In today’s (Sunday, June 22, 2014) New York Times Steven Rattner Has a column that at first appears to get the economics right, but blows it at the end. Most of the column is an explanation of why increased automation will not cause unemployment. He describes past fears of automation leading to unemployment, going back to 1589, and shows that these fears have always been incorrect. (He did not mention President Obama’s fear of ATM machines.) But at the very end of the column, he presents what he believes to be the cause of unemployment. “That honor belongs to globalization, and particularly the ability of companies to substitute far less expensive and increasingly skilled labor in developing countries.” Of course, this claim is just as absurd as the claim that automation is causing unemployment. Mr. Rattner is a smart man, although not an economist, and it is not clear whether his misguided diagnosis is due to ignorance or to politics — an unwillingness to blame increased regulation and particularly Obamacare for the slow growth in employment.
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More bad economics from the Times
Paul H. Rubin
Website PostsPAUL H. RUBIN is Samuel Candler Dobbs Professor of Economics at Emory University in Atlanta and formerly editor in chief of Managerial and Decision Economics. He blogs at Truth on the Market. He was President of the Southern Economic Association in 2013. He is a Fellow of the Public Choice Society and is associated with the Technology Policy Institute, the American Enterprise Institute, and the Independent Institute. Dr. Rubin has been a Senior Economist at President Reagan's Council of Economic Advisers, Chief Economist at the U.S. Consumer Product Safety Commission, Director of Advertising Economics at the Federal Trade Commission, and vice-president of Glassman-Oliver Economic Consultants, Inc., a litigation consulting firm in Washington. He has taught economics at the University of Georgia, City University of New York, VPI, and George Washington University Law School. Dr. Rubin has written or edited eleven books, and published over two hundred and fifty articles and chapters on economics, law, regulation, and evolution in journals including the American Economic Review, Journal of Political Economy, Quarterly Journal of Economics, Journal of Legal Studies, and the Journal of Law and Economics, and he frequently contributes to the Wall Street Journal and other leading newspapers. His work has been cited in the professional literature over 8000 times. Books include Managing Business Transactions, Free Press, 1990, Tort Reform by Contract, AEI, 1993, Privacy and the Commercial Use of Personal Information, Kluwer, 2001, (with Thomas Lenard), Darwinian Politics: The Evolutionary Origin of Freedom, Rutgers University Press, 2002, and Economics, Law and Individual Rights, Routledge, 2008 (edited, with Hugo Mialon). He has consulted widely on litigation related matters and has been an adviser to the Congressional Budget Office on tort reform. He has addressed numerous business, professional, policy, government and academic audiences. Dr. Rubin received his B.A. from the University of Cincinnati in 1963 and his Ph.D. from Purdue University in 1970.
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The “lump of labor” is a rather infuriating thing to argue against, precisely because the two sides usually end up talking past each other. People who have studied the past point out that this was said about many waves of technological development and labor-saving machinery, and it didn’t happen. The people arguing it say This Time is Different and “What are the new jobs?”, and you can’t really say that you know because you usually can’t know where they’ll be created in advance.