Relevant and even prescient commentary on news, politics and the economy.

Will Boilerplate Kill the Invisible Hand?

Will Automation Kill Our Jobs? by Walter E. Williams appeared in the Gaston GazetteCharleston Gazette-Mail, Daily Tribune, Frontpage Mag, Richmond Times-Dispatch, Townhall, Holmes County Times-AdvertiserNational Interest, Rocky Mount Telegram and CNS News (not to mention the Dogpatch Völkischer-Beobachter). It features the following cutting edge (& pasting) analysis:

People always want more of something that will create a job for someone. To suggest that there are a finite number of jobs commits an error known as the “lump of labor fallacy.” That fallacy suggests that when automation or technology eliminates a job, there’s nothing that people want that would create employment for the person displaced by the automation.

Williams is a professor of economics at George Mason University. His column is syndicated by the Creators Syndicate. Apparently there is still a HUGE market for cuts ‘n pastes of well-aged boilerplate. The Trump-bots on twitter eat this shit up.

Let’s see what Professor Williams thinks of Adam Smith’s lump of labor fallacy:

Dear Professor Williams,

I was interested to read the other day your account of the “lump of labor fallacy” in the Charleston Gazette-Mail. As you pointed out, the number of jobs is unlimited as long as there are people who want more of something that requires work to be done.

I had previously read a statement by a famous economist claiming that the number of workers who can be employed cannot exceed a certain proportion of the capital of the particular society the workers live in. I am wondering if you can clarify for me whether that economist has committed a lump of labor fallacy by suggesting that the number of jobs is limited by something other than the demand for goods or services, which — for all intents and purposes — is unlimited, as you have pointed out.

Furthermore, I am intrigued by the idea that people contribute to the public good without intending to when they are only pursuing what they perceive as their own self-interest within a free and competitive system of market exchange. Would such a contribution to the public good result even if their notion of their self-interest was “erroneous,” as in the lump of labor fallacy?

For example, if truck drivers were afraid that self-driving vehicles would put them out of work, they would presumably be acting in their self-interest if they made campaign contributions to candidates who promised to ban such vehicles on the grounds that they would create unemployment. Such contributions would be free speech, as defined by the U.S. Supreme Court. But wouldn’t such a ban, at least on those grounds, be based on a fallacious assumption?

Finally, I have been wondering who actually said that there is “a fixed amount of work to be done” or that “there is only a certain quantity of work to be done.” I have seen numerous rebuttals to such a view but no positive statements of it from representatives of organized labor. I would be grateful if you could identify sources who actually commit the lump of labor fallacy in plain words.

Sincerely,

Tom Walker

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All Economists Are Bastards — Except Us

All Economists Are Bastards — Except Us

Peter Frase has a very interesting post up about the role of popular culture in legitimizing the police.  Frase recounted a forum he attended with Alex Vitale  talking about his book, The End of Policing. In response to a question about why people believe that the function of policing is to maintain peace in the liberal order when its actual practice and history suggest otherwise, Vitale cited television cop shows like  as “a relentless machine for producing and reproducing the legitimacy of policing in the public mind.”

This is what called to Frase’s mind the perpetual plot line he calls “‘ACAB-EU’: All Cops Are Bastards, Except Us.”:

The trope works by consistently portraying its central characters as liberal fantasies of the good cop–whether it’s the pseudo-scientists of CSI, the workaday victim-protectors of SVU, or the magical profiler-geniuses of Criminal Minds. At the same time, it makes a seeming concession to concerns about police misconduct, by constantly putting its protagonists in conflict with “bad cops” and their enablers, whether it be a rapist Corrections Officer or a corrupt small town department whose cover-up leads all the way to the Governor.

Of course this trope works for politicians too. And economists.

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Rumble on Wall St. — No Other Way of Keeping Profits Up!

Rumble on Wall St. — No Other Way of Keeping Profits Up!

