Chasing Rainbows: A review

Tim Worstall has, with touching quaintness, written a book. Chasing Rainbows claims to be about how the “green agenda defeats its aims.” I’m not sure this is a good description; Tim never quite defines clearly what the “green agenda” is. Instead, I’d rather read it as a (partisan) economist’s take on environmental questions.
 In doing so, he demonstrates both the strengths and weaknesses we see in his blog.
One of these is a clarity of exposition. By economists’ standards - a low bar, admittedly - Tim writes very well, although some readers might find his snarkiness a little wearing. And there are some brilliant flourishes. His idiot cousin metaphor for comparative advantage verges on the genius.
There’s also the ability to show that basic economic concepts - opportunity cost, comparative advantage, Pigovian tax - have everyday practical applications. This skill is, I fear, under-rated; it’s very easy even for economists to understand these ideas in theory, but forget their usefulness. As a result, Tim scores some great successes; his discussion of carbon taxes; of the role of markets in promoting growth; and the link between prosperity and fertility are spot on.
However, I have three problems with it - which, I suspect, we often see in his blog.
First, there is - as Paul points out - a tendency to under-rate the intelligence of his opponents. This is most evident in his claim, in chapter one, that jobs are a cost, not a benefit.
This is certainly true in a world of full employment. In such a world, a “green job” means there’s one less worker to do something else. But we don’t live in such a world. The alternative to “green jobs” is not people being more productive elsewhere, but rather them lying around on the dole. And given that unemployment is a massive source of unhappiness, this is a bad thing. Yes, it’s true that, as individuals, we want to minimize effort. But in a world where risks are not pooled adequately, this is not true for society. In such a world, “green jobs” might be equivalent to Keynes’ paying men to dig holes and fill them in again - a way of pump-priming aggregate demand.
Of course, there are arguments against this, and Tim knows them. And it’s also true that greens - to their discredit - don’t often present their job creation in such Keynesian terms. But the point is that Tim doesn’t take the debate beyond the “jobs are a cost, not a benefit” line. This is excessively simple.
Secondly, there’s a failure to ask: is this a big problem or a little one? For me, this leaps out of his discussion of recycling. He’s entirely  correct to say that advocates of recycling ignore the effort involved in doing so. But is this really a significant issue? Here in Rutland, recycling consists merely of chucking rubbish into one of three bins - which is no effort at all. I fear that, in giving weight to trivial issues, Tim is guilty of a common error amongst free market economists, of over-estimating the importance of small deviations from full optimality.
Thirdly, there’s a tendency sometimes to attack a weak argument rather than a strong one. Thankfully, the dread name of Richard Murphy doesn’t appear in this book. But Tim’s Quixotic attack on irrelevant targets does.
He argues, convincingly, that “the physical world is not the defining limit upon economic growth; human ingenuity is”. This is true. But this doesn’t take us far. It’s quite possible that we’re heading for lower growth not because of pure resource constraints, but the race between diminishing returns and technical progress - which has always been the determinant of growth - is becoming tighter. You can interpret high commodity prices and firms’ reluctance to invest as evidence that the smart money believes that David Ricardo’s “stationary state” is, at least, a credible scenario. In tilting at the windmill of resource constraints, Tim doesn’t consider this more sensible possibility.
I don’t say all this to diminish the value of this book. If I were an economics teacher, I’d recommend it as holiday reading for my students, in the hope that they’d see how textbook concepts can be used - and that my greener students will be stimulated to think more clearly.

Comments

[john b]

I like this review a lot. I wish everyone taken seriously (for whatever reason) on the left had Tim's grasp of economics, because it's a fucking embarrassment trying to deal with the shower of idiots who don't.

In an ideal world, we'd also have a Keynesian Tim equivalent, to encourage online Swuppie nutters to follow the example of the mad hordes of far-right loonies who thankfully defer to Tim's outbreaks of economic sanity. I've tried this; you've tried this; sadly, online far-lefties are harder to persuade with economic facts and analysis than online libertoonians.

[Niklas Smith]

A very interesting review. Another "free-market" thinker who can get economic concepts across very clearly is Johan Norberg, though sadly only two of his books have been translated into English.

On green jobs as pump-priming, I take your point. But when pump-priming it is still relevant to ask how much that will cost. Some of the calculations I've seen estimating the monetary cost of each "green job" created by schemes like Spain's solar power subsidy is so large (compared with the income the workers eventually get) that I can't help thinking that paying them to dig holes and fill them in again would be an improvement.

[Matthew]

I must say I've probably read Tim's site as much as anyone and the idea that it involves him carefully teaching correct economics to frothy right-wingers is not how I would describe it.

