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The fetish of full employment- Henry Hazlitt vs. Ezra Klein
Posted on 5/19/14 at 2:36 am
Posted on 5/19/14 at 2:36 am
Ezra Klein recently wrote an article about how joblessness, not inequality, is the great crisis of our time. In typical liberal fashion, he trotted out the good ole' government as a solution to this problem of joblessness- aka public works.
Mr. Klein needs to read this chapter from Hazlitt's "economics in one lesson". I bolded the important points.
Mr. Klein needs to read this chapter from Hazlitt's "economics in one lesson". I bolded the important points.
quote:
THE ECONOMIC GOAL of any nation, as of any individual, is to get the greatest results with the least effort. The whole economic progress of mankind has consisted in getting more production with the same labor. It is for this reason that men began putting burdens on the backs of mules instead of on their own; that they went on to invent the wheel and the wagon, the railroad and the motor truck. It is for this reason that men used their ingenuity to develop a hundred thousand labor-saving inventions.
All this is so elementary that one would blush to state it if it were not being constantly forgotten by those who coin and circulate the new slogans. Translated into national terms, this first principle means that our real objective is to maximize production. In doing this, full employment—that is, the absence of involuntary idleness—becomes a necessary byproduct. But production is the end, employment merely the means. We cannot continuously have the fullest production without full employment. But we can very easily have full employment without full production.
Primitive tribes are naked, and wretchedly fed and housed, but they do not suffer from unemployment. China and India are incomparably poorer than ourselves, but the main trouble from which they suffer is primitive production methods (which are both a cause and a consequence of a shortage of capital) and not unemployment. Nothing is easier to achieve than full employment, once it is divorced from the goal of full production and taken as an end in itself. Hitler provided full employment with a huge armament program. World War II provided full employment for every nation involved. The slave labor in Germany had full employment. Prisons and chain gangs have full employment. Coercion can always provide full employment.
Yet our legislators do not present Full Production bills in Congress but Full Employment bills. Even committees of businessmen recommend “a President’s Commission on Full Employment,” not on Full Production, or even on Full Employment and Full Production. Everywhere the means is erected into the end, and the end itself is forgotten.
Wages and employment are discussed as if they had no relation to productivity and output. On the assumption that there is only a fixed amount of work to be done, the conclusion is drawn that a thirty-hour week will provide more jobs and will therefore be preferable to a forty-hour week. A hundred make-work practices of labor unions are confusedly tolerated. When a Petrillo threatens to put a radio station out of business unless it employs twice as many musicians as it needs, he is supported by part of the public because he is after all merely trying to create jobs. When we had our WPA, it was considered a mark of genius for the administrators to think of projects that employed the largest number of men in relation to the value of the work performed—in other words, in which labor was least efficient.
It would be far better, if that were the choice—which it isn’t—to have maximum production with part of the population supported in idleness by undisguised relief than to provide “full employment” by so many forms of disguised make-work that production is disorganized. The progress of civilization has meant the reduction of employment, not its increase. It is because we have become increasingly wealthy as a nation that we have been able virtually to eliminate child labor, to remove the necessity of work for many of the aged and to make it unnecessary for millions of women to take jobs. A much smaller proportion of the American population needs to work than that, say, of China or of Russia. The real question is not how many millions of jobs there will be in America ten years from now, but how much shall we produce, and what, in consequence, will be our standard of living? The problem of distribution on which all the stress is being put today, is after all more easily solved the more there is to distribute.
We can clarify our thinking if we put our chief emphasis where it belongs—on policies that will maximize production.
Posted on 5/19/14 at 4:23 am to HailHailtoMichigan!
Henry Hazlitt should be required reading for anyone to vote. 75% of Congress probably don't know who he is.
Posted on 5/19/14 at 6:08 am to Rawdawgs
quote:
Henry Hazlitt should be required reading for anyone to vote.
I read his "The Great Idea" back in the late 50's when I was at LSU. It was my first politically oriented book, and was the seminal event on the path to my current political beliefs.
Posted on 5/19/14 at 7:58 am to ChineseBandit58
Not so much politics as philosophy, in my opinion. Economics is like gravity. You can recognize this or you can try to deny it, but sooner or later, the truth will prevail.
Posted on 5/19/14 at 10:47 am to Rawdawgs
Ron paul included economics in one lesson in his list of books all Americans should read
Posted on 5/19/14 at 5:08 pm to Rawdawgs
quote:If he was required reading, democrats would be out of power. His take down of public work projects is brilliant. He writes for the layman, too.
Henry Hazlitt should be required reading for anyone to vote. 75% of Congress probably don't know who he is.
Posted on 5/19/14 at 5:12 pm to HailHailtoMichigan!
quote:
If he was required reading, democrats would be out of power. His take down of public work projects is brilliant. He writes for the layman, too.
republicans are just as big proponents of keynsian economics as democrats. I do agree if the public understand the problems with the keynsian model (which keynes duly noted), they would not support our current spending model.
But keynsian economics has 70 years of working for us. its failures are a failure of applying it correctly, more so than the theory itself.
Posted on 5/19/14 at 5:14 pm to Hawkeye95
quote:Absolutely. Republican support for Military expenditures is a form of Keynesian thinking.
republicans are just as big proponents of keynsian economics as democrats.