At Jacobin, Seth Ackerman did an interview with J.W. Mason about The Class Struggle on Wall Street that considers the trade-off between relative profit and wage shares of income. Whether you agree with his analysis or not, Josh teases out some of the implications of the relationship, both for profit expectations and for political prospects.

One assertion I would question is “there is absolutely no reason to expect an uptick in inflation.” Well, yes, no one expects the Spanish Inquisition, either. While there may indeed be no reason to expect inflation, inflation’s chief weapon is surprise… surprise and fear… and ruthless efficiency,

And this is also why I think it would be impossible to empirically confirm Egmont Kakarot-Handtke’s “law” of profit. There is no “real” yardstick with which to measure aggregate profit. If Egmont is right that “[m]acroeconomic profit depends in the most elementary case alone on deficit spending, that is, on the change of private or public debt,” then he is wrong that his profit “law” can be tested empirically and “will be confirmed without exception.”

Josh Mason also talks about the “tightrope we have to walk” in thinking about the relationships between profits, wages, inflation and productivity. Not only is the rope tight, it is also tied in knots with “inflation” and “productivity” referring to ratios between incomes, costs and outputs. Egmont’s theory reminds us of yet another tightrope — the tightrope central bank authorities must walk between inflating the money supply through the expansion of credit and persuading the public that such inflation is not inflationary.

The conventional persuader is unemployment. One doesn’t have to subscribe to the NAIRU doctrine that insufficient unemployment accelerates inflation to concede that policy-induced unemployment tips the scales against wage increases and thus insulates the profit share of income from the latent inflationary consequences of credit expansion. Yes, the trick here is how to sustain compound profit inflation without accelerating priceinflation! How to debase the coin of the realm without debasing the coin of the realm. It’s a beauty contest.

There is, after all, no other way of keeping profits up!

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Watch Out for Charlie Kirk’s Treacle Tart

“There’s many a fly got stuck in there.”

Who is Charlie Kirk? He is the 24-year old executive director and founder of Turning Point USA. Jane Meyer profiled the organization in the New Yorker in December:

Based outside of Chicago, Turning Point’s aim is to foment a political revolution on America’s college campuses, in part by funneling money into student government elections across the country to elect right-leaning candidates. But it is secretive about its funding and its donors, raising the prospect that “dark money” may now be shaping not just state and federal races but ones on campus.

A couple of weeks ago in The Baffler, Maximillian Alvarez described the tactics employed by TPUSA to harass and silence opposition to their “free market” totalitarianism. If you like Tomi Lahren, Sebastian Gorka, Donald Trump Jr. and Sean Hannity, you’ll love Charlie Kirk.

Charlie Kirk is a Charlatan.

Last Friday, the Sandwichman posted Is the “Invisible Hand” a lump of labor? to EconoSpeak and Angry Bear. It received a little over 300 views on EconoSpeak and a total of three comments on both blogs. Charlie Kirk’s twitter video on the “socialist myth of the ‘fixed pie'” was tweeted three days earlier. It has so far received 3,300 “likes” and 1,688 comments.

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Is the “Invisible Hand” a lump of labor?

The first premise of Adam Smith’s famous metaphor about an “invisible hand” leading individuals to promote the public interest, although they intend only private gain, was that there is only so much work to go ’round. That is, Smith assumed there was a certain quantity of work to be done — a “lump of labor.” He didn’t tacitly assume it — he stated it plainly:

As the number of workmen that can be kept in employment by any particular person must bear a certain proportion to his capital, so the number of those that can be continually employed by all the members of a great society must bear a certain proportion to the whole capital of that society, and never can exceed that proportion.

Smith didn’t present his invisible hand metaphor until six paragraphs later. But the argument about individuals promoting the public good in spite of seeking only private advantage is in the paragraph immediately following the above passage. The subsequent reference to an invisible hand merely emphasized and amplified the argument.

