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Luddites, Lumps of Labor, and a Laundry List of Illogic

Article by Ike Brannon May 31, 2012 //   5 minute read

Writing in Sunday’s New York Times, Tim Jackson decries the economy’s relentless emphasis on achieving gains in productivity. The hackneyed trope of a lazy columnist is to take down someone else’s column, but alas, that is precisely what my column will do. Jackson throws the kitchen sink of inane arguments against improving peoples’ standards of living, ignores the contradictions inherent in his arguments, and concludes by informing us that progress isn’t what it’s cracked up to be. He blames productivity growth for the myriad problems facing us today, whether it be the financial crisis or the ensuing high unemployment that resulted from the Great Recession. He concludes by suggesting that if we take the push to increase productivity to its natural conclusion, we will end up encouraging orchestras to play faster and make a hash of Beethoven’s 9th Symphony. I think that last bit was facetious, but it’s no more inane than any of his other points. Let me begin by explaining why economists believe that productivity matters: Gains in productivity allow us to ultimately have more of everything, whether it be more goods, more services, more free time, or a better environment. While life today may seem far from copacetic in aftermath of the Great Recession, our productivity gains over the last 40 years have afforded virtually all of us a markedly better standard of living than our parents enjoyed — or at least for those who drive cars, own computers or television sets, purchase food or clothing, or travel by plane. Jackson’s first salvo against productivity growth is a rehashing of the “lump of labor” fallacy. This theory says that if workers’ hours were cut by 10%, companies would be forced to hire the unemployed to fill these lost hours, putting the country back at full employment. This might be conceivable except that most unemployment today is structural — meaning we lack workers with the necessary skills for employment — and most jobs come with significant fixed employment costs in the form of inflexible fringe benefits. Because of these realities, Jackson’s suggestion is nonsensical. Jackson then makes an appeal to Luddism, suggesting that increasing worker productivity has resulted in workers being effectively replaced by machines. Therefore, he reasons, a drop in productivity might take care of unemployment. Luddites fail to account for the fact that when companies become more productive owing to technology, they also increase economic output. This requires them to hire more people, not fewer. In the last 200 years since the Luddites first smashed the looms in England, we have seen technological gains spur incredible gains in employment and wages. Jackson then avers that the reckless pursuit of economic growth has left the environment so befouled that our planet simply cannot sustain the pace any more, and we need to content ourselves with less. Again, it’s a notion that cannot survive a moment’s contemplation: More productive societies are able to devote more resources to cleaning the environment or to producing goods and services in an environmentally friendly way. The history of market economies over the last century shows a clear relationship between economic growth and an improving environment. Anyone who remembers the 1960s can attest to this. He concludes by lamenting that the push to improve productivity has left workers “stretched to the breaking point,” pointing to an article bemoaning the plight of nurses in Britain’s National Health Service. I have no idea whether the working conditions at the NHS are indeed poor, but it is a stretch to malign changes in a wholly socialized industry to the vicissitudes of a remorseless market system. Herb Stein once said that people read editorials to be massaged, not informed. That dictum fits Jackson’s piece quite nicely, since there’s nothing at all informative — or even true — in it other than a laundry list of illogical notions that are quite pleasing to certain people. Abandoning our focus on productivity would be disastrous to all the outcomes Jackson himself desires to see in the world.