“Jobs” as a Red Herring: The Dangers of Make-Work Bias

In the ongoing debate over the crony capitalist “Export-Import” bank, job statistics get thrown around a lot. On its website, the bank boasts that “Ex-Im Bank’s mission is American jobs,” claiming to have “supported 1.2 million private-sector, American jobs since 2009, supporting 205,000 jobs in 2013 alone.” Economist Veronique de Rugy points out that these job numbers constitute a negligible fraction of jobs supported by American exports overall.

Tim Carney disputes the validity of the job numbers themselves, saying the bank “uses a nearly worthless methodology to count ‘jobs supported.'” He argues that “Ex-Im subsidies often hurt U.S. employers by subsidizing their competitors. And at best, Ex-Im moves jobs around the economy, boosting employment in some parts of the economy and costing jobs in others.”

But the debate over employment statistics misses a bigger point: Jobs shouldn’t be the goal. A job isn’t an end in itself; it’s a means to an end. People seek employment so that they can buy food, afford shelter, and purchase the other things they desire. As Adam Smith wrote, “Consumption is the sole end and purpose of all production.”

Still, many people measure an economy’s health in terms of employment, a phenomenon economist Bryan Caplan calls “make-work bias, a tendency to underestimate the economic benefits of conserving labor.”

And there are obvious economic benefits to conserving labor. Suppose Kevin Carson is right that 3-D printers will create a homebrew industrial revolution, allowing individuals and small shops to produce modern consumer goods at incredibly low costs and with very little requisite labor. This would likely eliminate plenty of jobs in both manufacturing and sales, as people move to creating goods at low cost in their homes or neighborhoods. But while there would be fewer jobs, people would be much better off. They would have more stuff at lower costs, and likely more freedom to choose what to do with their time.

If this kind of innovation were squelched, some jobs might be protected, but overall people would be much worse off. We see this kind of dynamic at play today as entrenched interests use so-called “intellectual property” to squelch free expression and innovation online. The infamous and censorious Stop Online Piracy Act (SOPA), was backed by the AFL-CIO in order to protect a narrow set of jobs from the internet’s competition. The bill was wildly unpopular, as it would have destroyed one of the most desirable aspects of modern life. But hey, anything to protect jobs in politically connected industries.

Discussion of jobs is often used to divert resources to privileged business interests. That’s exactly what the Ex-Im bank does. It lends taxpayer money to corporations like Boeing, Caterpillar and General Electric. These companies have connections in Washington and profit handsomely off of militarism and war.

Every dollar politicians divert towards these firms is a dollar allocated by force rather than by voluntary exchange. Voluntary exchange tends to be mutually beneficial: Both parties involved gain something they want from the exchange. Indeed, they typically gain something they value more than what they gave up. In this manner, voluntary association and trade tend to create wealth and make people better off. Such exchanges also employ the tacit knowledge individuals have about their unique preferences and values, knowledge inaccessible to any politician or bureaucrat.

By contrast, the state takes money and resources by force through taxation. It then allocates resources not to those who provide goods or services people want, but instead to cronies with political privilege. Money given to militaristic aerospace companies like Boeing is money that individuals can no longer use to buy food, medicine, musical instruments or whatever else they desire. Thus, the jobs supported by institutions like the Ex-Im Bank are jobs supported at the expense of individuals choosing how they want to use their resources.

The same is true for jobs created by opening new prisons. It’s true for jobs created by military spending. Perhaps jobs are created, but they’re created at a serious cost to prosperity and individual choice, not to mention the destruction violent institutions like war and prison impose.

It’s time to stop seeing work as an end in itself. We should seek a world where we can toil less and have more. To do that, it’s important to let people freely associate and discover new ways of producing, trading, sharing, and interacting. The state will undermine this process, enriching privileged elites in the name of jobs.