Smith’s premise about the proportion between the number of workers and the amount of capital defined, with minor modification, what came to be known as the wages-fund doctrine of classical political economy. Instead of the whole capital restricting the number of workers that could be employed, however, the wages-fund argument specified that it was only that portion of capital that consisted of wage-goods that imposed the limitation.

Few authors have noted the connection between the classical wages-fund doctrine and Smith’s version of it. One was Henry Hoyt, who was governor of Pennsylvania from 1879 to 1883. In Protection versus Free Trade (1886), Hoyt credited Smith with having “laid down, as quite fundamental, this proposition… [as] one of the pillars of his free-trade system.” He then categorized Smith’s statement as a version of the wages-fund doctrine:

We shall see later on the essential vice of this statement as a statement of fact. It is not true that industry is limited by capital, and, as a matter of fact, there has never been any limitation on the employment of labor by reason of lack of capital. It is one mode of formulating the wages-fund theory.

Thirty years after Hoyt, Leopold Amery delivered a series of lectures in which he evaluated The Fallacies of Free Trade, paying particular attention to Smith’s “terminological inexactitude.” Smith’s concept of capital viewed the capital of a nation as merely an aggregate of individual capitals. The difference, Amery explained, was that an individual’s capital “is the result of saving, and grows by saving from profits or by credit based on profits” while the capital of a nation, “grows by the exercise of the qualities and energies of which it consists.” In the jargon of systems dynamics, Smith mistook a stock for a flow.

Amery subsequently served as a conservative Member of Parliament from 1911 to 1945 and was best known for a Commons speech he gave in 1940, following the Allied retreat from Norway. In that speech he criticized the government’s conduct of the campaign and concluded with a quotation from Oliver Cromwell, “You have sat too long for any good you have been doing lately. Depart, I say, and let us have done with you. In the name of God, go!” Three days later, after surviving a motion of no confidence with a greatly reduced majority, the Conservative government of Neville Chamberlain resigned.

As Hoyt had done, Amery identified Smith’s error with the wages-fund doctrine but also with “its daughter fallacy,” which he specified as “the restriction of output”:

It is upon this confusion, upon this terminological inexactitude, that they have based their exposition of many a plausible and mischievous fallacy – the long since exploded “wages fund” theory for instance, with its enduring legacy of class hatred, and with its daughter fallacy, the restriction of output, a fallacy involving most harmful consequences to the prosperity of the working man…

In contrast to the wages-fund doctrine, which was boldly proclaimed by the champions of free trade and laissez faire, this so-called “daughter fallacy” — also known as the “theory of the lump of labour” — had no suitors. This peculiar lack of utterance was sometimes noted by its detractors.

James McCleary, who served in the U.S. House of Representatives from 1893 to 1907, claimed there was an “oft-repeated error” behind statements from union leaders made to the congressional committee on labor on which he sat. “It was rarely if ever put into words,” McClary wrote in 1912, “but it was the unspoken major premise of many an attempted syllogism, the unstated basis of many an appeal.”

Half a century later, steel industry executive William Caples observed that the alleged fallacy was “one of the most tenaciously held and generally least articulated of trade union beliefs…” Least articulated by the trade unionists themselves, that is. Opponents of trade unionism never tired of attributing the belief to those who “rarely if ever” professed it.

McCleary’s and Caples’s perception of an absence of overt statement is confirmed by full-text searching of thousands upon thousands of historical documents, newspapers, pamphlets, books and journal articles using synonyms and cognate phrases for the proverbial fixed amount of work to be done. Up until the 1860s declarative statements of those phrases occurred exclusively in texts authored by political economists, propounding some version of the orthodox wages-fund doctrine. When trade union leaders or advocates used the phrases, it was invariably either with conditional if-clauses or in refutations of the claims of orthodox political economy.

In the 1860s and after a remarkable metamorphosis took place. Just as the wages-fund doctrine was being refuted, repudiated and recanted by economists, there emerged a chorus of remonstrance against what John Wilson in the Quarterly Review called a “Unionist reading of the Wage-fund theory.” As usual, no evidence was given of unionists stating any such view, only indignant assertions.

