4 responses so far ↓

• 1 steveintheknow // Jan 5, 2007 at 5:39 pm

  As Thomas Friedman likes to say, “jobs aren’t exported overseas, they are exported to the past”.

  It’s so true. I spent a year working for an integration technologies contractor who’s sole purpose was to create automated systems for DELL that produced the same amount of product per time with fewer people. In a cynical fashion we would often laugh that our job was to eliminate other ones.

  Anyway, for what its worth, there is one anecdote.

• 2 fling93 // Jan 5, 2007 at 9:42 pm

  Way too many people subscribe to the Lump of labour fallacy and will probably assume the conclusion from the Bhagwati piece is that we should halt technological progress to “save jobs.” 🙂

• 3 Kevin Carson // Jan 14, 2007 at 2:04 pm

  The Bhagwati article is the kind of by-the-numbers puff piece I’d expect from the Adam Smith Institute.

  For him, apparently, “Technological progress” is something that “just growed.” The state’s R&D subsidies, the state’s subsidies for substitution capital for labor, the state’s subsidies to technical education, the state’s patent system–all of them have had a massive distorting effect in promoting skill- and capital-intensive forms of production.

  The “lump of labor fallacy” is, to a large extent, a strawman. It might be a fallacy in a truly free and competitive market, in which workers and consumers internalized all the productivity gains of technological innovation. But in the real world–a world of state intervention to reduce the bargaining power of labor and to cartelize markets among oligopoly firms–the so-called “fallacy” can be quite sensible.

• 4 P.M.Lawrence // Jan 16, 2007 at 5:32 am

  Fling93, the lump of labour concept is not materially false over a sufficiently short period. That means that you can either model or gain insight into changes by assuming work available is fixed, then working through everything to find the discrepancy, and then use that to obtain the rate of change. In some situations you don’t get material technological unemployment – but in others you do, since there is a sort of inertial confinement; employees don’t catch up, and a material level of unemployment persists. (I won’t even go into choosing different bases and renormalising.)