The Lump of Jobs

I  saw this on Facebook:

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It’s from Reason magazine, and I was thinking about the “lump of Jobs fallacy”.    Here’s a reference.

It seems to me that this kind of thinking is really either a lack of creativity, or a lack of faith in human creativity.

The lump of Jobs fallacy assumes that there are only a fixed number of jobs that can be done.  Jobs are scare, and workers are allocated to those jobs.  If new laborers appear in the form of immigrants, than incumbent workers will be displaced from their jobs.  If jobs are automated then some workers again will pushed out of their scarce jobs.  In both cases the take home pay in total is reduced, and society is worse off.  Here’s bit from Reason on the scale of destruction of current jobs:

In 2013, the Oxford University futurists Carl Benedikt Frey and Michael A. Osborne warned that 47 percent of all jobs in the U.S. are at risk of being automated over the next 20 years. Sounds frightening—until you consider what percentage of jobs has been automated away in the recent past. Jobs in manufacturing and agriculture, which accounted for 33 percent of American employment in 1950, are now down to 12 percent. The number of U.S. manufacturing jobs peaked at just below 20 million in 1979 and has fallen to under 12 million today. Many went offshore, but many more were automated away.

This flies in the face of an economists perspective.  Here, jobs aren’t scarce, labor is.  In fact there are a boundless stock of tasks that need to be done.  New workers or machines to do work expand the range of output that society can produce and consume.  Both immigration and automation make society better off.

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I find it interesting that both the right and left tend to fall into the lump of labor fallacy, but emphasize different aspects of it.   Right wingers seem, at least lately, to fear influxes of new workers, and oppose immigration.   The left seems to fear anything that increases productivity, including trade and automation.

But both think that the jobs to do are limited mostly to those available today.  If new workers come they’ll force some current workers into unemployment.  Making workers less productive will create jobs to produce the same outputs.  The same output!

There’s the problem.  In fact, we all live with scarcity, scarcity of:

  • time
  • medical care
  • education
  • and more

If people pushed out of existing jobs don’t find something else to do that says, we’re uncreative and can’t allocate the displaced workers to new tasks, or the new tasks while making society as whole better off reward those workers less and they choose unemployment over a pay cut. 

After all as more current mundane jobs are displaced, then shouldn’t we be able to allocate people to what they are passionate about, not just what needs to be done to keep body and soul together?  The main reason we don’t spend most of our time acquiring food by hunting or farming, is that productivity has freed up most people to first make manufactured goods, and now more so services.  If we can’t find new jobs making new things we’re uncreative. 

As more mundane jobs are automated, then perhaps more  young people may go into something they are passionate about.  Think how many people once aspire to some artistic or creative profession, and automation over time will perhaps direct more to follow their passion – the star below.

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Reason said it pretty well:

Perhaps more chefs will prepare fine meals in the homes of clients, dramatists devise elaborate virtual environments as entertainment, tailors create one-of-kind bespoke garments. Who the hell knows?

It seems that for many thought their alternative  employment may pay less., though society  as whole will have their new services and whatever they were making before.

I suspect we do have both problems.  How else to explain the persistence of the lump of labor fallacy?  Of the two the problem of new jobs but less well paying is more serious.  It means that while society benefits from automation and immigration, some workers are worse off.

A Little Perspective

 

As recently as a few months ago, doctors were held in high esteem and educated people believed that medicine could be useful. All that changed, of course, with the medical profession’s stunning failure to prevent or even predict the breakout of ebola in West Africa. Worse yet, many doctors to this very day cling to their old ways of thinking, writing prescriptions, setting broken bones, and performing surgery in bull-headed defiance of the urgent need to jettison everything we know about medical practice and start over from scratch.

Nobody, of course, writes such nonsense about medicine. Why, then, do so many write equivalent nonsense about economics?

Most economists failed to predict the 2008 financial crisis and ensuing recession for pretty much the same reason most doctors failed to predict the 2014 ebola epidemic — their attention was, quite reasonably, directed elsewhere. It’s easy to say in hindsight that if economists had paid more attention to the shadow banking system, they’d have seen what was coming. But attention is finite, and if economists had paid more attention to the shadow banking system, they’d have paid less attention to something else.

