Thursday, January 8, 2009

What are jobs?

Today has been a big day for "jobs" in the media following the announcement by Dell that 1,900 jobs will be lost at their manufacturing facility in Limerick. Prior to this there have been numerous calls for the government to step in and "save" the jobs which has now turned to cries to "create" new jobs. However there is no shortage of jobs in Limerick as Don Boudreaux in the Pittsburg Tribune Review explains:

Jobs are always available. In fact, each of us has so many potential jobs that we can't possibly do all of them. Paint the house, clean the garage, cut the lawn. The list is endless. Trouble is, few of these jobs pay very much.

We must understand that jobs are a cost, not a benefit. That is, what each of us wants is not the job itself -- the obligation to toil and sweat -- but, rather, we want the income available from working the job.

In short, we want income-earning opportunities.

The economist understands, therefore, that the value of paid employment depends on the economy's productivity. If the economy is producing lots of goods and services that people find attractive, then each paying job will be worth more than if the economy's output is meagre or unattractive. Even the best jobs in a primitive society afford a level of well-being that every modern personwould find unbearably deficient.

We now enjoy access to a range and quality of goods and services that were undreamed of by our grandparents. We enjoy this access because our economy is so dynamic and productive.

Unfortunately, economic dynamism is commonly condemned. When a new spark of dynamism enables machines to perform tasks once requiring human muscle, or when an overseas source of supplies or labour opens up, politicians, pundits, and reporters focus on the resulting loss of domestic jobs. "It's awful!" some cry. "We need subsidies, incentives and other policies to stop this sort of thing!" demand others.

Although understandable, these reactions miss the big picture. Only by finding more productive ways to use resources (including human labour) does our standard of living rise. For example, it's only because of the colossal growth in agricultural productivity that fewer and fewer people need to farm. Today, children and grandchildren of farmers are programming computers, managing stores for Tesco, performing laser eye surgery, and on without end. As consumers, our standard of living would be much lower had no agricultural jobs been 'destroyed.'

And so, too, are our lives better as workers. When decades ago the prospects of earning a good living on the farm fell, the farmer wondered anxiously how his grandchildren would earn their livings. He could not have known that some would work for companies called Dell, Google and Eli Lilly, while others would be free-lance Web designers working out of their flats in Blackrock. These jobs would never have existed had not human creativity and energy been freed from older occupations.

The jobs that permeate the modern economy are created by our freedom as consumers to spend our money as each of us sees fit -- including our freedom to change how we spend our incomes -- combined with our freedom as entrepreneurs to create new spending opportunities.

If this dynamic process of consumer freedom and entrepreneurial experimentation were stopped in an attempt to freeze all existing jobs into place, the very logic of our economy would go haywire.

Rewards to entrepreneurism would disappear and consumers would be locked forever into an unchanging pattern of buying the same things year after year, decade after decade.

With profit-seeking and consumer sovereignty abolished, our jobs might be more secure. They also would be pitiful.

Of course such a view would never have given us classic songs like this:
I'm an ordinary man, nothin' special nothin' grand,
I've had to work for everything I own,
Well I never asked for a lot, I was happy with what I got,
Enough to keep my family and my home,
Now they say that times are hard; they've handed me my cards,
They say there's not the work to go around,
When the whistle blows the gates will finally close,
Tonight they're going to shut this factory down,
Then they'll tear it down.

I never missed a day nor went on strike for better pay,
For 20 years I served them best I could,
With a handshake and a cheque it seems so easy to forget,
Loyalty through the bad times and the good,
The owner says he's sad to see that things have got so bad,
But the Captains of industry won't let him loose,
He still drives a car and smokes a cigar,
And still he takes his family on a cruise,
He'll never lose.

Now it seems to me to be such a cruel irony,
He's richer now ever he was before,
Now my cheque is all spent and I can't afford the rent,
There's one law for the rich, one for the poor,
Every day I've tried to salvage some of my pride,
To find some work so's I might pay my way,
But everywhere I go, the answer is always no,
There's no work for anyone here today,
No work today.

And so condemned I stand, just an ordinary man,
Like thousands beside me in the queue,
I watch my darlin' wife tryin' to make the best of life,
God knows what the kids are goin' to do,
Now that we are faced with this human waste,
A generation cast aside,
For as long as I live, I never will forgive,
You've stripped me of my dignity and pride,
You've stripped me bare.

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