Labor Econ Versus the World By Bryan Caplan

My 13-year-old homeschooled sons just finished my labor economics class. I hope they take many more economics classes, but I’ll be perfectly satisfied with their grasp of economics as long as they internalize what they learned this semester. Why? Because a good labor economics class contains everything you need to see through the central tenets of our society’s secular religion. Labor economics stands against the world. Once you grasp its lessons, you can never again be a normal citizen.

What are these “central tenets of our secular religion” and what’s wrong with them?

Tenet #1: The main reason today’s workers have a decent standard of living is that government passed a bunch of laws protecting them.

Critique: High worker productivity plus competition between employers is the real reason today’s workers have a decent standard of living. In fact, “pro-worker” laws have dire negative side effects for workers, especially unemployment.

Tenet #2: Strict regulation of immigration, especially low-skilled immigration, prevents poverty and inequality.

Critique: Immigration restrictions massively increase the poverty and inequality of the world – and make the average American poorer in the process. Specialization and trade are fountains of wealth, and immigration is just specialization and trade in labor.

Tenet #3: In the modern economy, nothing is more important than education.

Critique: After making obvious corrections for pre-existing ability, completion probability, and such, the return to education is pretty good for strong students, but mediocre or worse for weak students.

Tenet #4: The modern welfare state strikes a wise balance between compassion and efficiency.

Critique: The welfare state primarily helps the old, not the poor – and 19th-century open immigration did far more for the absolutely poor than the welfare state ever has.

Tenet #5: Increasing education levels is good for society.

Critique: Education is mostly signaling; increasing education is a recipe for credential inflation, not prosperity.

Tenet #6: Racial and gender discrimination remains a serious problem, and without government regulation, would still be rampant.

Critique: Unless government requires discrimination, market forces make it a marginal issue at most. Large group differences persist because groups differ largely in productivity.

Tenet #7: Men have treated women poorly throughout history, and it’s only thanks to feminism that anything’s improved.

Critique: While women in the pre-modern era lived hard lives, so did men. The mating market led to poor outcomes for women because men had very little to offer. Economic growth plus competition in labor and mating markets, not feminism, is the main reason women’s lives improved.

Tenet #8: Overpopulation is a terrible social problem.

Critique: The positive externalities of population – especially idea externalities – far outweigh the negative. Reducing population to help the environment is using a sword to kill a mosquito.

Yes, I’m well-aware that most labor economics classes either neglect these points, or strive for “balance.” But as far as I’m concerned, most labor economists just aren’t doing their job. Their lingering faith in our society’s secular religion clouds their judgment – and prevents them from enlightening their students and laying the groundwork for a better future.