the lead out of gasoline or Kepone out of the James – “cost” but that is, in fact, the argument.

        it’s the same false dichotomy that’s been in use since the creation of pollution laws.

        the right has always had this same argument and it’s simply wrong because – as in this case – Jim does not acknowledge that pollution has a cost also.

        the cost benefit for the CPP is enormous .. but folks like JIm just ignore it like it does not exist.

        1. Rowinguy Avatar

          The additional costs incurred by electric utilities to comply with the CPP will certainly be passed on to their customers, Larry. That is a fact.

          There’s lots of dispute about how much those costs will be, but even the EPA has calculated implementations costs in the billions. That’s a fact, too.

          But, the hope is that eventually, these costs will be recouped in benefits, in better health, creation of new types of jobs, cleaner environment, etc. The realization of the benefits is less certain than that costs will occur and electric customers will pay them.

          The health-related benefits of taking lead out of gasoline are NOW beyond dispute; hopefully, the day that the CPP’s benefits arrive will come in our lifetimes.

          1. LarrytheG Avatar

            @Rowinguy – have you read the cost-benefit analysis by EPA?


            you say it is “hoped”.. the EPA analysis is more than “hope”.. it’s got real numbers…

            I agree there is dispute – but have the opponents disputed the EPA analysis with their own or do they just ignore or reject the EPA analysis?

            again – Jim uses the same tactic of other anti-regulatory folks in that he basically ignores the cost-benefit totally and proceeds right into the premise that any/all regulation has costs – and no benefits.

            if you call him on this he will say “well of course” but if you read his narrative – it don’t read like that at all… it reads like there are no benefits, just dead losses.

            this has been the tactic of the anti-regs folks – for as long as the EPA has been in existence and the unleaded gas issue is a prime example.

            Now I ask again – for all the regs that the EPA proposed and ultimately implemented and the opponents claimed would “cost” –

            my question – tell me which regs were subsequently found to do what the opponents claimed – cost – with no benefits – and then repealed because they were too costly and ineffective?

            what I’m arguing against here is what i consider to be a belief system by conservatives and free-market folks that regulation in general – is a cost… not a benefit.

            these folks invariably use the same ‘cost’ argument .. invariably don’t even mention the cost benefit analyses much less challenge them with their own that disputes the EPAs numbers.

            that’s not a reasonable discussion.

            It was not with unleaded gas and it’s not with CPP.

            that’s just more one-sided insistence of a ideological belief and a refusal to actually deal with the actual cost-benefit analysis.

            So I’d like to ask you – do you agree or disagree with the EPA cost-benefit analysis and why?

      2. Richard Avatar

        Of course there is upfront cost. There was an upfront cost for cleaning up the rivers. For reducing emissions from motor vehicles. For banning lead paint and DDT. For putting a lid on tobacco. In all these projects some industry lost but inarguably we are all better off for it and those in the industry took their money and went somewhere else.
        Your argument seems to be that if a project is hard and expensive for an industry it shouldn’t be done regardless of the value. With that attitude your James River would still be a sewer.

        1. “Your argument seems to be that if a project is hard and expensive for an industry it shouldn’t be done regardless of the value.”

          That’s not my argument at all! I’m just saying that regulations are not cost free, and that implementing them has near-term consequences for the economy. I’m not making an argument (in this post) one way or the other whether a specific set of regulations has a net positive benefit to society over the long run.

          As a generality, I would say that regulations that protect the public health and safety are more likely to offer positive net benefits over the long run, although I would hasten to add that we are experiencing diminishing returns — an additional dollar invested in environmental cleanup provides less net benefit (and in some cases a net loss) than a dollar invested in environmental cleanup 40 years ago.

          The most harmful regulations are those that offer no public health/safety benefit. Dodd-Frank, for instance, may have made our financial system less vulnerable to a systemic financial collapse — we won’t know until we have another financial crisis. But what we do know for sure is that it has led directly to the consolidation of the banking industry and the decline of community banking. There is a strong argument to be made that the shrinking number of community banks has led to a decline in small business lending, which has contributed to the net decline in business formations in the U.S., and the consequent loss of jobs.

          1. LarrytheG Avatar

            it’s up front cost – verses downstream benefits.

            health is actually one of the harder ones to really quantify.

            how much is a damaged quality of life worth?

            how much is a 10 point lower IQ worth?

            but I disagree with your basic premise that all regulation “costs” and that’s undeniable.

            ALL regulation has a cost-benefit – and you ignore that with your philosophy.. you ignore it as part and parcel of any regulation.

            if you had made your argument on ROI – as you have advocated for highway projects..then I would have agreed with you but you start out assuming that any/all regulation has a cost – and that’s it.. you’re opposed on that basis.

            That IS ideological.. and it fits right in with the current political environment where you say that Obama has more regulations… as if more means wrong or bad – and that goes back to your premise that any/all regulation is harmful..

            The CPP is “bad” because it undoubtedly will “impose costs”.

            Why don’t you take the same ROI approach you advocate for govt investments?

  16. Richard Avatar

    There are pros and cons on the minimum wage. But the issue is real and the statement that the solution is “more jobs” is typical conservative flack – no substance.

