Sunday, May 3, 2009

Employment and Energy

Partly inspired by Dr. Webber’s presentations on Energy & the Economy and Energy & Food, and partly inspired by the state of today’s economies, I thought it would be interesting to examine the relationship between unemployment and the economy. As Dr. Webber pointed out in the Energy & Food lecture, food is a form of energy too, although we don’t really account for it in our energy consumption statistics. According to the USDA, an average person is supposed to consume, on average, 2,000 kilocalories per day. Since 1 nutritional calorie, or kilocalorie, is equivalent to 1.163 Watt-hours, the average person consumes the equivalent of 2,326 Watt-hours, or 2.396 kWhs of food per day. For younger and more active people, this could range from about 2.56 kWhs/day for active 31-50 year-old females to 3.49 kWhs/day for active 19-30 year old males. Over the course of a year, for the average American (meaning, 2,000 kilocalories/day), this adds up to the equivalent of 849 kWhs per person per year. For the 300 million people currently living in the US, this translates into approximately 254 billion kWhs/year. This is the equivalent of 6% of total useful electrical energy generated in the US.

Of course, we can’t just “plug” people into the grid a la the Matrix—nutritional energy and electrical energy are very different forms of energy. It is worth remembering that the true meaning of energy is the ability do work. To the extent that we as a society have determined that we would rather have machines and robots perform certain work rather than people, we have preferred to have a “full employment” policy when it comes to capital investments, but a less than full employment policy when it comes to people. We tend to measure performance by comparing the value of outputs versus the value of the inputs. From a policy perspective, however, particularly from a labor policy and an energy policy perspective, simply using dollar values may not suffice. For example, a farmer may choose to use a tractor to harvest her crop rather than hire workers to perform that work because the dollar input to dollar output comparison is favorable for the tractor, but from a policy perspective, somebody is going to have to feed that worker.

Labor-saving devices are sort of euphemisms for energy-wasting devices if you look at it from the same perspective that people who examine the energy balance of ethanol do. They examine it as “fossil energy in” versus “energy out.” For this case, the comparison is even starker because for all intents and purposes, the nutritional energy usage for a person is fixed—they are going to need to eat whether they are working or not, whereas the energy required to run the tractor is discretionary—it does not consume fuel unless it is operating. Therefore, it would seem to make sense to fully employ every person possible in the economy—and to target “labor-saving” technologies first. The industrial revolution essentially took processes that required exclusively renewable energy in the form of human and animal work and firewood, and replaced it with processes that required fossil fuels: coal, oil, and natural gas. We should critically examine each process that currently uses fossil fuels that could instead use human labor. How might this work? In a rural area, for instance, the unemployment office could make unemployment benefits contingent upon volunteering 40 hours of work a week at a local farm. Depending on employment conditions, the farmer would have any number of people available to collect crops just the same way the a tractor would, and anything they were not able to collect, the farmer would use his tractor to collect. Or, in an urban setting, cities could require people collecting unemployment benefits to volunteer to sweep the streets or collect garbage. This would not help conserve energy, it would grow the economy because it would put people to work who otherwise would not be working and would be collecting unemployment benefits anyhow. So while the "performance" measures might appear poor in terms of dollars spent per unit of output, those dollars should be considered fixed for the purposes of decision-making because they would be paid out anyhow. Considering Dr. Webber’s analysis of today’s economy in which we have abundant people and scarce resources, perhaps it makes sense to employ more people so we can conserve more of our resources.

1 comment:

Ideamotor said...

Interesting post,

I think that this sort analysis may make sense from a 'central planning' perspective, i.e. for a country with direct control of wages, goods, and services. In your stated example, you proposed that governments force people to volunteer.

I think one problem with this sort of energy-centric analysis of goods and labor is that it does not evaluate different social value of different types of energy, goods, and labor. Also, any such evaluation would be sharply biased.

Our country has chosen to a large degree to allow individuals to make a choice and find work where they want. If there is a need for a job, there will be a market it. If nobody wants to do the job, maybe it's because their utility is maximized elsewhere (and so follows the country).

Instead of an energy perspective of goods and labor that leads to direct control, I think a better way to encourage preferred behavior due to environmental concerns is to lessen market externalities. Of course, as we saw in our class on life cycle assessments, even evaluating relative environmental degradation is subject to massive interpretation.