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.

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