Are jobs costs or benefits?
Lately there has been a lot of talk about “saving jobs” and “creating jobs” in the media and in politics as if it were completely obvious that this is something that you should want. What people really want is a source of income, and their job is the price that they pay to get that income. The whole thing reminds me of the confusion between costs and benefits in trade, exemplified in this passage from Paul Krugman of all people:
An international economics course should drive home to students the point that international trade is not about competition, it is about mutually beneficial exchange. Even more fundamentally, we should be able to teach students that imports, not exports, are the purpose of trade. That is, what a country gains from trade is the ability to import what it wants. Exports are not an objective in and of themselves: the need to export is a burden that the country must bear because its import suppliers are crass enough to demand payment.
The same logic applies to jobs and job creation – your job is a productive activity (your exports) that you undertake and your income is what you get in return (your imports). If you want to see what the costs and benefits are in a situation, just ask yourself which thing would you prefer to have if you could only have one – would you rather have a job without an income or an income without a job? I’ll talk more in later posts about my attitude towards changing job markets and creative destruction, but for now I think it’s worthwhile to start by thinking about the role that jobs and income play in the production cycle and how that’s incongruent with the current state of discourse on the subject.
Addendum: For those who are interested a lot of my thinking on this was influenced by Don Boudreaux’s many articles about the role of imports and exports in trade. There are many excellent EconTalk podcasts on the subject, this one on “Buying Local” perhaps being the most relevant to the aspects of trade discussed in this post.
Along those same lines, this reminds me of something I read the other day on columnist Andrew Bolt’s blog, where he decries the increasing population of Australia due to immigration:
“… Do we really have jobs for all these people, and the locals, too? And do we have the water, power and housing land, given the failure of governments to provide them?”
http://blogs.news.com.au/heraldsun/andrewbolt/index.php/heraldsun/comments/cutting_7000_from_337000_equals_overcrowding/
Sure this looks like just some throw away jibe in context, but there’s so much wrong with it that one has to question the thought process of the author.
The failure of government to plan for population growth by obstructing a corresponding increase in available utilities might be a valid point, but if jobs are of such concern then why are we not applauding the import of so many consumers?
In the context of the above post, you might decide if immigration is beneficial to the unemployment rate based on how much your average immigrant is prepared to export, (work and external investment), relative to import, (get paid).