Leo Amery’s analysis of terminological inexactitude is useful here to help understand what is going on in the incongruous transformation from avowed principle to alleged error. The first step was to deploy, as Smith had done, an individualist concept of accumulated capital in place of a societal concept of exercised capacities – substituting the stock for the flow. The second step was to uphold this ideal of aggregate capital accumulation as the standard by which the workers’ self-interest must be gauged. To attempt to restrict the accumulation of capital was thus denounced as delusional. This argument led to what Maurice Dobb later called “the apparent paradox that the more the workers allow themselves to be exploited, the more their aggregate earnings will increase (at least in the long run), even if the result is for the earnings of the propertied class to increase still faster.” The illegitimate “daughter” was thus conceived entirely in the image of the banished father.

Let me try to explain that once more because the sleight of hand of the operation makes it difficult to follow what’s going on. In order to allege the derivative restriction-of-output fallacy, the plaintiff needed both to commit AND to disavow the original wages-fund fallacy. This was accomplished by accepting both the “terminological inexactitude” and the conclusion of the original (social benefit from individuals pursuing self-interest) while failing to acknowledge the conclusion’s disgraced premise (the number of workers proportionate to accumulated capital).

Even if we understand how the derivative fallacy claim works the question still remains, why is it widely persuasive? I would propose two parts of an answer to that question. First, regardless of the invalidity of its premises, there is a compelling kernel of truth in Smith’s invisible hand metaphor. Actions that are wholly motivated by self-interest can, and often do, indeed have “unintended” social benefits. An avid gardener may care little about the pleasure the garden provides to neighbours and passers-by. Commerce certainly enables a wider and presumably preferable variety of commodities than would otherwise be available. On the other hand, the social costs of actions motivated wholly by self-interest may be diffuse and deferred and thus hard to trace.

The second reason is both an historical and a theological one. As such it can only be briefly alluded to here. Smith’s fable is a theodicy of sorts. Instead of addressing the question of how there can be evil in the world if God is omniscient, omnipotent and good, it addressed the paradox of the persistence of poverty in the midst of plenty. The intellectual climate of the Enlightment was awash in rationalistic theodicies. The legacy of those intellectual pursuits during the emergence of supposedly secular political economy has been addressed elsewhere in depth, for example, by John Milbank in “Political Economy as Theodicy and Agonistics,” by Michael Sonenscher in “Physiocracy as a Theodicy,” and most recently by Joseph Vogl in The Spectre of Capital.

Vogl identified what he called the “oldest and most deep seated convictions” of liberal economics as arising from “the conviction that market activity is an exemplary locus of order, integration mechanisms, harmonization, appropriate allocation, and hence social rationality, and that it demands to be represented in a coherent, systematic way.” At the core of such representations is the notion of individual actions motivated only by self-interest leading unintentionally to socially-beneficial outcomes.

A recurring feature of theodicy is the assumption of a closed system, “characterized by constancy of sum and the preservation of energy,” as Vogl described Leibniz’s metaphysics. In other words, the desire to be reassured about the ultimately benign nature of God, the universe or the economic system – especially when confronted with disconcerting evidence to the contrary – leads inexorably back to the notion of equilibrium, a self-correcting mechanism that presupposes a closed system. That is the narrative box we are in. It is how that story goes. No one is immune from the desire for reassurance.

The question that has to be asked, though, is whether the detachment and complacency enabled by such reassurance is not itself the greater evil. To paraphrase Leopold Amery, quoting Oliver Cromwell, “Depart, Invisible Hand, and let us have done with you. In the name of God, go!”

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Stranded Assets Rewind

Stranded Assets Rewind

There’s a Dangerous Bubble in the Fossil-Fuel Economy, and the Trump Administration Is Making It Worse…

“In reversing many of Obama’s keystone climate and environmental policies, Pruitt and Trump are conveniently ignoring these market signals in order to help out the fossil-fuel millionaires and billionaires who put them in office. Their actions could have disastrous consequences, not only for the climate but also for the global economy.”

