The Financial Times has a very good article that exposes some of the internal contradictions of progressive economic policy:
A shortage of construction workers is putting at risk the Biden administration’s ambitious plan to fuel a historic building boom in the US, according to industry executives.
The construction sector could be short as many as half a million workers this year, according to the Associated Builders and Contractors, an industry group, increasing project costs and delaying a building campaign that executives say is comparable to that of the second world war.
For much of the past 15 years, we’ve been assured that the economy was full of unutilized resources and “unmet needs”. Classical economics (with its emphasis on production constraints and opportunity costs) was out of fashion. We had multi-trillion dollar stimulus (even under GOP presidents) and Congress recently enacted several enormous programs to create infrastructure, clean energy, and chip making.
Even without these vast new programs, the economy is currently experiencing a labor shortage due to excess monetary stimulus. This situation is quite different from the WWII arms build-up, which began (in the spring of 1940) at a time when unemployment was relatively high. We don’t have enough skilled labor:
In Columbus, Ohio, Intel has pledged $20bn to build two semiconductor factories, and Honda is building a $4.4bn battery plant with LG Energy Solution. The projects will require nearly 10,000 construction workers.
“The entire state of Ohio does not have the number of professionals to perform this alone,” said Catherine Hunt Ryan, manufacturing and technology president of Bechtel, one of the companies building Intel’s factories.
Costs are being pushed up even further by some of the regulatory provisions that require “prevailing wages” (code word for union workers) in the new projects:
“The administration is effectively tying one hand behind one’s back because of the regulatory restrictions on who can engage productively in these construction projects,” Basu said.
So why not import the needed workers? Apparently, that’s also off limits:
To meet labour demand, construction bosses are pushing for immigration reform, an issue unlikely to gain traction in a divided Washington.
. . . One problem, according to Brian Turmail, a spokesperson for the AGC, is a contradictory attitude towards building jobs in the US.
“We just don’t want our own children to work in construction and we don’t want anyone from outside of the country to work in construction.”
Progressive economics is full of internal contradictions. In its crudest form (e.g. Bidenomics), it’s little more than a wish list. Wouldn’t it be nice if we had plenty of jobs and high living standards (consumption) and high investment and high wages and a clean environment and the re-shoring of chip making.
The problem is that one cannot have all those things at once. Choices must be made. Something has to give.
On economics, President Biden has the instincts of FDR, but he’s presiding over an environment that is very different from the 1930s. After taking office, Bill Clinton figured this out—let’s hope that Biden is equally adept at learning.
