Monday, September 3, 2007

Crandall Canyon, One More Time

Before the Crandall Canyon disaster recedes into media oblivion, it’s worth spending a moment to think about what economics does and doesn’t have to say about this grisly series of events.

The standard theory, which can be found in any labor economics textbook and even some principles texts, is that dangerous work is essentially a non-problem. Workers will only take a dangerous job if they get extra pay to compensate. This gives employers an incentive to make jobs safer up to the point when the cost of more safety exceeds the added wages they would have to pay. The result: the level of safety is efficient (marginal benefit of safety improvements equals marginal cost), workers with a taste for risk are efficiently matched with employers whose technologies make risk harder to reduce, and workers in dangerous jobs are no worse off than those in safe ones, since they have bigger bank accounts to keep them happy. There are two big regulatory implications: interference, like enforcing safety rules, is against the interest of both workers and employers, and the wage-safety tradeoff can be used to calculate a “value of statistical life”, which comes in handy whenever cost-benefit analyses need to be performed.

I kid you not.

The “consensus” view in the profession is that a wealth of empirical data validates this theory. The Environmental Protection Agency holds earnest discussions on whether the value of a life should be raised or lowered a bit, or perhaps set at a higher level for some groups (like the rich) compared to others.

There’s no point getting into a full-scale disquisition on this topic; my book from 11 years ago says it all. (Except for everything I’ve been saying since then....) One pertinent question we might ask, however, is this: what, if anything, does conventional economic theory tell us about a disaster like Crandall Canyon? Is this a theory for large data sets only, or can it be applied to a particular incident? My view: if it doesn’t make sense in any particular case, it doesn’t make sense in 60,000 cases.

So what do we have?

1. Efficiency: no, with the practice of retreat mining.

2. Risk-loving workers: we don’t know the psychological profile of the miners, but it would be outrageous to claim that the courageous rescuers, three of whom died on the job, simply had a higher tolerance for risk. Not knowing the difference between getting a kick out of risk and putting it on the line for others is typical of utility theory.

3. Fair distribution of risk: dubious. The tipoff is that three of the six miners now buried in the mountain were Mexican nationals; my guess is that they were not being offered whatever plum jobs were available in rural Utah.

Would it be too much to ask for an economics that, instead of spinning fantasies, asked practical questions like, what kind of labor market structures lead to this devaluing of human life? How can competition be prevented from leading to a race to the bottom (OK, not the best metaphor for coal mining) in safety practices? What forms of regulation can most effectively achieve the essential goals of public health and social justice?

20 comments:

Sandwichman said...

Peter, welcome aboard!

You asked,

Would it be too much to ask for an economics that, instead of spinning fantasies, asked practical questions like, what kind of labor market structures lead to this devaluing of human life?

Sandwichman says it would be too little not to ask for that and not to ask that question ten or twenty times a day. Would it be too much to ask that we endeavor to be, as well as ask, the question?

Anonymous said...

How about, workers will do dangerous work if there is no better work available within their geographic area of comfort? How about, economists haven't a clue regarding a worker's "taste for risk?" Do people move to locations in search of risky work because they love to put their lives in jeopardy? Or, do people, like those unfortunate Mexican nationals, gravitate towards those jobs which few others are willing to risk their own lives to do? Aha!! Is it just possible that people do risky work because better, or just any other, jobs are not readily available to them for one reason or another? Do people in risky jobs get paid relative to competition from other possible employers? If there are few alternative employers, as was likely to be the case in the "booming" economy of Utah, what the devil does the risk/reward ratio have to do with the choice of jobs?

They do write some damn stupid ideas in too many "scientific" texts. I'd be curious to know what forms of behavioral research may exist that measures the risk loving tendencies of the "richly rewarded" miner. And is there any economic research measuring the rich rewards of such work relative to other potential jobs?

Russ Nelson said...

Your guess is that they were not being offered whatever plum jobs were available in rural Utah is probably a good guess. Where you go off the tracks is that you fail to make the connection between this fact and the fact that Mexican workers, legal or not, are discriminated against. So, again we have workers who are choosing to take a risk to get the job they want, and again we fail to find any form of regulation which can improve matters. Other than open borders, which I suspect you are not in favor of, but correct me if I'm wrong.

Anonymous said...

Dorman

keep it up. i am not sure the answer lies in "economics" but then i am not an economist.

the rationalizations for no-regulation and saving money on safety measures that you quoted from "an economics text" explain why i am not an economist: i really can't stand dishonesty.

that doesn't mean all economists are dishonest, but there is a heavy flavor of self delusion in all the first year texts and popular expositions i have ever seen.

we take risks because they come with the jobs we can get, and we learn to suppress fear. risk that we can manage is, up to a point, a source of pride. risks we can't manage are a source of depression.
but there are extreme limits to how much "shopping" for jobs we can do, to find that delicate balance between too much risk and too little money. in fact, i never noticed a "risk premium."

perhaps the bosses can measure one to the penny. but workers are not so calculating.

