We have another example of the inability to understand basic economic reality – jobs are a cost of doing something, not a benefit of getting that thing done. This is something that we’ve all got to grasp, and properly, or we’re never going to get economics correct.
Most certainly, we like it that people are able to consume things, that’s the point of having an economy at all. That means we’d like them to have an income they can spend on those things they consume. For most of us, that’s going to mean a job – but going to work thing is a cost for us of gaining the income. It must be, we all must be regarding it that way, for that’s why we demand to be paid for having to go do the work, right?
From the other side, of course, a job is a cost. They’ve got to pay the wages to get the work done, so it’s clearly and obviously a cost. Finally, for society as a whole, a job is a cost. If someone’s labor is being used to do this thing over here, then it cannot be used to do that second over there. The cost of getting thing one done is not getting the second to enjoy.
Jobs are a cost, not a benefit.
Which brings us to today’s version of the misunderstanding. In the New York Times, we’re told that we all must be saving more energy. Possibly we should be, for wasting the stuff doesn’t sound very clever. But then we’re told:
The Trump administration has proposed killing Energy Star and all but eliminating other efficiency programs, with cuts averaging nearly 80 percent. Congress wisely rejected these proposals initially for the short term, but legislation recently passed by the House isn’t much better, proposing to cut many of these money-saving and job-creating programs nearly in half.
But creating a job isn’t a money-saving program, we’ve just proved that conclusively up above. Creating jobs adds costs, not reduces them. Then, we’re told again:
Today, according to the Energy Department, energy efficiency supports 2.2 million American jobs — from contractors weatherizing houses to workers manufacturing more efficient appliances and equipment. Imagine how many more jobs could be created if we were to turn our waste into opportunity.
Or, with our newfound knowledge, we can translate that into looking at how much more it will cost us if we use many more people to do it!
It is true that while all jobs are a cost, some of them are at least worth the expense of having them done. The output we get from their being performed is worth more than the cost of the labor going in. What we need and want is a method of sorting through which those are – and perhaps more importantly, which ones aren’t worth doing – so that we only use our scarce and expensive labor on producing those things which are worth more than their cost. Fortunately, we do have such a system.
It’s called “the market.” People doing something where the inputs are worth more than the outputs suffer, rapidly, an interesting process called bankruptcy. Those processes whose output is worth more than the inputs make something called “profits.” A useful corollary of this is that if we have to have government insistence to get people to do something then it’s probably not adding that value. A generally decent rule is that the lust for profits will get people doing what makes or saves them money. The alternative is that we think every businessman in the country is just too damn dumb to work out how much extra labor it will cost to save energy and vice versa. And in this day of spreadsheets, that’s a really hard sell to make.
Yes, there is that extra little bit, externalities. These are things not included in the price system, like the climate change to come (no, please, don’t argue about this) from the excessive use of energy. But the answer there is to price them into the market system with a carbon tax, perhaps. It still isn’t true that we should be using regulation to force people into increasing their costs by creating more jobs.
For, as I say, jobs are a cost, not a benefit.
Tim Worstall (@worstall) is a contributor to the Washington Examiner’s Beltway Confidential blog. He is a senior fellow at the Adam Smith Institute.
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