On Jobs (not Steve)

The Unemployment Rate of Selected EU Countries (source: Google Public Data)

People who religiously adhere to, or defend a doctrine are to be treated with suspicion. Nowhere is this more true than in the strange land of economic ideology. Economics is a young science, and if you look over the history of well-established sciences, then this is cause for concern. It wasn’t all that long ago that we believed the Earth to be the center of the universe, and had to invent things like “retrograde” motion to explain why the observed motion of the other planets didn’t match the theory. Even relatively recently, we have the discovery of micro organisms ushering in a whole new way of looking at diseases… no more explaining away your sickness with “bad air” (the literal translation of “Malaria”).

The trouble with economics though, is that it is intertwined with policy, and thus comes under the influence of politics. Even now, politicians still blindly espouse doctrines of laissez-faire free market economics as an answer to all of societies ills, completely ignoring not just the weaknesses in the theory, but also the assumptions that came along with the original model. Such blind dedication leads inevitably to free market policies and thinking being applied in very inappropriate situations (such as healthcare).

Recently, the world has struggled with employment.

There was a sharp uptick in unemployment immediately following the onset of the global financial crisis. The generally-accepted explanation among (serious) mainstream economics is that when times are bad, people aren’t as willing to take risks. That means that fewer people are investing in stuff. Fewer people (and companies) are buying things – there is a decrease in aggregate demand. Basically, the purse strings are being tightened. This results in people generally having less money to spend, so they spend less, and the cycle continues.

Why does this cause unemployment? Wages and working hours are generally fixed. When there’s less demand, then there will (and should) be less production. Less demand/productivity, leads to lower profits and if paying worker’s wages are a significant part of your costs (and they generally are) then something’s got to give, and that something is usually a few jobs.

I’m just going to come out and say it – I think that’s really dumb. A speculative bubble bursting on the other side of the world will obviously have ripple effects across the globe, since we are all so interconnected in this globalized economy. However, I don’t think that a factory worker in Naples should lose his job because of the bad behaviour of an investment banker in New York. Ideally, what should happen is all these people shouldn’t lose their jobs, and should keep getting paid. If they keep getting paid, then they don’t lose confidence in the economy, and they keep buying stuff and sustaining aggregate demand.

Of course, the big question then is “where does that money come from?”. If there was a way to do it, all the ridiculous bonuses for the bankers and traders on Wall St should be paid back and redistributed to everyone who lost a job as a result of the meltdown. There probably is enough to go around, and spreading the wealth around would actually be much better for the economy. That’s not just my opinion – 10 million dollars locked up in a Swiss bank account somewhere isn’t doing much for the economy, not when compared to 10 thousand dollars, spread out over one thousand people. They’ll spend more of it, and keep the cogs of the economy turning.

On a related note, I was also thinking about the bad press that immigrants get. I wrote a short piece on the famous xenophobe Geert Wilders a few years back, but unfortunately that article didn’t go viral in the way I had intended, nor did it usher in a new era of removing politicians of his ilk from public office (and public consciousness). In that article, I mentioned that religion was just a convenient tool for rich powerful people to use poor people to do their bidding, and that God really didn’t have anything to do with it. In much the same way, economics is being used to pull the wool over our eyes with little regard for the actual science (and there certainly does exist some good stuff) that underpins these economic theories.

The only immigrants who can really claim to be taking anyone’s jobs are people like me.

My pet-hate-phrase is “they’re coming and taking our jobs”. I’ve thought about this a bit and the more I think about it, the more utterly ridiculous it sounds. The only immigrants who can really claim to be taking anyone’s jobs are people like me. Highly-skilled, highly-educated people who can afford to hop around the globe gaining amazing and unique experiences, and being educated at some of the truly greatest educational institutions that the world has to offer. Yes – I AM STEALING YOUR JOB. I can come to a your country and take your job because I have qualifications and experiences behind me that very few (or none) of the people in your country have. Even in a country like Denmark, where I was welcomed with open arms because I had qualifications on the “positive list” (a list of subject areas and professions where there is a shortage of appropriately-skilled labor). That’s right – not only am I stealing your job, but your government is probably encouraging me to do it. (of course, highly-skilled employees also tend to fall into higher tax brackets and end up contributing a lot to society with the benefits associated with the comparative advantage of these rare, highly-prized skilz… or so it is said)

The point I’m trying to make is that a highly-skilled foreign worker will steal your job because there’s a good chance that they can do it better than you can (this is why CEOs get paid so much). Welcome to globalization. An unskilled migrant worker isn’t likely to do that. These people often end up doing the shitty jobs that nobody else wants to do. They’ll work harder, and for less (unless your country is smart enough to have a minimum wage). Is that fair? Sure it is, if you like free markets so much, then this is just the kind of competition that will bring prices down and improve the quality of products and services for consumers.

But do they really take your jobs? We’ve already seen above that the number of jobs in an economy is not a fixed entity. Let’s look at it this way – a person has a job, they get paid, they spend that money on rent, food, train tickets, movie tickets, parking tickets, whatever. At the end of the day, what happens? You often have almost the same amount of money as you started with. Can you see where I’m going with this? When there is an influx of new labour then there is a temporary shortage of jobs, but in the long run, it should even out because they’re people too, and they spend the money that they earn, thereby creating more jobs. The only real problem you get if you have a large influx of migrants is when they don’t work, and become a burden on your welfare system. That’s a genuine problem because most of these people haven’t had a great education and are more limited in what they can do, but if they’re not working, then you can hardly blame them for taking your job.

Take Australia for example. Many people in Australia whine about immigrants taking their jobs. It’s absurd. The entire country is made up of immigrants. Who did they steal their jobs from?

There are more important questions to be asking, and I have a feeling that migrants get the bad press from politicians because they’re easy targets for scoring cheap political points, and they often aren’t eligible to vote. Why aren’t there enough jobs? Why is the economic system designed in such a way that there never seems to be full employment? If we as humans have truly become so economically efficient that a fraction of the working age population actually needs to work, then why do some people not have enough to eat? These are the kinds of searching questions that politicians aren’t used to dealing with, and would much rather avoid dealing with, so they distract the electorate with immigrants-stealing-jobs, and smear campaigns for the other political parties. And who can blame them, when the election cycle is so short, especially when compared to how long it would take to truly solve these problems, then how can you realistically expect any politician to pay attention?

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