Where are the economists on this? Oh, right — talking about tax cuts and Fed rate hikes. Using Economist’s View as my sample, I found no links whose title indicated it was about the stranded assets carbon bubble in the two weeks following publication of the above article by Carolyn Kormann in the New Yorker on October 19th. Zero.

I actually think that Kormann is unduly optimistic in her analysis. My suspicion is that there was already a massive carbon bubble prior to the 2016 election that was being wound down excruciatingly slowly. The election of the coal-guzzling orange groper stopped that winding-down in its tracks and ushered in a fossil-fueled feeding frenzy at The Last Chance Texaco.

And where are the economists?

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The Othering of “Economic Illiteracy”

Noah Smith has written a column at BloombergView, “Don’t Believe What Jeff Sessions Said About Jobs,” which scolds Attorney General Jeff Sessions for “terrible economics.” That may be a bit like carping about Charles Manson’s hairstyle or critiquing David Duke’s academic integrity. But there is something far more dangerous going on with Smith’s knee-jerk invocation of the lump-of-labor fallacy to rebuke Sessions and, presumably, those who might find Sessions’s claims credible.

In effect, Smith is falsely equating Sessions’s rationale for the expulsion of 800,000 young people who have grown up in the U.S. to Dean Baker’s advocacy of work-sharing. Lest that appear to be hyperbole, here is how Smith described Sessions’s terrible economics: “It’s a classic application of a well-known fallacy called the Lump of Labor  — the idea that there are a fixed number of jobs in the world, and those jobs get divvied up among people.” And here is how Omar al-Ubaydli framed his counterpoint to Dean Baker’s case for shorter workweeks: “Proponents of work-sharing believe an economy requires a fixed amount of work to be performed by a limited number of people.”

But Smith’s is only a relatively tame implementation of the fixed amount of false equivalency racket. Would you believe “collective bargaining = genocide”? Pierre Cahuc and ‎André Zylberberg traversed the obscene false equivalence distance from work-time reduction to genocide in The Natural Survival of Work: Job Creation and Job Destruction in a Growing Economy:

The idea that any country’s economy, and a fortiori the world economy, contains a fixed number of jobs or hours of work that can be parceled out in different ways is false. When used to justify the policies that reduce the length of the individual work week, it may lead to unintended consequences. … It can even be dangerous, as when it leads to the notion that getting rid of “superfluous” manpower (the Jews of Nazi Germany in the past, immigrants from many countries in the present) will give work back to indigenous residents.

Of course the above claim is not only false but absurd in the extreme. Work is “parceled out” all the time. A shift manager at Starbucks fills available hours with interchangeable baristas. The number of jobs or number of hours doesn’t have to be “fixed” to allow them to be parceled out in different ways. Nevertheless, Cahuc and Zylberberg ride their vile hobby horse from the ominous-sounding “unintended consequences” of reducing the work week to the downright dangerous notion of getting rid of unwanted populations, which somehow begins to sound almost benign compared to those terrifyingly vague unintended consequences. The slippery slope only needed to be greased one short step to encompass the principle of collective bargaining. That step was taken by Thomas Cree in  “The Evils of Collective Bargaining in Trades’ Unions” when he described the “economics upside down” that underpinned trade unionism and collective bargaining:

But now, there is a more serious evil than any of the foregoing. It is this, that the power of the union is exercised to enforce regulations which limit production and waste labour. Most workmen believe (and the belief is not confined to workmen) that increase of production per man is an evil. They think they are benefiting their class by doing each as little as possible, so as to make the work go over a greater number; and the desire to relieve the society of out-of-work allowance is a reason for enforcing that view. This is at the root of the demand for an eight hours’ day, and for a say in the management in shops, and also a cause of the objections to piecework. In this view exceptional industry is no longer a virtue—it is a fault to be punished not only by disapproval of fellow-workmen but, in some cases, by penalties. In some trades, if a man earns more than a certain wage he is fined, and his employer is fined as well.

