But isn’t this older generation stealing jobs from the young? This, economists say, is the 'the lump of labour fallacy' – the belief that there is a fixed number of jobs in the economy. In reality, the economy expands, broadly, with the size of the workforce – one of the reasons for political acceptance of immigration.
1. In real reality, the economy doesn't expand "with the size of the workforce." It expands with the availability of credit. A larger workforce may encourage the expansion of credit but not necessarily.
2. Even if credit does expand and consequently the economy expands there is no guarantee of a one-to-one creation of new jobs for the added job seekers. Thus the number of jobs in the economy doesn't have to be "fixed" for unemployment to result from an expansion of the labour supply. The "lump-of-labor" assertion is a red herring.
Why do newspaper hacks (and economist hacks) keep peddling this discredited canard?
"Why do newspaper hacks (and economist hacks) keep peddling this discredited canard?"
ReplyDeleteThe myth that compensation is always and everywhere perfectly correlated with productivity is too painful to abandon. Those older workers damn well *deserve* those jobs and the income that comes with them, just as the lazy young-uns damn well *deserve* their unemployment and poverty. We have it seems the best of all possible worlds.