[Tim Almond]

"But we don’t live in such a world. The alternative to “green jobs” is not people being more productive elsewhere, but rather them lying around on the dole."

If the money from "green jobs" is instead directed at tax cuts, why wouldn't the productive economy spend that money on things it wants, employing more people?

[Tim Worstall]

"His idiot cousin metaphor for comparative advantage verges on the genius."

Awww, shucks.....

"nstead, I’d rather read it as a (partisan) economist’s"

But I'm not an economist. No, really, I'm not.

"I wish everyone taken seriously (for whatever reason) on the left had Tim's grasp of economics, because it's a fucking embarrassment trying to deal with the shower of idiots who don't."

But I am on and of the left. As classical liberals always have been. I'm sorta with Chris on this....the "so called left" is really rather conservative these days.

[Devil's Kitchen]

Chris,

"Here in Rutland, recycling consists merely of chucking rubbish into one of three bins - which is no effort at all."

The sorting is no problem at all. However...

One only has to witness the bags and bags and bags of recycling in our kitchen to realise that it does become an effort.

Our "normal" rubbish is collected by the caretaker (for whom we pay) but the recycling is not.

The recycling must be taken to the recycling bins, which are only accessible between 8am and 7pm on weekdays. We leave the flat at 7.30am and return at some time past 7.30pm.

And so it is an effort to recycle: not to sort it, but to put it where it needs to be. It involves sacrificing work kudos—which both of us consider to be more important than recycling.

DK

[Devil's Kitchen]

Chris,

Also...

"The alternative to “green jobs” is not people being more productive elsewhere, but rather them lying around on the dole."

No, it isn't. "Green" jobs are usually highly skilled: highly skilled people are not lying around on the Dole.

DK

[Luis Enrique]

very few of us are operating so close to our personal efficiency frontiers that a few minutes slinging recycling in the appropriate bins reduces our capacity to do anything else.

There is slack in our production functions.

[Tim Worstall]

"There is slack in our production functions. "

Sure: yet as that chapter points out, when we do a cost benefit analysis of high speed trains the time saved is counted as a benefit.

If time saved is a benefit then time spent must be a cost. And we should consider and calculate that time, apply a value to it, and only then can we say whether it is a large enough number to be relevant.

As I'm the only person to have actually even attempted such an estimation (no, really) then the best available figure is my estimate: 900 million hours annually. Or 500,000 full time jobs.

That's not a small enough number that we should simply dismiss it.

[john b]

DK - isn't that an indication that your building is managed by hopeless morons, rather than anything specifically to do with recycling?

In my block, we have a room downstairs with about 15 big red wheelie bins for domestic rubbish, 10 big yellow wheelie bins for paper and card, and 10 big blue wheelie bins for plastic and glass. It's available 24/7; the janitor puts the relevant bins out on the relevant collection days. This is easy.

Why not write to your management company and ask them why the hell they don't do the same?

[BenSix]

...the physical world is not the defining limit upon economic growth; human ingenuity is...

I'm reading this out of context, and as an idiot, but shirley that can't be true? Isn't ingenuity limited by the physical world? If there's no viable alternative energy source to be wrung out, for example?

[Neil]

Good point BenSix - 'able to cope within physical limits' is pretty much the definition of 'ingenuity'. Circular argument alert!

[Glenn]

Surely green jobs just replace non-green ones? coal fired power station closes (jobs lost), wind farm opens (jobs gained) - net effect likely to be very small. Structural probs may ensue (no engineers needed for boilers or turbines, but engineers needed to service wind farms, transformers, grid etc).

And so electric car workers replace oil burning car workers etc etc etc yada yada yada

I've not read Tim's book - I used to like his blog, but got a bit tired of its style and so this is a completely unqualified assessment...

Re recycling - creates low skilled manual jobs - probably net effect is more jobs than used in landfill. I would regard this as positive in the current climate to be honest.

There's market fundamentalism, but then there's social values and the fact most people are not rational nor have perfect information.

Hey, I am an economist and use economics as a toolkit to understand and predict human behaviour. But sometimes economics is secondary to personal choice, irrationality and politics. As long as we have a clear understanding of the policy options and implications we can make our choice. Don't expect market rationality and optimality to rule.

[Jonathan]

The idea behind employment is directed towards the labour intensity of energy production. Ultimately, we want to be as efficient in our energy production as possible and this relates to employment as well.

So whether there is full employment or not the concept remains. We want to produce as much energy at as little cost, environmentally and monetarily. The idea of producing the same amount of energy with more labour than necessary is therefore a waste of resources.