It is possible for some time to consume a resource faster than its renewal rate, just as a business can for some time consume its accumulated money capital faster than it takes money in (this is only an illustration and does not confuse money with wealth). But for the business to survive and go on providing jobs, it must lay money out no faster than the money comes in.
Accurate data are available on the quantity, depletion rate, and natural renewal rate of many resources. This availability can be expected to improve in accuracy and completeness as time goes on.
The rate of depletion of resource after resource must be brought below its renewal rate. Apart from, obviously, reducing the consumption rate, the renewal rate can be increased to some extent for many resources, for example, aluminium.
The mining of bauxite, its processing into aluminium, and subsequent wide dispersal into the environment would lead to very low availability of the aluminium resource, because one determinant of availability is concentration, which also determines the difference between gross and net throughput of a resource. The natural rate of reconcentration of the highly dispersed metal into convenient thick layers of bauxite ore is very low, if it exists.
The renewal rate can be usefully increased by deliberate human efforts to collect every scrap of used metal for restructuring into fresh metal products. One looks forward to a future time when such a process would be part and parcel of the economic system, an inescapable accompaniment to the use of the metal; but in our present relatively primitive economic state it is resisted, practiced only to a marginal extent, and regarded as a “cost” that is not “economic” to bear.
Recycling of aluminium, of other metals, and also of materials such as paper, cloth, glass, or building material would provide employment and reduce resource throughput by reducing the need to extract raw materials to make totally fresh supplies – two important economic benefits.
But nowhere near as much recycling is done as could be, because in many cases not enough money can be got for the renewed materials to pay the wages of the necessary workers.
So in this example, excessive wages not only prevent employment but undermine the economy by causing the accelerated depletion of the resource base.
Of course it is necessary for the money outlay required for the process of reconcentrating metals to be no greater than the money price obtained for them when they are ready for sale to manufacturers. But the reconcentration is a form of economic growth since it increases renewal rate and reduces the depletion rate; thus it must not be abandoned because the money balance is unfavourable. Rather the process must be continued and expanded, and the money situation must be coerced into conformity with this primary objective.
Putting it another way, recycling or reconcentrating are currently described as “uneconomic” in those cases where money outlay would be greater than money income, simply because of that. In fact, according to better developed criteria consistent with the ideas in these posts, recycling, by creating jobs and reducing the need for resource throughput, would be economic just because of those effects. An uneconomic project would be one that depleted or accelerated depletion of the resource base, which means destroying jobs and reducing living standards.
It follows that wages in renewal rate boosting industries (RRBI) must not be determined, as now, by arbitrary and often unrealistic ideas about the spending power to which workers have a right. Such ideas in practice often defeat their goal by eroding the purchasing power of money or eliminating jobs. It is no comfort to a worker to know that his job would be well paid if he had it, when no one can afford to employ him at that rate of pay.
Instead, RRBI, being “economic” in themselves, quite independently of the state of wage levels, must be kept going and this must be the overriding priority to which wage levels must submit and by which they must be limited, given the state of labour-saving technology at any time.
The limitation on wages is stricter in the case of RRBI than in the case of throughput rate boosting industries.
If a project is economic according to the better-developed criteria outlined above, then it must go forward. If the money balance is unfavourable then the money aspect of the project must be manipulated to obtain a favourable balance. There are several ways of doing this.
Wages for workers could be cut, which is possible by abolishing the minimum wage, restructuring unemployment payments (these would be useful measures in general), and weakening workers’ unions in the relevant area.
Improved technology requiring less paid labour input per unit of recycled material can be developed; this would require money investment that could take a while to recoup.
A recycling business could be government subsidised so that recycled material could be sold at attractive prices, or new resource extraction could be taxed so that the full price of recycled material would still be attractive in comparison with material made from newly extracted resources. The latter option would be better because the government would be dampening consumption while at the same time not piling up debt, rather reducing it. The workers losing their jobs in resource extraction industries as a result could be taken up by recycling industries.
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Posts in this Series
- Review of 1988 edition of Economics for a Round Earth
- Ends and Means
- Evolution Not Revolution
- Notes on Evolution Not Revolution
- Concepts and Terms – What is ‘wealth’?
- The Throughput Chain
- The Derivatives of Wealth
- Global Inequalities in Wealth
- Economic Growth Redefined
- Misconceptions in Practice
- Borrowing to Invest to Get Rich
- Environment versus Economic Progress
- Digression: Pollution Red Herrings
- Digression: Depletion and Inflation
- Value Inflation – the Trigger, not the Bullet
- Living Standard and Quality of Life
- Digression: Resource Consumption, Jobs, and Hands Off
- When the Boom comes
- The Effect of People’s Expectations
- Hard Work – Virtue or Vice?
- Who needs the Snail Darter?
- More Dollars for Conservation?
- Non-renewable Resources – Leave Them in the Ground?
- Digression: Fast Breeder Nuclear Fission Reactors
- Minerals in National Parks – Leave Them in the Ground?
- Population and Wealth
- Left, Right and The Environment
- Digression: “So Long As We Profit, Costs Elsewhere Aren’t Our Problem”?
- Limits to Growth?
- Solar Energy – a Special Case
- The Solar-Powered Car
- Money Supply, Throughput and Inflation
- Real and Money Wages: Living Standards
- Digression: Caution about “Increases” and “Decreases”
- The Idea of Proportionate Flows Applied to Wages: the Great Depression
- Deficit Financing
- The Optimum Proportionate Flow Condition
- Digression: Thrift versus Spendthrift
- Digression: the Private Motor Car – a Basic Necessity?
- The Idea of Proportionate Flows Applied to Wages – the Stagflation of the 1970’s and 80’s
- Excessive Wages Can Cost Jobs
- Fight Unemployment or Inflation First?
- Digression: Work and Jobs
- Other “Job Creation” Schemes
- Visual and Noise Pollution
- Digression: Renewal and Recycling of Resources; Wages and Jobs
- Ratio Distortion and Consumption
- Aggregate Demand – Components and Internal Ratio
- The Slave Economy
- Employment and the Steady State
- Consumer-Led Recovery
- Interest Rates and Ratio Distortion
- Demographic Trends and Living Standards
- Digression: Bad Economics Good for Conservation?
- Coping with Aging Populations
- Stabilising the Human Population
- Costs – What Really Costs Us and What Doesn’t?
- Digression: Other Comments on Statements in UN Report
- Discussion of Costs Resumed
- Budget Balancing Methods – Cost or Gain?
- Digression: Government Expenditure – Government Employees
- Expenditure on Weapons