Congratulations to “economist” Dean Baker, founder of the Center for Economic and Policy Research, for the worst remedy to our economic woes proposed thus-far — no small feat. His make-everybody-poorer job sharing plan is so outlandish and counterproductive, even the liberal arts major sleeping off a hangover in the back row of Econ 101 can recognize the absurdity. Mr. Baker’s plan is hardly new; both Hoover and Roosevelt implemented the same type of cockamamie schemes during the last Great Depression.
It is truly remarkable that this idea keeps resurfacing after its history of failure and refutation by most major schools of economics. Henry Hazlitt thoroughly refuted the idea, and all its inbred relatives, in Economics In One Lesson back in 1946, devoting an entire chapter to spread-the-work schemes and their unseen consequences. Here Hazlitt explains the ramifications of shortening the workweek from 40 to 30 hours without increasing pay (the outcome is much worse if the week is shortened and hourly pay is increased).
Though more workers will be employed, each will be working fewer hours, and there will, therefore be no net increase in man-hours. It is unlikely that there will be any significant increase in production. Total payrolls and “purchasing power” will be no larger. All that will have happened even under the most favorable assumptions (which would seldom be realized) is that the workers previously employed will subsidize, in effect, the workers previously unemployed. For in order that the new workers will individually receive three-fourths as many dollars a week as previously. It is true that the old workers will now work fewer hours but this purchase of more leisure at a high price is presumably not a decision they have made for its own sake: it is a sacrifice made to provide others with jobs.
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This is not surprising. This Dean Baker character has also: (a) endorsed (on Cato’s website) multi-billion-dollar (say, $30B-$80B) tax-funded innovation prizes to “replace” patents (see my “Ideas Are Free: The Case Against Intellectual Property,” text at n. 6); and (b) horrifyingly, argued for this: “The Artistic Freedom Voucher (AFV) would allot about $20 billion of taxpayer money to be paid to individual musicians or groups and allow the public to exchange, download, reproduce and enjoy creative work legally, efficiently and inexpensively” (see my C4SIF post The “Artistic Freedom Voucher” [sic]).
Update: in this interview with Stefan Molyneux he affects an anti-patent and anti-copyright posture. How ridiculous, given that he just wants to replace it with another statist, tax-funded boondoggle.
I wonder if Dean will be sharing his job? How about President Obama be president 1/2 of the time? We are now in the wacky world of well that does not work for me but will be great for everybody else.
OK. You convinced me. At first Dean’s idea seemed nutty. But when you put it that way, Dean deserves a sensible version of the Nobel Prize.
This would only work for unskilled jobs. Cashier, warehouse, or whatever non skilled job you can find. Essentially the people who will suffer from this are the poor.
I guarantee you that those of us who work highly skilled jobs that are in high demand won’t even have to give this a second thought.
And the flip side of that would be that the people who would benefit from this are those only qualified for non-skilled jobs but can’t get any. People with low income make less income, but people with no income make more income. You can’t call that an unqualified attack on the poor.
If government wants to impose this on us, then obviously it’s inappropriate. If private businesses decided to cut hours instead of hires, I certainly can’t see an ethical problem with that. Private employers are sovereign, and people whose hours are cut can’t complain that their employer chose to modify the terms of their association with the company any more than people who lost their jobs can complain that their employer chose no longer to buy their labor. Neither party was entitled to permanent employment at that hour/wage level.
But I’m not sold myself on the argument yet, specifically because I haven’t heard anyone give a clear analysis as to what would be substantively different between the economic ramifications of job-sharing, compared to the economic ramifications of the alternative, mass unemployment.
What foundational reason is there to dump 100% of the pain on a recession on 10% of the people, instead of dumping 10% of the pain on 100% of the people? If there is actually a good argument for that, I’m willing to hear it out.
From each according to his ability…?
“But I’m not sold myself on the argument yet, specifically because I haven’t heard anyone give a clear analysis as to what would be substantively different between the economic ramifications of job-sharing, compared to the economic ramifications of the alternative, mass unemployment.”
The additional costs borne by employers in training new employees and managing them? Loss of income and therefore utility by those who lose work (which could vastly outweigh the utility gains of those now employed; you cannot even compare this due to the non-comparability of utility between persons and qualitative nature of utility)?
I have an even better idea. How about we tax everyone who’s working 100% and then dole it out evenly to everybody?
Or ow about the government just take everything over and assign everyone a job?
A man who truly doesn’t understand economics!!! It just proves that in the present environment, mediocrity can rise to the top! Obama would be another example.
Dean Baker sounds off:
http://www.aljazeera.com/indepth/opinion/2011/11/20111115142561955.html
“We could be living through the last days of the euro. That is not a happy thought. While there were many negative aspects to the rules governing the European Central Bank (ECB) and the eurozone economies, no one can want to see the economic chaos that will almost certainly follow the collapse of the euro.”
Implying that there currently is no economic collapse…
“We have known how to generate demand since Keynes wrote his masterpiece in the ’30s. However, rather than pursue the simple steps needed to restore the eurozone’s economy to stable growth, the ECB is adhering to an ideological agenda that will destroy the euro and throw the economy into an even more severe recession than the last one. This is an extraordinary tragedy unravelling in slow motion in front of the world. ”
HRRGGRRR!!!
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