Even Nobel laureates forget their economic fundamentals sometimes. Paul Krugman, who knows better, recently fell for the broken window fallacy in a post at his New York Times blog. He argues that the tsunami that hit Japan last year has boosted the economy. An error that basic demands correction; my attempt ran today in The American Spectator:
Imagine for a minute that the tsunami never happened. Japan’s GDP growth would probably be slower; Krugman is almost certainly correct on that. And yet, a tsunami-less Japan would be better off. For one, the survivors wouldn’t have 15,000 holes in their hearts where their families, friends, and neighbors used to be.
As far as the economy goes, all that reconstruction spending would instead go to creating brand new wealth, as opposed to merely replacing what people already had to begin with. It is better to build than to rebuild.
Read the whole thing here.
Over at RealClearMarkets, my colleague Wayne Crews and I argue that the law of demand holds. Hard to believe that’s actually controversial, but that’s Washington for you. Here’s our conclusion:
Eberly was put in an uncomfortable position when she came to Washington. Just as a lawyer’s job is to vigorously defend clients even if she knows they are guilty, Eberly’s job is to vigorously defend policies that are obviously harmful to the economy. Try as she might, she cannot argue against the law of demand.
Regulations make hiring costlier and thus make jobs scarcer. And regulatory uncertainty makes companies reluctant to hire employees they might not be able to afford down the road. Case closed.
Read the whole thing.
Here is a hilarious short video accusing ATMs of killing jobs, loitering on street corners late at night, and even dispensing money to terrorists. It’s good. I couldn’t figure out how to embed it on this site, so you’ll have to click the link to watch it.
Good stuff. If the embedded video doesn’t work, click here.
Have a listen here.
In a recent NBC interview, President Obama blamed ATMs for taking away bank tellers’ jobs, and computerized airline check-in kiosks for eliminating aviation jobs. Communications Coordinator Lee Doren points out that innovation doesn’t affect the number of jobs so much as the types of jobs. Accomplishing more while using less labor is actually the key to prosperity. People looking for an explanation for today’s high unemployment need to look elsewhere.
Posted in CEI Podcast, Economics
Tagged atms, basic economics, cafe hayek, causes of unemployment, Don Boudreaux, econ 101, economic fallacies, Economics, jobs, jonah goldberg, lee doren, luddites, obama, obama atm, president obama, unemployment
Don Boudreaux makes good sense on why country of origin labels only tell part of the story of where a product comes from:
Yes, Mr. Hoch’s socks say “Made in Swaziland,” but who developed the computer software to operate the loom that wove the cloth used to make his socks? Who designed the loom itself? Who figured out how to transform crude oil into the elastic in the socks? Who devised the method for pooling risks so that the Swaziland factory is profitably insured against fire and that the cargo ship carrying his socks to America is profitably insured against sinking?
In fact, Mr. Hoch’s socks – and nearly everything else that he consumes – should be labeled “Made on earth,” for they truly are global phenomena.
Read the whole thing. Keep it in mind the next time someone grouses —falsely — that America doesn’t make anything anymore, or that Americans buy too many goods from foreigners.
Posted in Economics, International, Trade
Tagged america, basic economics, cafe hayek, country of origin labels, dan ikenson, Don Boudreaux, international trade, no labels, swaziland, Trade
My colleague Ryan Radia and I recently sent this letter to The New York Times:
Editor, New York Times:
Catherine Rampell’s September 7 article, “Once a Dynamo, the Tech Sector Is Slow to Hire,” mourns the recent decline in U.S. data processing jobs. She blames much of the decline on the automation of previously tedious tasks.
May we suggest one way to get those jobs back: No more automation. Ban the use of computers for data processing. Imagine how much information flows through today’s global economy in an average day. Computers handle most of the load. That costs millions of jobs.
The effects would reverberate far beyond the tech sector. The paper, pen, and pencil industries would also boom.
Companies are dead-set on doing more with less. True, that creates more jobs in the long run by freeing up resources — and employees — for new ventures. But if only they would consider doing less with more, they could create more data processing jobs.
Ryan Young and Ryan Radia
Competitive Enterprise Institute
Posted in Business Cycles, Economics, The Market Process
Tagged basic economics, catherine rampell, creative destruction, data processing, econ 101, Economics, economics 101, employment, high tech jobs, jobs, new york times, outsourcing, progress