Adam Gurri in a post titled Create Value, Not Jobs, writes
Certainly technology can and is disrupting human labor markets–but that isn’t going to “further weaken the global economy”. It is going to increase our productivity, make it easier to provide consumers value for cheaper. It will make it hard for people replaced by machines to figure out how they can create additional value, for a time.
But we need to get our priorities straight; what we want to do is help people create value. Unless giving someone a job will enable them to create more value than it costs, the existence of that job is counterproductive.
Economists like to say this type of thing. Its counterintuitive, which always fun. And, it helps highlight why certain policies are in fact a bad idea.
The only problem is that as a general statement, its wrong.
Or, more precisely, its either trivially true or false.
If value is simply, that thing which our ideal social objective function maximizes, then its true. But, literally by construction and hence trivially so.
For example, one could just as accurately say
- Unless freeing millions of people from slavery creates more value than it costs, its counterproductive
- Unless preventing the mass rape and murder of innocent children creates more value that it costs, its counterproductive
- Unless asking Hannibal the Cannibal to refrain from devouring all humans on earth and then committing suicide for want of another person to eat creates more value than it costs, its counterproductive
While these statements are all true they are not particularly useful as a guide to policy.
On the other hand, if what you mean is that unless giving someone job on net increases the total value of goods and services produced within the economy, its counterproductive, then this is not true.
First, its not true because of the simple fact that jobs are a means of distributing income and distributing income is not, generically, costless. If we were to levy a tax and use that tax to redistribute income to those without a job this would almost certainly have some Hicksian deadweight loss.
In addition you are going to need some administrative authority to manage this redistribution policy and you have to worry about designing the system so that it does not encourage people to seek joblessness.
All of these things have welfare losses even if they have small or zero losses in terms of the total value of goods and services produced.
Second, people value having a job. They value the narrative that they are taking actions on a daily basis which enrich society, even if they are not actually doing this.
Now I am the first to point out that people can take this way too far. And, you have to balance the value of allowing folks to engage in an extended fiction about their role in the global economy against the material consumption of other human beings. Nonetheless, the value of the fiction is not zero.
If for a total material cost of $1 we could allow 100 Million people to persist in the belief that they are expanding the global pie, even if they are not, this would be a price well worth paying.
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Monday ~ January 23rd, 2012 at 9:46 am
Adam Gurri (@adamgurri)
If my argument is counterintuitive, yours is downright contrarian!
You say:
First, its not true because of the simple fact that jobs are a means of distributing income and distributing income is not, generically, costless. If we were to levy a tax and use that tax to redistribute income to those without a job this would almost certainly have some Hicksian deadweight loss.
This is sort of begging the question, isn’t it? Aside, perhaps, from instances where public funds are used to fund the arts or something, in general a lot of make-work jobs suck. Sorting someone into doing a job that they actually enjoy doing (read: that they value) is a nontrivial task; it isn’t costless, either. Attempting to enhance people’s welfare through playing real job is just as likely to involve both making people work to create nothing of value for anyone else, and forcing them to continue doing something they themselves do not value.
Something like a negative income tax would be a more straightforward, lower cost way to redistribute income, if that’s what your goal was.
In addition you are going to need some administrative authority to manage this redistribution policy and you have to worry about designing the system so that it does not encourage people to seek joblessness.
If these hypothetical people were doing their jobs effectively (which I am skeptical is possible) wouldn’t you say, then, that they were providing a valuable service?
Second, people value having a job. They value the narrative that they are taking actions on a daily basis which enrich society, even if they are not actually doing this.
(…)
If for a total material cost of $1 we could allow 100 Million people to persist in the belief that they are expanding the global pie, even if they are not, this would be a price well worth paying.
This is all well and good, but people value a lot of things–including leisure. You could replace that last sentence with “if for a total material cost of $1 we could allow 100 Million people to go on vacation for the rest of their lives, this would be a price well worth paying.”
If the cost is low enough, nearly any benefit is worth it, yes?
Your argument, in essence, is that doing work is itself something valued by people, and therefore make-work jobs can be a valuable service that governments provide their unemployed citizens.
My response is that the particulars matter–it’s not doing just any job that people value; and I think it’s fair to argue that a sizable minority if not a majority of people who have real jobs (ones that produce something valued by the market above what it costs to employ them) would work less, if not necessarily zero hours, than they do now. What are the odds that the income redistributor is going to come up with something more appealing?
Monday ~ January 23rd, 2012 at 11:01 am
Becky Hargrove
Karl! I want you to think for a moment about what you said, “Unless freeing millions of people from slavery creates more value than it costs, it’s counterproductive.” You seem to have gotten out of bed this morning and tied yourself into knots.
We will finally be free – if we only allow it, by our own skills and abilities, our own desires to be a valid part of community. We will become entrepreneurs of all we are capable of providing, and once we set the ground rules, our greatest challenge will become that of creating greater value for one another through knowledge itself. This is what technology now frees us to do, if we can only figure out how to do it – and when we do, we will live far better than this middle class ever did.
Monday ~ January 23rd, 2012 at 4:58 pm
JL
Obviously, it’s a moral choice. No one can deny that the (American) people want jobs (including ‘deserved’ vacation) and that they do not want to be unemployed parasites, i.e. ‘welfare queens’.
The government (their leaders) needs to either figure out how to get them productive jobs, or else provide them with sucky unproductive make-work jobs that allow them to feel good about themselves.
Heck, the Chinese government is building ghost cities and subsidizing their exports and the Chinese people are happy with the work!
To allow such mass suffering to persist and to argue that it is unavoidable or necessary because of some economic theory is morally repugnant.
On par with arguing against emancipation.
Thanks, Karl, for calling out the naked emperor.
Monday ~ January 23rd, 2012 at 5:41 pm
Noumenon
Second, people value having a job. They value the narrative that they are taking actions on a daily basis which enrich society, even if they are not actually doing this.
I find this desire is far more easily fulfilled by video games. That illusion of productivity and status is strong and there’s no counterweight of having to put up with crappy coworkers and getting your performance criticized.
Monday ~ January 23rd, 2012 at 8:01 pm
Adam Gurri (@adamgurri)
I find this desire is far more easily fulfilled by video games.
Quote of the day.
Tuesday ~ January 24th, 2012 at 12:04 pm
Lord
Now if we could just pay for food and rent with it. Leisure doesn’t exist without an income.
Wednesday ~ January 25th, 2012 at 2:01 pm
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