Anonymous said...

let me see if i can put it more clearly:

the mine owner and his paid economist come out to tell me that "the equilibrium point between installing better safety measures and paying the miners more is what it is, and trying to alter that through regulations will result in market inefficiencies."

we say, "yes. and where it is shocks the conscience of the nation. we will insist upon the mine safety measures. we know this may result in an increase in the price of coal, and possibly a decrease in your profits, resulting in a disincentive for you to continue the hard work of owning a mine. we are prepared to pay that price."

Anonymous said...

oh no

please don't suggest

job markets just need
a few good rules and refs

paine

Anonymous said...

anonymous,
The intent of your post is not quite clear. You may be being sarcastic, intending to mean that govt. should make no rules regarding the job market. It doesn't read as though it were a simplw declarative sentence. Don't be shy. If you're intending to say that the job market is just another aspect of the purity of capitalism and that all things therein will adjust to market demand, then just say so. Then we'll all know what you mean and not have to play guessing games. And what's with paine? Is that who you are? Or are you qouting paine?

Anonymous said...

jack,
paine is, i believe, our old friend pinky, therefore i would interpret the above not as a call to laissez-faire capitalism but a suggestion that we move beyond this system of wage labor and capital with its always imbalanced economic power and striving for every last pillar of profit, roof drops and all even if we call these recessions and depressions.

i may have overly elaborated but that would be my guess.

now, the mining side... room and pillar mining has a long history. depending on geology, depth, technology, it used to be that even sixty or more percent of of a seam could be left as pillars on the way in though i doubt that was the case at the crandall canyon mine. retreat mining is just what it's called, a removal of pillar material in order to extract as much as possible on the way out. 'as much as possible' relates to as much return on investment as possible since, you know, miners' lives don't count until after they've been buried.

that there had been a 'large bump' (pillar blows apart due to pressure) when? in march* and only some hundreds of feet from where these guys were gifted with permanent internment, makes me wonder whether risk is even an applicable term... but now whatever evidence is conveniently buried.

*A memo obtained by The Salt Lake Tribune shows that mine owners were trying to work around "poor roof conditions" before halting mining of the northern tunnels in early March after a "large bump occurred . . . resulting in heavy damage" in those tunnels.
[...]
"It's dangerous. Damn dangerous I would say," Robert Ferriter, now director of the mine safety program at the Colorado School of Mines and a 27-year veteran of the Mine Safety and Health Administration. "What is MSHA doing in all this? They're the ones who are supposed to catch this sort of thing."
[...]
Both areas to the north and south of the main tunnel had been "longwalled," meaning the coal had been extracted and the areas had caved in, leaving no support on either side of the main tunnel. Digging out the last supports for the main tunnels is extremely dangerous.
"I'm surprised that they would try to take that last section," Ferriter said. "I would've thought that would have triggered someone from MSHA to say, 'Wait a minute..."

rather than emphasize MSHA failure, the operators had to be aware, and were going for that last bit of return... capital personified.

Anonymous said...

Juan

please please don't misunerstand this. my object is a long term improvement in our (generic our) ability to communicate with each other.

you use phrases in you comment which may be entirely justified, but they look to me like they fit the form, at least, of what you called innuendo when it was incoming and reacted to with great hurt and offense.

i have no desire to defend the mine operators. i think you are probably right. i just wish to suggest you be aware of a style of expression which you, and others, use freely. but which stops conversation entirely when you find yourself the subject of it.

of course you are essentially accusing your non-present opponents of murder. whereas i was accusing my avialable-to-respond opponents of bad logic.

and while killing miners is surely the worse crime, i would hope that you would expect that a worker, not otherwise thinkng about greater crimes, could become quite passionate about the attempts to kill the source of his old age security...and the inadvertant aid -- in his eyes -- given that attempt by people of the greatest good will and intelligence.

oh, well, small note on "intelligence" since it came up. i have only a moderate intelligence. i am aware that others have more than i have, and some people seem to have much, much more.
but i have also noted, and i think been supported by the people whose business it is to study such things, that even people of the highest intelligence can be wrong. telling them they are wrong...even when they are right, and even in sarcastic language...should not be seen as an attack on their lives, their honor, their reputation, their intelligence, the core of their being...

that said, i think there may even be standards to "rough" debate. though i am not sure those standards ought to be "respect for my personal dignity." but "street language" that cannot, even remotely, add anything to the argument, reflects on the dignity of the employer of that language, not the object of it.

Anonymous said...

i'm not sure what you're talking about coberly.
the above post accuses capital of being capital, of trying to maximize returns.
if you want to discuss the merits and not of room and pillar then retreat mining then please study it a bit.
if you want to say that tighter regulation might have prevented this and other mining accidents, just say it. but be aware of the political relationships between operators and fed + state govts.
if you want to tell me that miners might get mad,,news flash, they do and mostly with very good reason.
if you want to talk about 'intelligence', i have no idea why... everybody is intelligent; it is not some stupid competition, some 'look, i'm right and you're wrong' -- it does have to do with experience, learning from it, trying to apply; there is a knowledge component. everybody is intelligent but everybody is, thankfully, also different.
'rough' debate mostly = the 'your wrong, i'm right no matter what' type and, again, have no idea why you bring that up. is it a matter of feeling slighted? of ideology? of perspective? of?

