David R. Henderson  

How Many Jobs?

Journolist Ethics... The Recalculation Story: A Su...

My wife and I were driving by a P.F. Chang's restaurant in Monterey today and we recalled how much hassle the city government gave the restaurant when it wanted to put a sculpture of a horse in front. The city relented and the restaurant got its horse. That got me thinking.

I know a number of people in Monterey and Pacific Grove who want to add a room to their house or do some other improvement. Some of them don't bother because it's too hard to get permission and, even if they do all the paperwork, hire the right consultant, etc., permission is not assured. I know others who would like to cut down some Monterey pines in their yards. But the city government of Pacific Grove requires that if they cut down one Monterey pine, they must plant two. There is even a group of Pacific Grove citizens who go around making sure that people comply.

Here's what I'm wondering. If a local government in Pacific Grove or elsewhere got rid of such laws, how many extra productive jobs would be created? How many people would hire workers to cut down trees, build extra rooms, etc.? The city of Pacific Grove is also hostile to anyone who wants to have a medical marijuana clinic. It also doesn't allow bars. If the city government started allowing these things, how many extra jobs would be created? I know that jobs are not the measure of wealth, but in all these cases, the jobs would create wealth.

Also, I talked to a friend who returned from Spain and told me that the government there is far more tolerant of people selling beer to people on the beach. What if the governments here were to allow that. How many additional people would find work?

I know that many of the people who got such jobs would simply leave other jobs that produce less wealth. So the new jobs would overstate the net addition to employment. Still, probably some of the people who take these jobs would be people currently out of work and not in the labor force or currently out of work and looking for work (unemployed.)

Here's what I'm wondering: Think of some example of a peaceful activity in your community that government bans or prevents or discourages that, if the government would allow, would occur. Put it in the comments. An (unspecified) prize for the best entry. (The prize will probably be that I write a future post praising your idea.)

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CATEGORIES: Labor Market

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The author at Chronicles of the Lifeworld in a related article titled Economism writes:
    From David Henderson at EconLog: Here’s what I’m wondering. If a local government in Pacific Grove or elsewhere got rid of such laws, how many extra productive jobs would be created? How many people would hire workers to cut down trees, bui... [Tracked on July 24, 2010 10:41 PM]
COMMENTS (31 to date)
Joe Kristan writes:

I would start with the 21-year drinking age.

Jacob Kearns writes:

Minimum wage obviously.

Daniel writes:

The young can already get beer and wages are too sticky for dropping the minimum wage to have much effect until we get more inflation.

But tell men (and some women) that prostitution is legal and watch those registers ring!

If that's too libertarian for you, try letting anyone start up a taxi service. My father is old enough to remember the Depression, and he'll tell you that it started to end for his family when his older brother and father took turns driving a car they purchased for fares.

Snorri Godhi writes:

How many people would hire workers to cut down trees, build extra rooms, etc.?

Before Steve Sailer beats me to it, I'd like to turn that question around to the demand side: how many extra rooms would people have? how many more children would they have once they get the extra rooms?

Also, how much would it help to avoid housing bubbles, the fact that people can have a bigger house without having to move?
Would not the increased supply of floor space stabilize the housing market?

Vacslav writes:

City of Westminster discourages poster ads depicting sex service workers in telephone booths in the area where I live - Hyde Park/Edgware road/Marble Arch corner. Local police arrest those who place the ads, rightfully assuming that they are somehow managing these sex workers. Courts then prohibit these managers from entering certain areas in the neighborhood and appropriate information is posted in special places. I can probably understand why the local advertisement is necessary - there are plenty of young unmarried men of certain religious denomination that discourages female (but not male) promiscuity and perhaps there is considerable demand for quality sex services from single males who must seek the said services from professional workers. There is plenty of supply, plenty of demand. Decriminalizing sex industry would add legal workers, their managers to the pool of human capital and law-obeying citizens.

Tim Worstall writes:


Got to be the biggest possible change.

Or for an entirely minimal one, how about the European Union's "jams, jellies, marmalades and sweet chestnut purees regulations (as amended 2004)*."

In this it becomes a criminal offence (punishable by up to 6 months in jail and or a £5,000 fine) to add essential oils of citrus to jam. Such oils may only be added to marmalades, the distinction being that marmalades are made from citrus fruits while jams are made from non citrus fruits.

So vital innovation in the jam and compote making industry is stymied: who knows whether a cherry jam sharpened up with a bit of lemony zest would be a good idea, taste nice or be a decent seller? We'll never find out because to even make the experiment is illegal.

In order to be able to make our lemony cherry jam we would have to persuade the European Commission to revisit the regulation, then get the European Parliament to pass it (after the Council of Ministers had had their say) and then it must be passed by the national legislatures of 27 countries plus innumerable devolved administrations (Wales, Scotland, the German Lander,etc)encompassing perhaps 10,000 legislators and the associated bureaucrats, mistresses and aides.