Posted on 5/19/14 at 5:17 pm to Hawkeye95
quote:
its failures are a failure of applying it correctly,
of course. one of the 2 arguments for the failure of government: (1) we didn't use enough money or (2) it wasn't implemented correctly
if you want to see why keneysian economics fails, just look at california in 2007-2008 and how it handled it's public unions. in a time of economic prosperity, it was supposed to cut government spending, right? what did it do? increased public spending, so that public workers could "compete" with the free market's wages, benefits, etc.
not only did this ignore keynes, but it also creates a double-fricking once the cool off happens, as the public is left with new public obligations, only born out of a temporary increase in economic activity.
while in the objective and in hindsight, california looks ridiculous, due to the very nature of politics, it was SOP during that time period
Posted on 5/19/14 at 5:21 pm to Hawkeye95
Keynesian economics: taking water from the deep end of a pool and pouring it in the other end, and expecting the water level to rise.
Posted on 5/19/14 at 5:25 pm to HailHailtoMichigan!
quote:
Ezra Klein recently wrote an article about how joblessness, not inequality, is the great crisis of our time. In typical liberal fashion, he trotted out the good ole' government as a solution to this problem of joblessness- aka public works.
But didn't we already do the whole stimulus things? Shovel ready jobs and all that jazz?
I guess when you're too busy being a Jurnolist you miss those sorts of things.
Posted on 5/19/14 at 5:27 pm to HailHailtoMichigan!
I don't understand what point you're trying to make, or even if you have one.
versus
Public works ARE production.
quote:
Ezra Klein recently wrote an article about how joblessness, not inequality, is the great crisis of our time. In typical liberal fashion, he trotted out the good ole' government as a solution to this problem of joblessness- aka public works.
versus
quote:
We can clarify our thinking if we put our chief emphasis where it belongs—on policies that will maximize production.
Public works ARE production.
Posted on 5/19/14 at 5:31 pm to Rex
quote:Digging ditches and filling them up again is not production. Building unneeded things just to employ people is not production.
Public works ARE production.
And public works require taxation. Every dollar spent on public works is a dollar that cannot be used in the private sector.
And that's exactly what the WPA was. It was makework political shite.
The WPA was NEVER sold as a production project. It was sold as an employment bill.
This post was edited on 5/19/14 at 5:34 pm
Posted on 5/19/14 at 5:33 pm to HailHailtoMichigan!
quote:
At one of our dinners, Milton recalled traveling to an Asian country in the 1960s and visiting a worksite where a new canal was being built. He was shocked to see that, instead of modern tractors and earth movers, the workers had shovels. He asked why there were so few machines. The government bureaucrat explained: “You don’t understand. This is a jobs program.” To which Milton replied: “Oh, I thought you were trying to build a canal. If it’s jobs you want, then you should give these workers spoons, not shovels.”
Posted on 5/19/14 at 5:37 pm to SlowFlowPro
quote:
if you want to see why keneysian economics fails, just look at california in 2007-2008 and how it handled it's public unions. in a time of economic prosperity, it was supposed to cut government spending, right? what did it do? increased public spending, so that public workers could "compete" with the free market's wages, benefits, etc.
sure, but this wasn't keynesian economics. It was some bastardization. I would agree that we can't handle keynsian policies b.c we don't have the ability to actually implement it.
This is the problem with abstract economic arguments is they are always summarized and rarely do policies follow the theory closely.
for instance, Ricardo's theory of comparitive advantage requires full employment in both economies. When the frick is that going to happen? But its a given and accepted.
Its sorta bizarre. BTW, this impacts most conservative economic theory, b.c consumers do not make rational decisions.
Posted on 5/19/14 at 5:39 pm to HailHailtoMichigan!
quote:
And that's exactly what the WPA was. It was makework political shite.
Several buildings exist on the LSU campus, and many hundreds in productive use exist elsewhere, because of the WPA. So where are you getting this "makework" nonsense?
In a country where roads and bridges are crumbling I'd hardly worry about people being employed to do unnecessary things. And we no longer employ a WPA model, anyway. Stimulus money for public works is contracted out to private enterprise.
Posted on 5/19/14 at 5:40 pm to Rex
quote:
Stimulus money for public works is contracted out to private enterprise.
yep, all those "shovel ready" jobs
Posted on 5/19/14 at 5:41 pm to TrueTiger
I see several miles of interstate highway lanes here in Baton Rouge that didn't exist before Obama's stimulus package.
I believe a Keynesian approach to economic stagnation and recession is OBVIOUSLY valid, as proven by the WPA and then WWII spending, and as I'm proceeding to demonstrate in my Hunkydoria thread.
I believe a Keynesian approach to economic stagnation and recession is OBVIOUSLY valid, as proven by the WPA and then WWII spending, and as I'm proceeding to demonstrate in my Hunkydoria thread.
This post was edited on 5/19/14 at 5:44 pm
Posted on 5/19/14 at 5:50 pm to Rex
I see hundreds of thousands of unemployed that had jobs before BHO.
I see miles and miles more to go before our economy recovers from BHO.
I see miles to go before we fix what ACA and BHO has wrought.
I see miles to go before the majority feel good about the economy and this country BHO has delivered after 6 years.
You stare at those
I see miles and miles more to go before our economy recovers from BHO.
I see miles to go before we fix what ACA and BHO has wrought.
I see miles to go before the majority feel good about the economy and this country BHO has delivered after 6 years.
You stare at those
quote:we will look at the long road ahead.
several miles of interstate highway
Posted on 5/19/14 at 5:54 pm to goatmilker
The Obama stimulus package kickstarted 51 straight months of private sector job growth after he inherited the worst recession since the 1930's.
What was George Bush's record on job creation again?
What was George Bush's record on job creation again?
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