Is increasing throughput always bad?
Not necessarily. Many times in these postings, the reduction of throughput is stated or implied to be a benefit. But this only applies to present-day conditions when so many resources are being depleted because they are throughput faster than they can be renewed. Under these conditions increasing throughput of any resource will probably either accelerate its depletion rate or, if it is not yet being depleted, restrict the possibilities for using it (up to the limit that its available renewal rate allows) in place of resources that are being depleted. Thriving economic activity can go on indefinitely without resource depletion as long as the throughput rate stays below the renewal rate. So increasing throughput is good in circumstances where most resources are being consumed at a rate far less than the available renewal rate. In these circumstances increasing throughput is a benefit because the increasing level of economic activity that results can support more people at a better standard of living.
No, there cannot be jobs without throughput. Jobs are based on wealth, but are realised by the throughput of the wealth. Wealth must be conserved, that is, its quantity maintained or increased, in order to provide a secure future for jobs and economic activity; but the wealth must be throughput to enable the jobs to be performed and the economic activity to take place.
If the throughput rate of a resource that is already being depleted is further increased, this will provide a gain in short-term employment in exchange for a greater loss of long-term employment.
Short-term and Long-term Employment
That raises the question: short-term or long-term, isn’t any employment increase a permanent, “bankable” one?
No. “Short-term employment” describes the work directly entailed in undertaking a process. “Long-term employment” describes the work available in the total economy once the direct and indirect effects of that project have worked their way through.
Another way is to look at short-term employment as a cause whose effect is found in long-term employment. The effect may be loss or gain, depending on whether the short-term employment was active in depleting resources, conserving them, or increasing them or their renewal rate.
Current economic theory and practice places too much emphasis on throughput, neglecting the conservation of wealth, assuming resources to be unlimited. There are some at the other extreme who place too much stress on conservation, wishing to minimise throughput. This brings us to the next question.
Must it be “hands off everything?” Definitely not. There are some on the conservation movement who wish altogether to ban the throughput of certain resources, such as whales. The argument is that whales are beautiful and special and ought to be left alone.
All life forms are beautiful and special in their way but all animals must consume other life forms to survive. There is no choice about this.
A more practical approach to whales would be to leave them alone long enough for stocks to build up, then to crop them at a carefully controlled rate less than or equal to the rate of maturation (not reproduction – mortality before sexual maturity must be considered). The longer the whale “resource base” is given to build up, the larger can be the whaling industry, and the greater the rate of throughput and the number of jobs it can support when cropping resumes (but see Note on Whaling below).
The same kind of policy could be applied to forests. These are rapidly being depleted around the world, and the sensible thing would be to halt timber-getting and other encroachments and allow the forests to build up. But this would take centuries. A more practical policy would be to exploit the forests at a rate just below the renewal rate.
(The renewal of rain forests would require a very low level of cropping and careful land management to prevent erosion during renewal. A surviving large tract of virgin forest would be essential to enable the renewal to take place.)
This would allow the resource to build up slowly while still supporting economic activity. This policy could be generalised to every renewable but diminishing resource – and currently that means a host of different resources. People would need to be carefully taught that the restricting of economic activity resulting from the practical application of such a policy would actually be by far the lesser of two evils as far as jobs and living standards were concerned. The alternative, allowing unchecked exploitation, would cause a greater and more permanent loss of jobs and reduction of general well-being.
Note on Whaling
It is arguable that whaling makes available nothing that could not be obtained from plants, from fossil fuels, from plentiful marine life forms, or land animals currently part of normal farm stock and in no danger of extinction. The unique properties of whale oil could not perhaps in former times be found or created in oil from plants or fossil fuels, but modern chemical technology can change the nature of any oil or synthesise any oil entirely from simple starting materials.
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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