For a little perspective, have a look at this chart showing U.S.~per capita income in fixed (2005) dollars:

That little downward blip you see near the top is the recent crisis. The somewhat bigger downward blip in the 1930s is the Great Depression. The moral is that in the overall scheme of things, recessions don’t matter very much. At the trough of the Great Depression, people lived at a level of material comfort that would have seemed unimaginably luxurious to their grandparents. Today, while Paul Krugman continues to lament “the mess we’re in”, Americans at every income level live far better than Americans of, say, 1980. If you doubt that, you surely don’t remember what life was like in 1980. Here’s how to fix that: Pick a movie from 1980 — pretty much any movie will do — and count the “insurmountable” problems that the protagonist could have solved in an instant with the technology of 2014. Or reread any of the old posts on this page.

If you care about human well-being, recession-fighting is small potatoes. It’s that long-term upward trend that matters. And economists, fortunately, understand a lot about what it takes to nourish that trend — things like well-enforced property rights, the rule of law, free trade, sound money, limited regulation and low marginal tax rates. Even more fortunately, economists have managed, however imperfectly and with fits and starts, to impress that understanding on the minds of policymakers. As a result (and going back, at least, to the repeal of the Corn Laws), we’ve had better policies and greater prosperity.

To throw out all that hard-won knowledge because we failed to prevent a financial crisis would be like closing all the hospitals because doctors failed to prevent an epidemic.

Moreover, it’s entirely possible that some of the best policies for fighting recessions are inimical to long-term growth. It could easily follow that even if you knew exactly how to fight recessions, you might prefer not to.

It’s a very good thing that some economists are trying to understand recessions, and a very good thing that they’re accounting for the lessons of the past few years. It’s also a very good thing that most economists are working in the myriad of other areas where we’re capable of doing good. Another very good thing is historical perspective. The current so-called “mess” that economists have (partly) gotten us into is not just the most prosperous era in human history; it is prosperous beyond the wildest imaginings of your parents’ generation. And yes, economists helped get us here.

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A Little Perspective
Steve Landsburg
Mon, 06 Oct 2014 06:01:23 GMT

How Obama Is Caught Between Economic Growth and Shrinking Incomes

 

In President Barack Obama‘s big speech on the economy Thursday, the president touted his party’s economic agenda and repeated a claim similar to one he’s made before: “It is indisputable that our economy is stronger today than it was when I took office.”

Then he added, “It is also indisputable that millions of Americans don’t yet feel enough of the benefits of a growing economy where it matters most — in their own lives.”

Behind Mr. Obama’s frustration: A striking divergence between the growing economy and the share of that growth going as income to the median American household.

In the economic expansions of the 1980s and 1990s, roughly coinciding with the presidencies of Ronald Reagan and Bill Clinton, the amount of gross domestic product for each person in the economy, or GDP per capita (red in all the charts), was growing. And the median household income — the earnings of the middle household (blue in all the charts) — was also growing.

Income inequality surely existed in the ’80s and ’90s, but the pie available was growing and Americans in the middle were getting a piece of it. Then incomes slid during the 2001 recession at the beginning of George W. Bush‘s presidency and never quite recovered, even as GDP per capita continued to grow. The recession that began in December 2007 sent both measures falling.

Since Mr. Obama took office, GDP per capita has reclaimed its lost ground. But these gains have not accrued to the median household.

A look at the year over year change shows the breakdown. In the 1980s and 1990s, median incomes and GDP per capita both rose. But beginning around the year 2000, per capita GDP has posted a number of solid years, while median household income has had few years of positive growth.

In 2013, median household income climbed for the first time since 2007, but by only a tiny bit — less than $200.

Since 1999, this has opened a widening gyre between the two measures. GDP per capita has risen, while median incomes have fallen. Mr. Obama would like credit for the recovery of the former. But it’s the stagnation of the latter that has left so many households dissatisfied.

