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Weigh Jobs Destruction, Creation Claims Skeptically

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Thursday, 06 February 2020 11:25 AM Current | Bio | Archive

Politicians often argue that their proposals will create jobs. Opponents, in turn, often argue that they will destroy jobs.

Though both claims may be true, we shouldn't take either of them seriously.

Here's a example of why we shouldn't:

In the late 1940s AT&T employed more than 350,000 operators. As we became able to dial our own local calls, and later to dial long distance calls, most of these telephone operators lost their jobs. But at the same time the cost of telephoning went down drastically, thanks to improved technology and the savings on labor costs.

In 1953 a long distance call from our Oregon home to Maine, where my father was working temporarily, cost $1 per minute.

In 2019 dollars this was the equivalent of about $9.50 per minute. Obviously, we made few such phone calls. Today we can make a lot more calls while spending much less.

The money we save enables us to buy other goods and services.

Producing these creates a lot of jobs.

Thus, the net result of automating phone calls was not unemployment but a higher standard of living. To criticize automating phone calls because it would destroy 350,000 jobs would have been crazy.

For a more recent example, consider proposals to replace Obamacare with Medicare For All. Critics of this proposal claim, correctly, that it would destroy hundreds of thousands of jobs. Doctors and hospitals now employ many people to cope with billing different insurance companies and government programs, each with its own unique red tape.

Many people also work for insurance companies, processing claims.

The administrative simplicity of Medicare For All would make most people now processing medical billing unnecessary. The services of these people now cost about $80,000 (some would say closer to $100,000) annually for every doctor in the country.

The fact that that Medicare for All would destroy a large number of jobs, however, doesn't mean that it's a bad idea.

Citing this fact only looks at one side of the ledger.

Medicare for All will save money for patients, whose medical fees will no longer be indirectly paying the salaries of these bill-processors. Patients' savings will be spent on goods or services which they otherwise would not be buying.

Producing these goods and services will create jobs that otherwise would not have existed.

It can conceivably be argued that medical costs are equal to medical incomes. People whose incomes are threatened will naturally oppose reforms which would reduce costs. But looking at both sides of the ledger reveals that the fact that a policy destroys particular jobs provides no basis for criticism if, as is generally the case, it creates an equal number of new jobs.

Naturally when jobs disappear, those occupying them may be injured even though they will eventually find other jobs. Unemployment insurance and retraining programs may be necessary if we want a dynamic but fair economy in which we all benefit from technological progress.

Our economy clearly is better today than when we had hordes of telephone operators and people worked manufacturing buggy whips. We will have a better economy tomorrow when we have no coal miners, but large numbers of Americans have good jobs designing, producing, installing, and maintaining equipment producing renewable energy — solar panels, storage batteries, wind turbines, and the like.

It's impossible to make good public policy if we look at only one side of the ledger, focusing only on jobs created or only on jobs destroyed by a particular policy.

As in all cost-benefit analysis, we have to look at both the costs and the benefits.

We should not believe people who intentionally or unintentionally stack the deck by focusing their arguments on only one side of a two-sided case.

Paul F. deLespinasse is Professor Emeritus of Political Science and Computer Science at Adrian College. He received his Ph.D. from Johns Hopkins University in 1966, and has been a National Merit Scholar, an NDEA Fellow, a Woodrow Wilson Fellow, and a Fellow in Law and Political Science at the Harvard Law School. His college textbook, "Thinking About Politics: American Government in Associational Perspective," was published in 1981 and his most recent book is "Beyond Capitalism: A Classless Society With (Mostly) Free Markets." His columns have appeared in newspapers in Michigan, Oregon, and a number of other states. To read more of his reports — Click Here Now.

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It's impossible to make good public policy if we look at only one side of the ledger, focusing only on jobs created or only on jobs destroyed by a particular policy.
att, operators, automating, coal
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2020-25-06
Thursday, 06 February 2020 11:25 AM
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