And yes, Europe is festooned with these regulations, about everything.

* No, I'm not joking**, this is a real law.

** No, I'm really not joking, this is the same law that defines carrots as fruit***.

*** No, really.

Les writes:

Very good prohibitions to remove are:

1) The war against drugs. Legalize marijuana, cocaine, heroin, etc.

2) The law against prostitution.

3) The law against buying and selling body parts for transplantation (especially kidneys).

4) The law restricting access to mailboxes to the U.S. Postal Service. Let all delivery services have access.

5) The tax law that makes all income taxable regardless of its geographic source. Make only U.S. source income subject to U.S. taxes.

6) All U.S. custom duties. Repeal every single duty.

7) All government subsidies and taxes, and all government income transfers.

Troy Camplin writes:

As I wrote for Mises.org, zoning laws ( http://blog.mises.org/12598/zoning-laws-destroy-communities/ ) are highly destructive of wealth. They prevent people from starting businesses in their own homes, thus preventing untold millions of starup businesses.

David Youngberg writes:

Oh that's easy; organ donation. Can you think of anything that would save more lives and at the same time give the poorest people a means of lifting themselves out of poverty than letting people buy and sell their own organs?

JKB writes:

Liquor sales prohibitions. Where I live you can only buy wine and liquor in the city limits. Beer sales only in the country. It's a 20 mile drive to the nearest liquor store. If the county (actually counties since I live at the intersection of 3) went wet, a liquor store would open up out this way.

I wonder what the global warming footprint of liquor sales prohibitions is? A lot of people driving a lot of miles for a bottle of wine with dinner.

Or just the liquor by the drink prohibitions. A suburban city a friend works in voted down liquor by the drink about 9 months ago, they had about a half a dozen national restaurant chains ready to build if the prohibition had been removed. Instead, along the undeveloped access corridor from the freeway to the city proper is just overgrown land with for sale signs.

Doug Murray writes:

I see no need for the government to license businesses and professions as that serves mainly to reduce competition for those already in the business. It may provide some benefit in areas like medicine (doubtful) but hair braiding and florists - no way.

James writes:

How about the state monopoly on liquor sales in virginia. Studies have been done and found that the state would increase their tax revenue by privatizing the stores. Not to mention that they wouldn't have the expense of paying gov't workers (liquor store employees).
I live in a county in KY where almost every county below is dry (can't sell alcohol) so there are tons of bootleggers who buy in bulk and re-sell them back to consumers south of here. lol its funny how silly gov't regulation creates these black markets and takes away tax revenue from other counties.

How about bans on fish pedicures! http://online.wsj.com/article/SB123776729360609465.html

It has to be land use related. Here's from today's Carpe Diem from Mark Perry:

MP: The graph above shows that Texas never had a real estate bubble like those in California, Florida, Arizona or Nevada. Consequently, Texas never had the real estate crash like in the other states. This article presents an interesting perspective about how restrictive land use policies contributed to the real estate bubbles around the country, and how Texas escaped the Great Recession due to more liberal land use policies.
Steve Sailer writes:

Yet, despite the jackboot of the government lodged so firmly on the windpipe of Pacific Grove, many people familiar with this Monterey Peninsula town consider it pretty close to paradise.

In contrast, Salinas, where many of the menial workers of Pacific Grove live, is much more wide open to the construction of tenements.

Yet, how many rich people choose to live in Salinas over Pacific Grove?

quadrupole writes:

Don't take this the wrong way... but I think you are a deck short. Your deck of workers to match to jobs is a useful way of thinking about it... but it's incomplete without the deck of outputs and the deck of consumers. In other words, there are a chain of cards and decks... matching workers to jobs, jobs to outputs, and outputs ot consumers. Even if we were to succeed in matching workers to job well... if outputs don't match to consumers well, you still have a recalculation to do.

Basically, what you have is a cascade of recalculations going back. Consumers abruptly changed their preference for outputs, so the outputs to consumers has to be recalculated. Which causes a recalculation of jobs to outputs, which causes a recalculation of workers to jobs.

The economy of course, naturally does this sort of recalculation all the time. So what you ideally want is:
1) The maximum velocity of recalculation you can get
2) The minimum nudge away from a stable equilibrium you can manage.

The current 'Great Recalculation' has occurred because various artificial factors pushed the economy away from stable equlibrium for far to long... and then various other artificial factors (government policy, I'm looking at you) have greatly reduced the velocity of recalculation.

Mike Moffatt writes:

A related question - how many jobs are lost because the (municipal) governments can't/won't make determinations on whether or not an activity is legal.

A story from my hometown paper about an acquaintance of mine:

Boot camps get the boot from city parks

BYLAW DUST-UP: Operator said he got tepid approval


Nick L writes:

I think these broad strokes paint the wrong picture.