How Obama Is Caught Between Economic Growth and Shrinking Incomes
Josh Zumbrun
Fri, 03 Oct 2014 12:00:08 GMT

Just when we thought we were out we’re pulled back in!

Once again, the United States has let itself be manipulated and baited into an undeclared war, for the second time in the Middle East.  The initial scope has been proclaimed to be limited, but as in the past, it isn’t clear what will keep that scope limited.

Now in the sixth decade of life, I feel like I have seen this movie before, and I fear how it will end.  Mostly I fear I’ve seen the end before.  In my life I’ve seen Vietnam, Gulf War I, Afghanistan, and Gulf War II.  Of these, only one in retrospect seems like it had realistic, necessary and achieved goals:  Gulf War I.

Vietnam, of course escalated steadily for almost a decade, failed to stop the tumbling of dominos by Communists in Southeast Asia, and its failure to do so never really showed why it mattered to the US anyway.

Gulf War I had a clear and achievable goal:  removing Sadam from Kuwait.  Leaving him in Kuwait still seems in retrospect like it wouldn’t have been wise  .  That limited goal was also achieved.

Afghanistan at its outset seemed and seems like it was unavoidable.  9/11 did require a response.  Unfortunately, the mission became nation building, and in that culture so different from that of US – tied culturally to Europe-the US has sunk live and treasure to no apparent end other than successfully dispersing the Al Qaeda nest.  At the least many goals were not realistic or achieved.

Gulf War II never had a goal other than taking out our collective anger on an Arab state.  It felt good at first, but was likely never necessary.  Over time the goal morphed as we realized that we had to leave some kind of state in our wake.  Unfortunately, that necessary goal has proved beyond our grasp.

Because of that fact, now we are heading back to Iraq in response to the chaos we have left there.  I can’t help but think that we will in the end only further make a mess of that area.

Utah Trip 2014 # 1

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This is at Zion National Park on July 26, 2014.

Prayers for the End of Abortion

Today I was in Church and we prayed for lawmakers, and health care givers to value life.  On the face of it that’s hard to fault, but I found myself disturbed by what we didn’t also pray for.

We did not pray for the woman choosing to abort to have a change of heart,  We did not pray for the woman that may later choose to abort to abort to avoid pregnancy.  We did not pray for the woman who consider to abort to have more ways to care for their unborn child and to choose to bring that life in her to fruition.

Whether one is pro life or pro choice, as we have labeled the two sides of this 41 year old debate, the question seems to boil down to when does life begin before birth.  On this I find it hardest to understand those who are pro choice.  How can you be so sure of when life begins?  That leaves me unable to believe that any good society doesn’t wants as few abortions as possible.  I am unable to be anything close to sure that abortion is not murder.

That said, I’m still also uncomfortable with the idea that using the power  of the state, the use of sanctioned force, to reduce abortion is in fact moral, or at least the best way to save babies from abortion.  I certainly don’t think that the use of force against abortionists, and their clients are the only approach we should take for the protection of life.

I think we should offer as many alternatives to abortion as we can.  We should encourage birth control.  We should make it as easy for unwanted babies to be adopted.

I think we should pray for those things.

Most of all, I think of the woman choosing to abort to have a change of heart,  We did not pray for the woman that may later choose to abort to abort to avoid pregnancy.

Why didn’t we?

Canada pulls the plug on the U.S. Keystone Pipeline – will send oil to Asia

brucetheeconomist:

I like President Obama, but I have never been able to understand why his administration is so lukewarm on increased supplies of North American energy, including that from Canada. It is one of the bright spots in this mediocre economic climate that we all have suffered from.

Originally posted on Watts Up With That?:

Approves Asia Supply Route, Ignores US Route

H/T Eric Worrall and Breitbart – Obama’s inability to make a decision on Keystone has finally yielded a result – Canada has made the decision for him.

Breitbart reports Canada has just approved the Enbridge Northern Gateway Project – a major pipeline to ship Canadian oil to Asia.

The Canadian oil will still be burnt – in Asia, instead of America.

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