Labor is not Fungible: problems with the First infrastructure stimulus

[dkf]

Dhanson August 31, 2011 at 4:17 pm

Those of us who actually work in industry and are involved in large engineering projects of the type the stimulus was designed to ‘stimulate’ could have told you this without waiting for a study. We tried to. No one was listening.

It is maddening to hear ‘workers’ talked about as if they are interchangeable – Oh, a whole bunch of home construction workers have been layed off? Don’t worry, we’ll build a road or a bridge and employ them!” The only problem being that the type of construction home builders are trained for has nothing to do with bridges. Perhaps people like those in the Obama administration lack the appreciation for the real complexity of these jobs and assume that any blue collar work is trivial and interchangeable with a little retraining, but it’s not the case.

Not only that, but the people who can *start a project are very different than the people needed to bring it to completion, and in general the people needed at the beginning of a project are the least likely to be unemployed. In fact, even in a recession there is a shortage of such people. So it was predictable as rain that new stimulus projects would have to scavenge project leaders, architects, managers, and senior engineers from other existing projects that may have more value. It was absolutely, 100% unavoidable.

Not only that, but it is incredibly destructive: Pulling a manager from an existing project can cause damages far exceeding the salary of that person. If a project manager or architect is enticed away from a project that has a $100,000 per day development cost, and his leaving causes a month of delays while a new manager is found and brought up to speed, that’s a cost that will never show up in the stimulus accounting – but his $150,000 job will be counted as a ‘job created’. No one will know that in addition to the stimulus money used to hire him, the real cost of that job was an additional $3 million dollars. I’ve never seen a single Keynesian model take that kind of destruction of existing projects into account or try to quantify the effect. You’d think this might be important to consider – especially in an era where specialization is so important, where even low-level positions require specialized training.

http://www.thefreemanonline.org/anything-peaceful/labor-is-not-fungible/

[Fumesucker]

1. "We tried to (speak up) but no one was listening."

I for one am shocked, shocked I tell you, that politicians would not listen to those who indeed know something.

It's talkers versus doers, the talkers always think their input is far more valuable than some grubby lowlife who actually gets their hands dirty while working.

[dkf]

2. I admit I am one of those people who thought this was a great idea.

It's a lot more complicated than I gave it credit for.

I wonder how well politicians are equipped to do this type of planning.

[Fumesucker]

3. The thing about doing real, tangible work is that you can't get away with bullshit indefinitely..

At some point the project must make real physical progress and it's blatantly obvious if such a project doesn't make progress.

Which makes it totally unlike politics where many, indeed IMO the great majority of, politicians do nothing but spout utter bullshit every time they open their mouths.

I thought the term "shovel ready project" was remarkably clueless the first time I ever heard it.

[Buns_of_Fire]

4. Most of today's politicians are equipped to do one thing and one thing only.

That's why they're politicians and not something useful, like a porn star.

[HereSince1628]

5. I suspect those hundreds of jobs in that guy's company don't exist.

Never trust an anecdote presented in unspecified conditioning pronouns.

Hiring people away from existing work? Maybe, but the idea is to create demand, demand sucks up existing resources and requires additional effort to deal with what becomes limited resources. That's the whole point.

I have the feeling that the great dam projects in the West, as well as the projects of the TVA and electrification were taken up by contractors who initially were already employed. You start with what you have, and you place demands upon it, that results in EXPANSION of the manpower and resources. Expanding manpower and resources is a desirable outcome.

Those projects were supported by entire cities of workers and those labor camps/new cities had to be constructed and staffed with all manner of community support from scratch. That sort of 'diversion' is a desirable outcome that can cause a project in the middle of no-where Nevada to stimulate industry throughout the nation.

Training a workforce is part of how the stimulus spreads out into the broader community. Suddenly there is an increased demand for trainers, and training equipment and spaces to train in...to produce people with the skills to do the jobs. That's a desirable outcome.

Not having skilled workers isn't a problem with respect to the benefits of stimulus activity. It's an opportunity to diversify the course of the revenue stream. Of course, if you are the owner of an engineering firm, you want all those bucks for your profit line, you hate to see them trickle out into the community. But concentrating the buck IS NOT a desirable outcome.

[jpgray]

6. Which was why the WPA did nothing whatsoever and crashed the construction industry

I'm sorry, but this is a little ridiculous. The people I've known that worked construction were hardly specialized perfect slot-fit experts when they started, and I'd love for you to look over the CVs of a sub-sub-sub contractor's hires. But maybe you need an Associate's now to hotpatch an off-ramp? The world can change, I suppose.

[dkf]

7. Maybe the point is infrastructure meant to create jobs can't be a one time deal.

It isn't fast nor efficient. How do the Chinese do this?