Came across this yesterday: http://www.reason.com/news/show/122019.html
The article talks about some misconceptions "normal" people have of economics. I wanted to talk about the make-work bias and how those people who are unemployed now may be better off in the future. This assumes a very neo-classical view, workers who were laid off are not an essential part of the company they are working for, so they can take the hint and use their time off learning a useful skill, provided they do not starve to death.
Most people believe that having a job is a good thing, as it provides them a means to feed and clothe themselves. This is false.
Not everyone needs and deserves a job, (so unemployment is actually a beneficial thing since it purges the system of useless people).
Nineteenth-century economists believed they had diagnosed enduring economic confusions, not intellectual fads, and they were right. The crudest form of make-work bias is the Luddite fear of the machine. Common sense proclaims that machines make life easier for human beings. The public qualifies this “naive” position by noting that machines also throw people out of work. It forgets that technology also creates new jobs. Without the computer, to give one obvious example, there would be no jobs in computer programming or software development.
But the fundamental defense of labor-saving technology is deeper than that.
Employing more workers than you need wastes valuable labor.
After technology throws people out of work, they have an incentive to find a new use for their talents. The Dallas Fed economist W. Michael Cox and the journalist Richard Alm illustrate this process in their 1999 book Myths of Rich and Poor, citing history’s most striking example, the drastic decline in agricultural employment:
“In 1800, it took nearly 95 of every 100 Americans to feed the country. In 1900, it took 40. Today, it takes just 3. The workers no longer needed on farms have been put to use providing new homes, furniture, clothing, computers, pharmaceuticals, appliances, medical assistance, movies, financial advice, video games, gourmet meals, and an almost dizzying array of other goods and services.”
Many economists advocate government assistance to cushion the displaced workers’ transition to new jobs and to retain public support for a dynamic economy. Other economists disagree. But almost all economists grant that stopping those transitions has a grave cost.
Exasperating as the Luddite mentality is, countries rarely accede to public anxieties and turn back the clock of technology. But you cannot say the same about another controversy infused with make-work bias: hostility to downsizing.
Inside of a household, everyone understands what Cox and Alm call “the upside of downsizing.” You do not worry about how to spend the hours you save when you buy a washing machine.
Make-work confusion can arise only in an exchange economy. If you receive a washing machine as a gift, the benefit is yours; you have more free time and the same income. If you get downsized, the benefit goes to other people; you have more free time, but your income temporarily falls. In both cases, though, society conserves valuable labor.
The danger of the make-work bias is easiest to see in Europe, where labor market regulation to “save jobs” has produced decades of high unemployment. But we can see it in the U.S. as well, especially in our massive employment lawsuit industry. The hard lesson to learn is that giving people “rights to their jobs” is a drain on productivity—and makes employers think twice about hiring people in the first place.
I am not sure I subscribe to this line of thinking, as it seems a little brutal. And it eliminates a certain psychological element that I think is important.
It is a little something I like to call, the Weakest Link Syndrome. (If you don't recall it, "You are the weakest link - Good Bye!", should refresh your memory)
On the show, very rarely did the smartest person win. Usually, the dumb people would be let go first. This follows the above economic theory in that competition will drive out the dead wood.
After about 1/2 way through the game however, the dumb people would start to conspire against the smarter person, voting them off even though they screwed up the least. This was because the dumb people knew they could only win if they eliminated the strongest competition.
If this were to translate into the current workday environment, I believe that the smartest/ hardest working people will not be the ones left standing at the end. They are too busy working to lobby for their jobs.
You can think of it this way, Dilbert would be fired before his idiot manager, not because he is less qualified, but because the idiot manager knows how to throw others under the bus.
While the benefits of a recession and job losses are beneficial according to economic theory (they eliminate a lot of useless positions that were allowed to accumulate during the boom times A.K.A. the excessive layers of upper management) it is less than ideal because the market is not completely efficient.
The people manning the guillotine are not going to chop their own heads off, even if they are the ones causing the most problems.
There are market inefficiencies and information asymmetries that prove that the market (and life in general) is just not fair.
Now may be a good time to stop working so hard, it is not going to save your job in the long run, and take a look around for people you can toss under the bus.
Otherwise: "You are the Weakest Link, Goodbye!"
No comments:
Post a Comment