As did many of his fellow dogmatists, Cree felt it instructive to obscure the claim of a false belief in a fixed amount of work by embedding it in the “regulations which limited production” and the supposed impulse toward slacking and shirking. The rationale, however is that “most workmen believe… that increase of production per man is evil”… because they assume that there is only a fixed amount of work to be done and thus if one man does more of it than there will be less left for others. This argument was explicated in David Schloss’s canonical explanation of “the Theory of the Lump of Labour”:

In accordance with this theory it is held that there is a certain fixed amount of work to be done, and that it is best in the interests of the workmen that each shall take care not to do too much work, in order that thus the Lump of Labour may be spread out thin over the whole body of work-people.

Schloss’s “Theory of the Lump of Labour” conformed to a template that already was more than a century old, having been expressed in similar terms in 1780 by the Lancashire magistrate, Dorning Rasbotham, in response to factory riots the previous year. Successive iterations of the complaint against the economic illiteracy of workers, handed down from Rasbotham to Schloss, adhered to what Albert O. Hirschman diagnosed as the “rhetoric of reaction.” Workers enjoyed “the best of all possible worlds.” Any effort on their part to “coerce” employers into paying higher wages or operating shorter hours would inevitably result in — as Cahuc and Zylberberg put it — “unintended consequences” that would make them worse off.

But, in what Noah Smith calls “one case where economists get it absolutely right” the consensus of economists — outside of Econ 101 textbook orthodoxy — is far less unanimous than he presumes. Among those economists who directly refuted the fallacy claim are Maurice Dobb, A.C. Pigou and Robert Hoxie. Economists who indirectly countered the fallacy claim in their analysis include Sydney J. Chapman, John Maynard Keynes, Joan Robinson, Luigi Pasinetti, John R. Commons, Dorothy W. Douglas, John Maurice Clark and Thorsten Veblen. Amazingly, objections and counter-arguments raised by these economists are never mentioned — and obviously never addressed — when the fallacy claim is trotted out. What kind of getting it “absolutely right” is that?

In my view, two of the most effective repudiations of the fallacy claim came from Dobb and Hoxie, both of whom presented alternative explanations for why workers might appear to want to “restrict output.” Dobb argued that what workers were after was not maximizing aggregate earnings but maximizing earnings relative to expenditure of time, effort and bodily “wear and tear.” Hoxie argued that the tactics and strategies of trade unions were not based on some abstract idea of what was happening in the “economy as a whole” but on everyday experience in a local economy. Dobb referred to the “Work Fund” fallacy, which was another name for the lump of labor:

…trade unionists in the nineteenth century were severely castigated by economists for adhering, it was alleged, to a vicious ‘Work Fund’ fallacy, which held that there was a limited amount of work to go round and that workers could benefit themselves by restricting the amount of work they did. But the argument as it stands is incorrect. It is not aggregate earnings which are the measure of the benefit obtained by the worker, but his earnings in relation to the work he does — to his output of physical energy or his bodily wear and tear. Just as an employer is interested in his receipts compared with his outgoings, so the worker is presumably interested in what he gets compared with what he gives. A man who works longer hours or is put on piece-rates, and increases the intensity of his work as a result, may earn more money in the course of the week; but he is also suffering more fatigue, and probably requires to spend more on food and recreation and perhaps on doctor’s bills.

Hoxie re-branded the lump of labor as the “fixed group demand theory” and concluded that this theory, in practice, “is simply the application by the unions of the principle of monopoly, admittedly valid”:

There is much scorn of unionists by economists and employers because of this lump of labor theory with its corollaries. This scorn is based on the classical supply and demand theory and its variants. Supply is demand. Increased efficiency in production means an increase of social dividend and increased shares, which in turn increase production and saving. Therefore, the workers cut off their own noses when they limit output or limit numbers. The classical position is undoubtedly valid when applied to society as a whole, if there is any such thing, and in the long run. But the trouble is that, so far as the workers are concerned, there is no society as a whole, and no long run, but immediate need and rival social groups.

