Friday, March 17, 2017

Energy and Jobs:

A Delicate Balance

I have long been troubled by the question of how society should deal with the human impact of technology advances.  I have been especially concerned when I see advertisements for an industry arguing that a factory or a power plant or a coal mine needs to be kept open because of the jobs these industries generate.  Therefore, I was very pleased to see an article by Professor Maria Zuber of MIT reflecting on just this situation for the coal mining industry, and offering some practical suggestions for dealing with the impacts of change in a constructive way. 

In the past, when I've heard advertisements by industry groups promoting themselves on the basis of the jobs they create, one part of me has always reflected on the fact that a lot of occupations that once employed thousands of people now exist as niche markets, if they exist at all.  Somehow, in the past, the job market has always evolved and people have adapted.  So why is today different?

But another part of me recognizes that the situation is much more complex than just telling people to get another job.  In past generations, there were more people who were self-employed or who worked at small businesses, and they were spread out geographically.  The need for farriers or buggy-whip manufacturers or other such occupations diminished over a period of time, so probably, to a large extent, there was a natural progression.  People in these professions continued to work in the professions, but new people didn't take those jobs.  Since they were geographically spread, people needing these services could continue to get them, but perhaps had to travel a little farther.

I'm not saying that all this happened without any disruption or difficulty, but that kind of transition is not the same as a company employing hundreds or thousands of people in one area suddenly shutting down.  We have had some experience with large companies, or industries that dominated a region, closing their doors, and it has not been good.  Cities and towns have been devastated by the large-scale unemployment that has resulted from changes of fortune of the industries they  hosted.  When hundreds or thousands of people in a region are suddenly left without jobs, there is no place for them to turn.  It is easy to say they should move to a different region or to a different industry.  It is harder to accomplish. 

Yet, every time I have heard an industry argue that it is important because of the jobs it has creased, I have wondered how we can ever move ahead if we need to keep the doors open because of the jobs.  How can we reduce the pollution from dirty industries?  How can we reduce the health and safety risks from inherently dangerous occupations?  How can we replace outmoded technologies with new ones if we have to keep supporting the old ones?

Professor Zuber addresses this issue for the coal industry.  What is particularly impressive to me is that she has a very personal perspective on the coal industry, as she grew up in coal country and her grandfathers were coal miners (and were afflicted with black lung disease).  Therefore, she does not see this as an us-versus-them or an either-or situation.  She argues that we need to reduce the emissions that burning coal produces, but at the same time, she has empathy for the people whose jobs are at risk.  The solution she describes is multi-pronged:  develop and deploy carbon capture technology, develop other uses for coal, and most of all, develop and support a plan to assist workers in transitioning from the coal industry to other industries.

All this is easy to say, but harder to implement, especially if it has to be scaled up to other industries and other parts of the country.  Nevertheless, as we move forward, I think we have to avoid the knee-jerk reaction of saying that the jobs justify the existence of a factory or a mine or a power plant.  We must instead look at the bigger picture and look at all the options.  Professor Zuber's suggestions for the coal industry provide a good model for how we might start to approach such decisions. 


Thursday, March 9, 2017

The Dilemma of Regulation:

Is it Good or Evil?

After I reported on the death of Harold Denton last week, I couldn't shake the feeling that his career and his role in the aftermath of the Three Mile Island (TMI) accident had some larger implications that I should have addressed--namely, the importance of a good regulator.

When I lecture to students on regulation, I always start by saying that, in a perfect world, there would be no need for regulation.  Everyone would be capable and ethical and honest--no one would cut corners to save time or money, no one would cheat anyone else, no one would be careless or irresponsible or would handle equipment they weren't trained to handle.  We wouldn't need stoplights that end up making us stop even when we can see that no traffic is coming the other way.  We wouldn't need to have policemen giving us speeding tickets when, most of the time, you can drive a little over the speed limit perfectly safely.

I also like to give two examples of the value that regulation--and regulators--sometimes have.  In particular, I point out that before the present era of occupational, environmental, and other regulation, the death rate from accidents was astounding by today's standards.  Quoting from David Von Drehle in Time magazine, May 2, 2013, who was talking about what happened after the infamous Triangle Factory fire in New York City in 1911:

A little more than a century ago, in the rapidly developing United States of America, nearly 1,000 workers died on the job every week, on average. Collapsed mines buried them alive. Bursting steam engines scalded them to death. Pots of molten steel poured over their heads. Whirling saw blades worked loose in lumber mills and turned to shrapnel. Railroad engines crashed. Merchant ships and fishing boats sank in trackless seas.

In the years since then, the number of workplace fatalities has been cut by more than 90%, even as the population of the country has more than tripled. The risk of death on the job today is but a tiny fraction — less than 1/30th — what it was on the warm spring day in 1911 when 146 garment workers died in New York's notorious Triangle fire.

The fact is that most regulation today was introduced in an effort to prevent a repetition of disasters that were killing and maiming people in the early days of industrialization.  Even today, as Von Drehle points out, in countries with lower regulatory standards and higher levels of corruption, we still see factories collapsing and killing hundreds of workers.

My other favorite example is the Thalidomide scare of the 1950s.  Thalidomide was legal in Europe while the FDA appeared to dither and delay approval for use in the U.S.  In the meantime, women using the drug in Europe started to give birth to deformed babies.  In the end, it was a single person on the FDA staff who kept asking for more information that saved the American public from the same fate.  Until the risks of Thalidomide were revealed, this woman had been widely criticized for causing regulatory delay.  

Does every regulatory delay save lives?  Of course not.  Is every search for more information merited?  No.  Can regulators make an effort to speed up their reviews?  Certainly.  But it is a difficult challenge to determine how to speed up reviews without risking missing some important potential problem.  It is not a problem that can be solved by imposing an arbitrary restrictions on regulations.

I do not want to be an apologist for regulation.  Regulations do have some inherent shortcomings:  they are sometimes made in reaction to a problem, so they are implemented in a hurry and may not fully consider all possible situations and implications; regulators tend to use some conservatisms to try to counter anything they may not have thought of; they tend not to be updated as fast as new technology develops or as our knowledge evolves, so can be out of date.

Regulations, to serve their purpose, need to be continually reviewed and modified to reflect new technology, new science, new social developments, and new concerns.  Some regulations may even become obsolete and should be eliminated.  But evaluating regulations is complex.  Regulations exist in a complex world--they have costs, but they also have benefits.  Decisions to eliminate or modify existing regulations or to develop new regulations need to be based on objective reviews of the entire picture: the needs, the options, the costs, and the benefits.

There is a lot that can and should be done to improve regulation.  Regulators should seek to find the least burdensome ways of implementing regulations.  The NRC has attempted to encourage this through its Principles of Good Regulation.  The paperwork and reporting requirements of regulations are often considerable and should be streamlined where possible.

All of this, however, should not be done with a view that regulation is evil and the less we have the better.  This should be done with a view toward addressing the kinds of needs that led to the regulations in the first place, whether they were health and safety regulations, economic regulations, or any other kind of regulation.  They should be done with a perspective on what has been good about regulation as well as what has been flawed--of the factory accidents that were prevented because of the lessons learned from the Triangle Factory fire, the medical problems that were prevented because of the kinds of regulators that evaluated Thalidomide and other drugs, and all the other benefits, often unrecognized, of things that didn't go wrong because of regulation.