by the Sandwichman
Europe: Economic facts of life
Giles Merritt International Herald Tribune
FRIDAY, FEBRUARY 17, 2006
The whole row is as absurd as it is heated. In the first place, it rests on one of the oldest misconceptions derided in economics textbooks - the lump of labor fallacy is the mistaken notion that there is only a given amount of work to be done in an economy, or a fixed number of jobs to be divided up; in reality, more workers generate more economic activity.
To the editor, International Herald Tribune
I'm in favor of the free movement of people so it pains me to see Gilles Merritt use bad arguments on behalf of a good cause. The lump-of-labor fallacy claim may well be derided in (some) economics textbooks but that's only because textbook authors tend to repeat thngs that were said in previous textbooks without checking the original sources. Having traced the sources and written published and currently in-review scholarly articles on the strange history of the fallacy claim, I can assure you that it's a red herring. Opposition to immigration isn't necessarily based on the "notion that there is only a given amount of work to be done in an economy." It can also more realistically relate to fears that the alternative sources of labor can be -- and often are -- used by employers as a wedge in bargaining.
A couple of years ago, it was hilarious to watch employers like Siemens and Daimler-Chryler threaten to move jobs 'off-shore' unless they got union concessions on wages and hours and at the same time read pompous invocations of the lump-of-labor fallacy in denunciation of the shorter hours that the workers were being pressured to give up. But according to the textbooks, presumably the export of those jobs should have just generated more economic activity and so the displaced workers would immediately be re-employed (albeit at a lower wage, perhaps). Again according to the textbooks, lower wages should generate even more economic activity and thus lead, eventually to higher wages. Had those silly workers only read the textbooks they might have realized that they really had nothing to lose (in the long run) by refusing concessions. That is, assuming the textbooks know what they are talking about.
Tom Walker
Vancouver, BC
Canada
Dear Giles Merritt,
You have fallen into the "it's in the textbooks it must be true" trap (almost as treacherous as the "I heard it from a think-tank so it must be true" trap). I've researched the so-called lump of labor fallacy extensively and it has no business being in the textbooks or elsewhere in economic discourse as other than a historical curiousity. I would be glad to send you copies of one or both of my articles on the history and validity of the fallacy claim. One of them was published in 2000 in the book Working time: International trends, theory and policy perspectives, the other is under second-stage review by the Journal of Economic Issues. If after reading those articles, you remain convinced that the fallacy claim is genuine I would be delighted to debate you on the MaxSpeak blog. Below [above] is the text of the letter I sent to the editor of the IHT:
Posted by sandwichman at February 17, 2006 07:10 AM