On the island of Hilton Head, SC and neighboring Bluffton, SC, local ordinance requires all commercial buildings to be set back a certain distance from the road, nearly out of view, and for businesses along the road to be built behind a layer of trees (this includes fast food franchises, grocery stores, etc). Obviously this is an attempt at keeping some of the beauty of the area intact (and very effective at that) while also serving the island with many of the amenities it's affluent tourist clientelle have grown accustomed to back home. You may say this stifles employment, but in this case I believe the opposite has happened. Hilton Head has every common commercial chain you could ask for, they just put their buildings back a few dozen feet. But, by keeping the island from turning into one continuous strip mall like many neighboring resort towns (Myrtle Beach), Hilton Head has become the destination of the more affluent vacationers in South Carolina.

David E writes:

Allowing people to practice medicine without a licence would certainly lower the cost of healthcare. Most things that people go to see a doctor for don't require nearly as much education and experience as a licensed doctor has.

nick writes:

Licensure of barbers

Chris Koresko writes:

John Stossel recently did a show on this, though his focus was on the ridiculousness of some licensing requirements from a libertarian point of view rather than an economic one.

He introduced the show by imagining himself being arrested for practising flower arrangement without a license.

Harold Cockerill writes:

In Fairfax County Virginia (home to George Mason Univ.) you are allowed to have a home office with one employee that is not a resident of the home. The cost for this license is $50. To secure a license to have two employees a businessman must make an application and pay a $15,000 application fee.

The fee is for the application and does not guarantee one will get the needed permission.

I'm so happy the ruling class is there to protect me.

John Goodman writes:

My casual impression is that (1) Monterrey is one of the worst cities in the nation in this regard (remember: that is why Clint Eastwood ran for mayor) and (2) the citizens there are not interested in creating jobs that would encourage the influx of more people.

Mr. Econotarian writes:

Although the US already allows $500 million in exports to Cuba, we could dramatically expand that if we lifted the restrictions that require getting a specific export permit and limitations that the government of Cuba must pay cash in advance, through a third-country bank.

If we also allowed American tourism to Cuba, not only could this bring additional jobs in the US travel & transport industry, the additional tourist money in Cuba could help to increase imports from the US.

BZ writes:

Troy Camplin has the best one. When I think of the cost in distance and money my sister has to pay for daycare, I always think of the stupid zoning laws.

My three favorite local ordinances are 1. registration of pets, and limitation on their number per household; 2. limitation on number of vehicles in a driveway to 1 per household resident; 3. length of lawn grass (yes, this is a CITY ordinance).

I can't say how much more there would be without them. I've violated all three from time to time regardless.

Sisyphus writes:

In trying to be along the same lines as the original post, I would suggest a more limited and noncontroversial deregulation - allowing dancing in any restaurant, bar, etc. Here in over-regulated California, it's common for cities to only allow very limited numbers of nightclub licenses, while there are substantially more places with liquor licenses. The result are many bars that serve drinks and play music, but where no one is allowed to dance. It is a not infrequent occurrence in restaurants and bars here to have to intervene when a patron dances and stop them from dancing because it's not allowed by their permit.

Surely there are at least arguable reasons (though perhaps not ultimately good ones) for prohibitions on alcohol sales, prostitution, various drugs, etc. But dancing is a low risk activity with positive health benefits and social benefits. If particular restaurants or bars didn't want to allow dancing because it doesn't fit their business model, they could choose not to allow it, but why should any government do so?

Pietro Poggi-Corradini writes:

Raise the speed limit 10 mph everywhere and see productivity shoot up.

Seth writes:

This is in California? Sounds like Elmore City, Ok (the town in Footloose), only a whole different religion is in charge.

What are home prices like in Pacific Grove? Sowell often writes about the zoning restrictions and supply and what that does to home prices.

He also writes about hypocrisy of the people who support the laws as they are usually created and enforced by people who say they support things like helping the poor and diversity, yet the zoning laws act against these goals.

Matt writes:

Scrap product safety regulations and require express warranties and privity of contract for product-related claims (i.e., legislate away current product liability laws). Let those who want their product liability lottery ticket pay for it. Allow the rest of us to pay less if, based upon our own risk-reward calculations, we opt out of safety features mandated by regulation or tort law.

Ryan writes:
selling beer to people on the beach. What if the governments here were to allow that. How many additional people would find work?

Doc Henderson,

We already have this in North Carolina. I took advantage of it this past weekend. Of course, the city council is looking to shut it down because, "[we] just don't know who is buying the beer" as if they did in the stores.

q writes:

for once, steve sailer has it right.

if you don't like it, you can move somewhere else, and if enough people do, then you'll have something else. that's the market.

wait, you don't want to live with poor people next door? then you'll have to put up with the absurd values of the rich.

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