Both Dobb and Hoxie called attention to the central conceit of the economists’ scorn for unionist “theories” — that somehow those who do not embrace the economic orthodoxy must have a view of economics that is “upside down” relative to the “true” theory. which is to say, same-but-different, with difference indicating deficiency. To put it bluntly, othering.

What the hell is “othering”? In a nutshell it is the practice of constituting the self as sovereign Subject by constituting the other as subjugated.

In the seminal text for the analysis of othering, “The Rani of Sirmur: An Essay in Reading the Archives,” Gayatri Chakravorty Spivak presented “three random examples of othering.” I’m not sure how “random” these examples were or even if they were random at all. Maybe she meant random as a kind of joke. At any rate, the first example had to do with s young Captain, Geoffrey Birch, riding through the countryside from Delhi to Calcutta “to acquaint the people who they are subject too.”
Spivak’s second example was General Sir David Ochterlony, a gentleman, who saw in the locals “all the brutality and purfidy [sic] of the rudest times without the courage and all the depravity and treachery of the modern days without the knowledge or refinement.” Her third example concerns some deletions in a letter drafted by the Court of Directors of the East India Company but expunged by the Board of Control. These deletions explicitly spelled out the rationale for withholding technology and knowledge from the natives. The final communique enacted the restrictions without disclosing the reasons.
So what does Spivak’s narrative of power, disparagement and knowledge have to do with the lump of labor fallacy or, for that matter, with the expulsion of colonial subjects “dreamers”? My point is that Noah Smith’s recourse to the bogus lump-of-labor fallacy claim has a much closer affinity to Attorney General Sessions’s remarks blaming “illegal aliens” for denying jobs to Americans than do the latter remarks to Dean Baker’s advocacy of shorter work weeks.
Dorning Rasbotham, Sir David Ochterlony and Jeffrey Beauregard Sessions are reactionary birds of a colonialist feather, along with Thomas Cree,  Pierre Cahuc and ‎André Zylberberg. Sessions’s economics is indeed terrible… as is the economics that opposes to it a fraudulent fallacy claim.

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Sessions, Krugman, DACA and the Lump-of-Labor Fallacy

Now may be a good time to remind people that there can be bad arguments for good causes. There may even be good arguments for bad causes.
Sessions is wrong:

The effect of this unilateral executive amnesty, among other things, contributed to a surge of unaccompanied minors on the southern border that yielded terrible humanitarian consequences. It also denied jobs to hundreds of thousands of Americans by allowing those same jobs to go to illegal aliens.

This is a lie. DACA has not “denied jobs to hundreds of thousands of Americans.” But it isn’t a lie because it assumes the amount of work to be done is fixed. To make that claim trivializes both the mendacity of the Trump administration and the gullibility of people who believe the lies that demagogues tell them. The alleged “fixed amount of work” has nothing to do with it.

To the extent there is economic illiteracy, the economics profession is the main culprit. Economists have shamelessly touted policies that enrich the rich and impoverish the poor and pooh-poohed egalitarian proposals like work-time reduction. For all too many of them, it’s their job. When those policies have exactly the effects they were designed to have, economists become puzzled about where all the inequality is coming from.

In simple terms, when things are not going well for people they tend to scapegoat vulnerable others. This is not “economic illiteracy.” It is scapegoating. Ironically, the economic illiteracy claim is itself a form of scapegoating. People stop listening to the experts because the experts have sold their credibility to the highest bidder. Instead of reflecting on why people don’t trust them any more, the experts blame it on economic illiteracy.


UPDATE: Here Paul Krugman makes good arguments in defense of DACA and avoids the fixed-amount-of-work straw man distraction. The Very Bad Economics of Killing DACA. Much better.

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