{"id":2359426,"date":"2024-12-31T01:15:00","date_gmt":"2024-12-31T06:15:00","guid":{"rendered":"https:\/\/monetizemail.com\/magatoon\/?p=2359426"},"modified":"2025-01-10T07:54:42","modified_gmt":"2025-01-10T12:54:42","slug":"want-progress-lose-the-spoon-jobs","status":"publish","type":"post","link":"https:\/\/monetizemail.com\/magatoon\/2024\/12\/31\/want-progress-lose-the-spoon-jobs\/","title":{"rendered":"Want Progress? Lose the Spoon Jobs"},"content":{"rendered":"<\/p>\n

Politicians want to create<\/em> jobs, \u201cgood-paying union jobs<\/a>,\u201d in existing industries.\u00a0 But that\u2019s not what markets do. The \u201cdestructive\u201d part of creative destruction<\/a> eliminates<\/em> jobs in existing industries. In a dynamic economy, innovations in division of labor can create good-paying jobs<\/a>\u00a0 in new<\/em> industries, but new industries require entrepreneurs, not politicians.<\/p>\n

Frederic Bastiat had two devastating satires of how policies designed to \u201ccreate jobs\u201d actually cause economic disaster. The first was the \u201cCandlemakers\u2019 Petition<\/a>,\u201d asking government to require heavy curtains and blacked-out windows, to create jobs making candles. Second was the \u201cSeen and Unseen<\/a>,\u201d where breaking windows would create jobs for glaziers and carpenters.<\/p>\n

In both cases, the problem comes from ignoring \u201cthe unseen\u201d: the people making candles, or repairing broken windows, would be doing something else without the misguided policy. And the resources spent on unneeded candles, and wasted windowpanes, would have been spent on something else. We see the jobs, but we don\u2019t see the costs of foregone alternatives<\/a> given up to \u201ccreate\u201d those jobs\u00a0.<\/p>\n

I recently was thinking about another famous story of \u201ccreating jobs,\u201d one that is often told about Chicago economist\u2014and Nobel Prize winner\u2014Milton Friedman. Stephen Moore told one version <\/a>of the story, in The Wall Street Journal<\/em>:<\/p>\n

\n

At one of our dinners, Milton recalled traveling to an Asian country in the 1960s and visiting a worksite where a new canal was being built. He was shocked to see that, instead of modern tractors and earth movers, the workers had shovels. He asked why there were so few machines. The government bureaucrat explained: \u201cYou don\u2019t understand. This is a jobs program.\u201d To which Milton replied: \u201cOh, I thought you were trying to build a canal. If it\u2019s jobs you want, then you should give these workers spoons, not shovels.\u201d<\/p>\n<\/blockquote>\n

A little digging (ha!) reveals that essentially the same story is also told about other famous people, and the supposed location of the incident ranges from China and India to Canada or the UK. But it turns out that none of these is the actual origin of the tale, which was first put in print in Philadelphia in 1901<\/a>.\u00a0 That version goes like this:<\/p>\n

\n

An incident which struck me at the time as quite amusing occurred not long since on North Broad Street. A steam shovel at work had attracted a large number of spectators, including two Irishmen, who, judging by their appearance, were toilers temporarily out of employment.<\/p>\n

As the big shovel at one lick scooped up a whole cartload of dirt and dumped it upon a gondola car, one of the Irishmen remarked: \u201cWhat a shame, to think of them digging up dirt in that way!\u201d \u201cWhat do ye mane?\u201d asked his companion. \u201cWell,\u201d said the other, \u201cthat machine is taking the bread out of the mouths of a hundred laborers who could do the work with their picks and shovels.\u201d \u201cRight you are, Barney,\u201d said the other fellow.<\/p>\n

Just then a man who had been looking on and who had overheard the conversation remarked: \u201cSee here, you fellows. If that digging would give work to a hundred men with shovels and picks, why not get a thousand men and give them teaspoons with which to dig up the dirt?\u201d<\/p>\n

The Irishmen, to their credit, saw the force of the remark and the humor of the situation and joined heartily in the laugh that followed, and one of them added: \u201cI guess you\u2019re right, Captain. The scoop\u2019s the thing after all.\u201d <\/p>\n

\u2014Philadelphia Public Ledger<\/p>\n<\/blockquote>\n

The example is amusing, and the fact that the unemployed laborers came around to see \u201cthe force of the remark\u201d is a tidy closing of the circle. But don\u2019t they have a point? And isn\u2019t that point especially forceful when it comes competing with other countries, which after all are using \u201ccheap labor\u201d and not steam shovels to take \u201cour\u201d jobs?<\/p>\n

That\u2019s certainly the argument many policy-makers have used to justify tariffs, quotas, and other kinds of trade barriers: we have to protect American<\/em> jobs! Stop shipping jobs overseas!<\/p>\n

