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Labor Lumps

http://www.nytimes.com/2003/10/07/opinion/07KRUG.html

Lumps of Labor
By PAUL KRUGMAN

Published: October 7, 2003


Economists call it the "lump of labor fallacy." It's the idea that there is a fixed amount of work to be done in the world, so any increase in the amount each worker can produce reduces the number of available jobs. (A famous example: those dire warnings in the 1950's that automation would lead to mass unemployment.) As the derisive name suggests, it's an idea economists view with contempt, yet the fallacy makes a comeback whenever the economy is sluggish.
Sure enough, the lump-of-labor fallacy has resurfaced in the United States — but with a twist. Traditionally, it is a fallacy of the economically naïve left — for example, four years ago France's Socialist government tried to create more jobs by reducing the length of the workweek. But in America today you're more likely to hear lump-of-labor arguments from the right, as an excuse for the Bush administration's policy failures..... for more go to: http://www.nytimes.com/2003/10/07/opinion/07KRUG.html

Monday, October 06, 2003 |

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