Cheese-eating Job Creators (and The Lump-of-labor Fallacy)

I have been following Sandwichman for a long period of time. Since I do shop floor throughput exercises which no economist appears to understand in a micro sense, Sandwichman comes the closest to what I deal with on a day to day basis.

Paul Krugman in 2003:

“Traditionally, it is a fallacy of the economically naïve left — for example, four years ago France’s Socialist government tried to create more jobs by reducing the length of the workweek.”

Paul Krugman in 2014:

Well, I hadn’t looked at this data for a while; and where we are now is quite stunning:

“Since the late 1990s we have completely traded places: prime-age French adults are now much more likely than their US counterparts to have jobs.

“Strange how amid the incessant bad-mouthing of French performance this fact never gets mentioned.”

Now that you’ve mentioned this fact, Paul, how about revisiting the cogency of the lump-of-labor fallacy claim?

 

“Economists call it the “lump of labor fallacy.” It’s the idea that there is a fixed amount of work to be done in the world, so any increase in the amount each worker can produce reduces the number of available jobs. (A famous example: those dire warnings in the 1950′s that automation would lead to mass unemployment.) As the derisive name suggests, it’s an idea economists view with contempt, yet the fallacy makes a comeback whenever the economy is sluggish.”