Thoughts on politics and life from a liberal perspective

Monday, 5 November 2012

Is the number of jobs the right measure?

Jobs, jobs, jobs.

More jobs, fewer jobs.

Employment up, unemployment down.

Employment down, unemployment up.

Statistics on how many jobs there are and how many people are employed in them are thrown around like political confetti in our national discourse. It is axiomatic that "more jobs" is better and "fewer jobs" is worse.

I am not immune to this feeling. Of course I feel better if I see employment rising and unemployment falling. I run a small business and any signs that the economy is improving is good news as far as that is concerned.

But in the longer term, is the number of jobs the right measure?

I listened to a podcast recently from Freakonomics Radio entitled "We the Sheeple". I've been a fan of the Freakonomics guys for a good while now. I am aware that some of their claims do not always stand up to scrutiny but they often make me think about things in a different way to how I would ordinarily do so and from a different perspective.

In this podcast, Stephen Dubner interviewed Bryan Caplin, author of "The Myth of the Rational Voter: Why Democracies Choose Bad Policies". I think the title speaks for itself. He talked about a number of policies and positions that political candidates take because they have to in order to be elected but which is his view are economically irrational or in other ways make little sense.

The most resonant point he made for me was how the number of jobs in an economy is always, always seen as a vital measure and how if the number is not high and increasing politicians promise to fix this. But in Bryan's view this is irrational for the long term economy.

He gave the example of the industrial revolution. During that period, a lot of jobs were lost as farms and factories became mechanised. He then pointed out how if that was happening today, there would be a huge outcry from the voters about how they were losing their jobs and politicians would feel duty bound to promise to do something about it. But the only thing they could really do in the short to medium term would be to implement laws to slow or halt technological progress. If politicians had been successful at doing this 200 years ago then our advancement could have been severely hampered.

The people who lost their jobs and their descendants did find other work to do eventually. It's just that it wasn't obvious at the time what that work would be.

We are in a similar position now. There is a huge revolution taking place in terms of manufacturing moving away from our shores and service and computer related industries evolving at a rapid pace. Some of these changes involve the loss of jobs. It it inevitable. And it is far from clear what jobs will replace them. But without this evolution our advancement as a society will be held back.

I realise I am dangerously close to saying that "unemployment is a price worth paying". But actually it is more fundamental than that. We essentially have no choice in the matter if we want to advance, just as those industrial pioneers in the 18th and 19th centuries did not.

Bryan is of course right about the political ramifications of this. No politician is going to stand on a platform of "Fewer jobs for now, uncertainty for the future!".

There is not really an answer to this. Politicians have to win elections and society needs to advance. What is fascinating is to watch how these tensions are resolved when they rub up against each other. The best politicians are the ones who can walk this tightrope and not hamper our long term future with short term measures whilst reassuring people we are moving in the right direction.

1 comment:

asquith said...

I am in agreement with your stance, and I recall this in a similar vein:

As I say, I work hard and my job benefits me in that it pays the bills. But it's fairly difficult to discern what use it actually is to the world at large. I achieve much more in my voluntary work than in employment.

We are led once more to a basic income. I appreciate the practical difficulties, and the stumblings the universal credit has had on its way out, but it seems to me that the way forward is to iron out problems with universal credit (such as the monthly payments and the idea that most claims will be fired online- and I know the DWP deliberately make it very hard for people to get through on the phone in a bid to force them online, which is going to end badly for people who can't fill out forms well).

I also advocate a much more liberal approach to people setting up microbusinesses and generally doing things for themselves, which means far less means testing.

And at the same time, I would not be so hard on people who for one reason or the next don't have regular paid employment. It is in fact a good thing if we can meet our basic needs without working as hard as our grandfathers, isn't it? With a basic income, and without undue persecution of unemployed and disabled people, most people wouldn't sit round watching Jeremy Kyle but would go and earn more or otherwise fill their days doing something useful.

(sorry if this is a bit disjointed- not feeling particularly good tonight).