Anonymous said...

Juan

in your comment that i replied to, you made a number of statements that ammounted to "innuendo" accusing the mine owners of essentially murdering workers in order to make a buck.

i was not even disagreeing with you. i was trying to point out your use of innuendo.

with the hope that you would be more forgiving when you suspect someone is levelling the old innuendo gun at you.

i tried to expand that into a more general discussion of the ways people don't understand each other, and a kind of "apology" for why this uneducated, unintelligent person feels perfectly qualified to argue with you are both better educated and more intelligent than i am.

and it's not a matter of feeling slighted. it's an effort to avoid hurting your feelings, and sandwichmans, if i inadvertantly stumble again into my native dialect.

that sad, i am flabbergasted that once again we have utterly failed to communicate.

Anonymous said...

coberly, i was not 'arguing' but combining the general (capitalism) and the particular (crandall canyon). i cannot pretend that capital and its personifications have nothing to do with dehumanizing employees (and themselves as well).
did those particular operators intentionally kill their workers. i don't think so. but given conditions exposed months before, they surely couldn't have cared anything about their lives.
have mine owners ever intentionally killed employees? bet on it.
please stop saying things like 'this uneducated, unintelligent person' but if you truly feel that you are, well, fwiw, i don't think so.

Anonymous said...

juan said,

" as much return on investment as possible since, you know, miners' lives don't count until after they've been buried."

"makes me wonder whether risk is even an applicable term... "

" the operators had to be aware, and were going for that last bit of return... capital personified."


I pointed this out, not because I disagree with it, but because in another thread I was accused of "innuendo." I wished to point out to Juan, his own use of innuendo. Not to complain, but only to suggest he be aware that he uses the same style that he complains about when it suits him.

I am so stupid I thought this might make for more tolerance in the future.

Instead I have had the justice of Juan's innuendo pointed out to me in two comments, and a suggestion that I make my argument FOR the mine owners more clear.

I was not arguing for the mine owners.

And the mistake I made was to assume it was my use of "innuendo" which provoked the complaints in the first thread.

The real problem is much deeper.

Anonymous said...

lets communicate -

1. each firm try's to maximize its return and that includes mines, even the canyon mine. under what circumstance and how often do you hear anything about mine employees?

2. when, in march* of this year, it was known that "mine owners were trying to work around 'poor roof conditions' before halting mining of the northern tunnels...after a large 'bump' (pillar blowout) occured.." and this was ~900 ft from where the miners were recently working and died, what does it tell you about 'risk', or are you absolutley unaware of how dangerous such conditions are?
ok, don't take my word for it? how about colarado school of mines director of mine safety program, quoted in intial post?

3. given the above, yes, 'the operators had to be aware'. if they weren't 'going for that last bit of return', what was continued operation about?

'capital personified' - well yeah at least if a few hundred years proves anything. capital is a social relation between owners/employers and employees. it is not a relationship of equality but exploitation. personify it and you have owners who demand that work be done under evidently unsafe conditions, even owners who might chain child workers to the machines they operate, even owners who see no problem spraying pesticide over employees while they work, even owners who prefer unrestricted pollution no matter the injuries and deaths caused, even owners who demand that generally working class others fight their imperial wars for them.

*i believe there were also other 'incidents' prior too.

Anonymous said...

juan

i agree with everything you said.

but i am tearing my hair out because you seem to have no idea that i always agreed with you about this. i was trying to talk about the use of innuendo.

not because it is wrong to use innuendo, but in the hopes you would be more tolerant of me if you suspected i might be using innuendo.

but this whole experience has been amazing.

it makes me think you (I) can never say anything to anyone they are not expecting to hear and have them hear it. not agree with it. just hear it.

i agree with you about the mines, and capitalism in general. but i was talking about the use of innuendo.

Anonymous said...

coberly,

if you agree with the content of my innuendo, what are we talking about, simply hidden implication which were not particularly hidden?

or, that juan also uses innuendo (and therefore should not be upset by others' use of same no matter who/what it's directed towards and whether it has basis beyond the instant usage?)

yes i understand 'that [you] were talking about the use of innuendo' but all uses are not identical.

Anonymous said...

juan

all uses of innuendo are not identical.

yes. i am learning that.

Anonymous said...

some are more equal

Anonymous said...

some innuendo is less personal and more substantive; not more equal but less.

Anonymous said...

would that be in the eye of the beholder?

i was yelled at for innuendo i didn't even intend.


juan, i believe, thinks it is more or less straightforward to not quite say that capitalists commit murder to make money.

i said, i think this was the comment that provoked the outrage, that i had a fear of soft voiced men...

it being more or less an article of folk wisdom where i live that the men in the suits (capitalists?) are very polite and speak softly when they are about to do something you won't like.