Less means more? You bet.One of my earliest memories is the iceman delivering large blocks of ice to my parents’ small triplex apartment in southern California. The ice was deposited in my parent’s “ice box” and kept food cool. Frozen? Nope; just cool. Of course, the ice didn’t last forever. It melted and drained into a drip pan at the bottom of the “ice box.” The pan had to be emptied periodically to prevent water overflowing onto the kitchen floor. Once the ice had melted sufficiently, the iceman would appear with another large block of ice.
My “ice box” memories are abbreviated because my parents soon bought an electric refrigerator. So did a lot of other people. As a result, iceman jobs disappeared. Or in the language of politicians and pundits, refrigerators and their producers “destroyed” icemen jobs.
Nevertheless, most of us would say that Americans were/are better off as a result of electronic refrigeration. What about the icemen? Did they smoothly transition into production of refrigerators? Probably not. More likely they moved to their next best employment opportunity, and next best is precisely that, next best. In other words, icemen lost. Iceman received a smaller piece from a larger economic pie. A rising economic tide does not necessarily raise all ships.
The “invention” of the wheel in pre-recorded history surely increased peoples’ living standards.What about the number of lost icemen jobs compared to the number of refrigerator production jobs? Does it matter? Yes, but not in the way you think or wish it were. To wit, the fewer jobs associated with producing the refrigerators, the better!
Having fewer people employed in producing refrigerators means people cannot only have superior refrigeration, but more of other things. This is how technological advances raise living standards. We ignore it at our peril.
Losing Jobs but Gaining Prosperity
I have found that people are more willing to accept this line of reasoning when it is supported by examples from the distant past. For example, the “invention” of the wheel in pre-recorded history surely increased peoples’ living standards, even though it reduced the number of jobs associated with moving things from one point to another. The tremendous advance in US agricultural productivity over the last 150 years or so is another example. Agricultural jobs fell while living standards rose.
As examples get closer to the present, however, political and economic pundits change their script. The consequences start being defined in terms of jobs lost in the industry adversely affected by economic change. Losers become lucrative targets for political entrepreneurs promising to “reward” job losers with special favors in exchange for their votes. This is not possible for changes that occurred in the distant past because losers of jobs are now dead and have no votes, except, maybe, in places like Chicago where people vote “early and often, even when dead.”
Don't Stop Progress
Nowhere is the latter more evident than when US jobs are “lost” because of imports. Suppose an influx of, say, Chinese umbrellas occurs at prices that undercut US umbrella producers. Like the icemen, the umbrella producers lose regardless of whether they leave or stay in umbrella production. But they become a potential voting bloc that political entrepreneurs can capitalize on. To the extent that these entrepreneurs can delay/restrict the entry of Chinese umbrellas into the United States, they become analogous to a political movement that would have restricted electronic refrigeration. Not good.
Incidentally, who gets what the US umbrella producers lose? Not the Chinese! That’s for sure. All the Chinese get is the lower price Americans now pay for umbrellas. The beneficiaries of the lower price are Americans who buy umbrellas. None of the US economic pie goes to the Chinese. Rather, a larger US economic pie is re-sliced among Americans such that some get a larger piece and others a smaller piece, with the increases summing to more than the decreases.
The bottom line in all this is that economics as a field of study is grounded in the proposition that people, individually and collectively, cannot command sufficient productive resources to satisfy unlimited consumption desires. This resource shortfall means that all societies, rich and poor alike, have living-standard ladders with yet-unreached rungs. The only way to reach higher rungs is to devote less productive effort into reaching rungs.
Less means more? You bet. That’s why University of California at Irvine economist, Richard McKenzie, could pen a Wall Street Journal op-ed some years ago titled “Help the Economy: Destroy Some Jobs.”
Personal Note: Because of my early experience I have long called electric refrigerators “ice boxes.” So when I’ve asked my children to clear dinner table, I’ve sometimes told them to put things like leftover salad in the “ice box.” At which point they would deposit the salad in the refrigerator’s freezing compartment, because that was where the ice cubes were kept. Of course, the leftover salad would be ruined in short order. Alas.