    But conflating that arguable point with every conservative bugaboo is pure conservative drivel. Not every problem in the world can be solved with rhetoric – sometimes you need regulations to restrict environmental damages and financial chicanery. Sometimes you need to tweak our wonderful free, democratic, capitalistic but imperfect system to protect the weak and those who have been mistreated by the system.

  17. LarrytheG Avatar

    not only Conservative drivel -but wrong on the face of it because it’s based on the pure theoretical concept of supply and demand.

    there is no such thing as one supply of something and one demand for it.

    the concept is illustrative with millions of counter examples in the real world.

    people do not – not buy burgers because they cost a nickel more than they did last year..

    and employers do not lay off people because people don’t buy burgers that cost a nickel more.

    If you buy the Conservatives logic – we’d have full employment of all workers – if we CUT the minimum wage.

    never hear them make that argument – even though it’s exactly the same supply/demand argument…

    1. Larry, you misunderstand my thinking about regulations but I do not have time today to rebut all your misrepresentations. I simply urge readers to read what I say, not what Larry says I say.

  18. LarrytheG Avatar

    re: ” There is simply no denying that implementation of those regulations has or will cost tens of billions of dollars and that, for the most part, rate payers will pay for that implementation. That’s not knee-jerk, right-wing rhetoric. That’s reality.”

    Well there IS denying because – The EPA DID DO a cost-benefit analysis and so YES – it IS right-wing rhetoric that ignores the analysis.


    “The EPA estimates that, in 2020, the final guidelines will yield monetized climate benefits (in 2011$) of approximately $2.8 billion for the rate-based approach and $3.3 billion for the mass-based approach (3 percent model average). For the rate-based approach, the air pollution health co-benefits in 2020 are estimated to be $0.7 billion to $1.8 billion (2011$) for a 3 percent discount rate and $0.64 billion to $1.7 billion (2011$) for a 7 percent discount rate.”

    page 313

    So Jim says it will “cost” and the EPA says it will save…

    THe EPA provides an analysis.. none forthcoming from those who assert “tens of billions”.

    Jim and most Conservatives when they say cost – usually provide no analysis to back up their claim – they just basically ignore the EPA cost-benefit analysis

    The SCC also ignored the EPA analysis and went straight to their own “analysis” which ignored health benefits as well as likely expected technological conservation and fact that natural gas is cheaper than coal – at least during the timeframe of the propose rules.

    The Va GOP did the same thing..

    as far as I can tell NOT A SINGLE Conservative has actually opposed the CPP on the merits… it’s almost always based on the premise that ANY regulation COSTS… there is no such thing as cost-benefit… it just an article of faith that regulation costs…

    a genuine – debate would be on the merits – of the cost-benefit.. not a denial that any exist at all.

  19. LarrytheG Avatar

    The real world of supply and demand works like this.

    You buy a hundred items ….a week or a month or whatever

    one day one of them goes up in price – might be because of increased labor costs might be for other reasons… maybe even the supply/demand price of a commodity

    so what do you do?

    do you stop buying the item that went up in price?

    and even if you did that -and lots of others did – would it result in laying off of employees?

    the real world is not one standard item of one supply and one purchaser of fixed income.

    when kumquats go up in price – you may decide that you still want the kumquat and decide to buy one less lottery ticket or to buy a cheaper grade of ice cream or any endless number of other actions OTHER than to buy less kumquats.

    this is not particularly earth-shaking but for some reason the folks that insist that supply and demand works in such a narrow fashion such that increased minimum wage means higher cost burgers which means less burgers bought – which means employees laid off – can’t seem to get to the next step … of how the real world of supply and demand works.

    for the record – I’ll stipulate that if you had only one item of fixed supply and only one group of buyers also of fixed size – that supply and demand would work EXACTLY as the theory says.

    I do not dispute the theory what so ever.

    I’ll even stipulate that for commodities like fuel or pork bellies or whatever – there is a direct relationship between supply and demand – but beyond that – things get out of hand pretty quick and trying to ascertain the effects of it are very , very hard to do.

    Even experts in commodities lose their financial butts on trying to determine what should be a straight forward supply-demand dynamic.

    so trying to use that basic theory for minimum wage is anything but straight forward – it’s exceedingly complex.

    and here’s what you don’t see.

    CARD AND KRUEGER did this study involving minimum wage between adjacent jurisdictions in Pennsylvania and New Jersey – and could find no confirming correlation.

    what did the folks who insist otherwise do?

    well. they attacked the study.. and when challenged to do their own study supporting their thesis – they said – it was far too complex to “prove”.

    yes.. that’s right.. the folks who believe this – won’t do studies of real world situations to back up the premise.

    Instead – it becomes – like regulation – an article of faith – a belief – and not one that they have any real motivation to try to really prove… like
    CARD AND KRUEGER actually did do – and could find no real confirming data of reduced levels of employment on the side that increased the minimum wage.

    So basically this is a “belief” of thoe who are philosophically aligned that way.

    and that would be fine if that’s all they wanted – just to believe ..

    but they want to use that belief to institute policy.. and that’s where the rub comes.

    like with regulation where they have no inclination to use cost-benefit as a way to inform decisions.. they reject it and they have no inclination to actually do studies involving the real world effects of increasing minimum wage.

    we cannot do policy based on beliefs. we have to use hard data and more than that – we have to WANT to use hard data and not philosophical beliefs.

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