Why We Need Fewer Jobs in Order to Make More Jobs

I tread lightly here because I realize that a) we are in a time of high, long, and painful unemployment, and b) I am of the privileged class, by dint of having parents who helped me get a college education, so I am more cushioned against today's economic vagaries. But I want to pick up on a thought from earlier this month, in my semi-annual letter to Congress, about the importance of not being afraid to let capitalism run its disruptive course, even at the loss of some jobs.

This post at Marginal Revolution, entitled “India and the Promise of Productivity,” makes the same point. In response to a commenter who warned that big retail displaces more jobs than it creates, Alex Tabarrok replies that winnowing down the number of jobs in industries like retail and agriculture is exactly what India needs in order to make the sort of economic progress required to live hundreds of millions of people out of crippling poverty and into a comfortable middle class life.

It is popular to blame the capitalist pigs, the industrialists, China, or the machines for the vast loss of jobs in sectors such as farming and manufacturing, especially at a time when unemployment is high and the middle class is being hollowed out. But this misses the great gains we have all enjoyed as we trade back-breaking labor in the fields and the factories for affordable and ubiquitous goods. I doubt any of us would trade down to our equivalent lives from 100 years ago, when health care, sanitation, technology, and consumer goods were vastly inferior.

To be sure, still up for grabs is making sure that we have equitable access to opportunity, that we are merciful to those who are most vulnerable, and that we make sure all children are prepared for future productivity. But it seems backward-looking and unhelpful to put a halo around a former time, in which we had to use lots of labor to produce the simplest things, and think that is somehow better than what we have now. Instead, let's focus our effort on preparing our children for a globally demanding and knowledge based economy, and on instructing them on where issues of justice and equity fit into such a system.