To see why that logic is no better than \u201cgive them spoons!\u201d, one has to consider the nature of international trade in manufactured goods.<\/p>\n

The Only Way to Gain Jobs is to Lose Jobs<\/h3>\n

A good angle to approach the problem of \u201closing jobs\u201d is ask a simple question:<\/p>\n

What country in the world lost the most manufacturing jobs between 1990 and 2010?<\/em><\/p>\n

The answer (and it\u2019s not close) is China<\/em><\/a>.<\/p>\n

In 1990, Chinese \u201cmanufacturing\u201d in many cases consisted of a large shed, filled with tables and containing hundreds, maybe thousands, of men or women working with needles and thread, or looms, or a hammer and some pieces of leather, or a small hand-operated metal press and boxes of parts.\u00a0<\/p>\n

The scale of the employment was huge, perhaps 100 million or more<\/a>.\u00a0 But the productivity<\/em> of these workers, in 1990, was terrible.\u00a0 One person, working as hard as he can work, with a hammer and a shoe last and some cut pieces of leather, can produce no more than 2 or 3 pairs of shoes in a day.\u00a0 A thousand workers, working hard (and they didn\u2019t, always, because these were state-run factories where quotas rather incentives dominated) might produce 5,000 pairs of shoes in a day<\/a>, and the quality was decidedly inferior.<\/p>\n

In the mid- to late-1990s, China began doing two things<\/a>.\u00a0 First, they cut back on state-owned factories.\u00a0 Millions of workers lost their jobs, whole cities were out of work.\u00a0 Second, China\u2019s private sector began to exploit the division of labor by developing highly specialized factories that made toys, clothing, and simple electronics. These factories, because they were substantially automated, were much more productive than the old system of exploiting cheap labor. China began to exploit productivity. Moving from hundreds of men with shovels to handful of men driving bulldozers and trucks actually increases the amount of work done, with less labor. <\/a>All of those jobs that had produced, and paid, little were wiped out <\/a>by jobs that produced, and paid, more.<\/p>\n

To be fair, this has also been happening in the US. Our total manufacturing has actually increased dramatically<\/a>, without pause, over this whole period. But the number of manufacturing jobs in many industries has fallen, as workers have become more productive. Still, overall, there has been a sharp resurgence in US manufacturing<\/a>, as many companies have engaged in \u201con-shoring.<\/a>\u201d<\/p>\n

In short, the US did not \u201cship our jobs\u201d to China. If anything, China lost more manufacturing jobs than we did. <\/a>The whole world lost jobs to increased productivity<\/a>. As a result, prices of many products have fallen, in some cases substantially<\/a>, if we adjust for inflation.<\/p>\n

Why did this happen? <\/a>China began to use a market system <\/a>to reward investment in increased productivity. When one factory converted from a thousand people with sewing machines to twenty people operating an automated production line, the 980 people who had \u201clost\u201d their jobs found other jobs elsewhere, and at an increased wage<\/em>, because those industries were automating also. In many cases, that is true in the US as well, though there are some industries where the transition to new jobs has been slower.<\/p>\n

But having slower adjustment in the US is not surprising, because China started at a much lower level of wealth and prosperity. China\u2019s GDP per capita is almost $13,000<\/a>; in the US, that number is nearly $70,000<\/a>. The US no longer has the option to give out spoons, or for that matter shovels, to \u201ccreate\u201d jobs, because no one is willing to work at the wage that spoon-jobs pay. Most American workers spend their time using some version of a bulldozer, whether that be writing code or using physical machines that increase productivity. It\u2019s still true that \u201cthe scoop\u2019s the thing, after all.\u201d<\/p>\n

The post Want Progress? Lose the Spoon Jobs<\/a> was first published by the American Institute for Economic Research (AIER)<\/a>, and is republished here with permission. Please support their efforts.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Politicians want to create jobs, \u201cgood-paying union jobs,\u201d in existing industries.\u00a0 But that\u2019s not what markets do. The \u201cdestructive\u201d part of creative destruction eliminates jobs in existing industries. In a dynamic economy, innovations in division of labor can create good-paying jobs\u00a0 in new industries, but new industries require entrepreneurs, not politicians. Frederic Bastiat had two …<\/p>\n","protected":false},"author":90,"featured_media":2324418,"comment_status":"close","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[59],"tags":[],"class_list":["post-2359426","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economics"],"_links":{"self":[{"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/posts\/2359426","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/users\/90"}],"replies":[{"embeddable":true,"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/comments?post=2359426"}],"version-history":[{"count":1,"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/posts\/2359426\/revisions"}],"predecessor-version":[{"id":2359427,"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/posts\/2359426\/revisions\/2359427"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/media\/2324418"}],"wp:attachment":[{"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/media?parent=2359426"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/categories?post=2359426"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/monetizemail.com\/magatoon\/wp-json\/wp\/v2\/tags?post=2359426"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}