New Adventures in Treating Symptoms

by Don Boudreaux on September 20, 2011

in Man of System, Not from the Onion, Seen and Unseen

Here’s a letter to the Boston Globe:

David D’Alessandro argues that America’s economy would be strengthened if government forced suppliers to hire more workers to produce the goods and services that these firms sell to Uncle Sam (“Make ‘em hire,” Sept. 20).

That is, Mr. D’Alessandro wants to oblige certain firms to operate with inefficiently large numbers of workers.

If it’s true that the path to economic efficiency is paved with mandated inefficiencies, government should go beyond Mr. D’Alessandro’s relatively modest proposal.  It should require also that, say, restaurants assign a minimum of three waiters to each table.  That every taxicab be driven at each point in time by two drivers (one steers while the other operates the foot peddles).  That barbershops designate two barbers to perform each haircut.  That schools man each classroom during every minute of the school day with two teachers.  And that newspapers publish only columns and op-eds written by at least two writers.

Given that profit-seeking producers greedily seek to operate as efficiently as possible, available opportunities to encourage economic recovery by prohibiting such efficiencies are legion!

Sincerely,
Donald J. Boudreaux

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{ 40 comments }

veritasrex September 20, 2011 at 2:15 pm

Unbelievable. So when these CEOs leave their jobs and embrace politics and journalism, does everything they learned in the business world vacate their brain?

Greg Webb September 20, 2011 at 2:37 pm

No, they retain their knowledge of business, but their focus is now on selling themselves as politicians or journalists to a target market willing to pay for their services. For a politician that means doing anything to get noticed by, and receive campaign contributions from, political cronies who will benefit from the idiotic policies that the politician is proposing. For journalists that means writing or saying anything to get the attention of network or newspaper executives who are progressives in the hopes of getting more air or press time and a bigger salary.

Seth September 20, 2011 at 2:45 pm

As Buffett and Trump both demonstrate, business and economic acumen are not necessarily the same — though often conflated by the general population as such, even by themselves.

Josh S September 20, 2011 at 3:20 pm

Trump doesn’t have business acumen. He has self-promotion acumen. It’s a little different.

vidyohs September 20, 2011 at 8:46 pm

I think you are probably right. I have the suspicion that in no way would Trump want to be cashed out because I suspect his balance sheet tilts towards debt way more than he would like for people to know.

Kyle September 20, 2011 at 2:52 pm

Is this implication here that anyone in politics has a brain? We may want to scrap this line of though entirely.

veritasrex September 20, 2011 at 2:59 pm

Touche.

Paul Brinkley September 20, 2011 at 3:18 pm

It’s tempting, but at some point we should probably pour ourselves our stiff drink and concede that many people in politics do, in fact, have brains, and are quite smart about it to boot. Hayekians are fond of saying that incentives matter. Well, I say they matter in politics, too. The successful politicians are plenty bright; their “dumb” proposals stem from their significantly different incentive system (which Greg alluded to above, in fact).

Attack the politician for being dumb, and you’ll get almost nowhere. Attack the incentive system, and you’ll get… well, slightly further.

In fact, I’ll ask a question I almost never see: why don’t we have sufficient incentive to overturn the current system of political incentives? I have at least one answer to that, which might be depressing to some.

Gordon Richens September 20, 2011 at 5:10 pm

Cost of the status quo too low to justify the switching costs? Cheer up, that is apt to change.

Methinks1776 September 20, 2011 at 4:45 pm

Veritasrex,

It’s even worse when they think that since they can run a company, they can run a country.

One of Warren Buffoon’s patriotic millionaires (or whatever) was interviewed on a financial news network today. He was a knot of confusion and spoke in a string of non sequiturs. One of his “brilliant insights” was that taxes must rise because “as any businessman will tell you”, the core issue of any business is revenue. You can’t make money solely by cutting expenses. WTF that had to do with government is a mystery not only to me but to him as well.

Don Boudreaux September 20, 2011 at 5:07 pm

*LIKE*

Methinks1776 September 20, 2011 at 10:14 pm

I forgot the best part.

At the end of the interview, the Patriotic Millionaire said that he didn’t think the government was capable of spending his money wisely. Still in favour of a tax increase on millionaires, though, because the government needs the revenue. Ostensibly to misspend. Yeah.

SweetLiberty September 20, 2011 at 5:19 pm

“You can’t make money solely by cutting expenses.”

No, you make it the old fashioned way. You print it.

Invisible Backhand September 20, 2011 at 3:03 pm

I’ll just leave this here:

http://i.imgur.com/7WYPi.png

SweetLiberty September 20, 2011 at 3:19 pm

IB,

Apparently you’ve had a tourniquet tied around your neck one too many times.

Methinks1776 September 20, 2011 at 5:10 pm

That’s okay, though. I don’t think he has anything in his head requiring blood supply.

Paul Brinkley September 20, 2011 at 3:21 pm
Andrew_M_Garland September 20, 2011 at 5:03 pm

Invisible Backhand,
Your mission, if you are willing to accept it, is to fit the Generic Boudreaux Letter Template to a selection of Mr. Boudreaux’s letters. Show me (and others) the brilliance of your discovery.

For example, how does that Generic Letter fit with Mr. Boudreaux’s post above?

morganovich September 20, 2011 at 3:18 pm

don-

is that why you have 2 writers on the blog?

way to lead by example.

Paul Brinkley September 20, 2011 at 3:21 pm

I’ll admit; I laughed.

Kyle September 20, 2011 at 8:48 pm

Well played.

John September 20, 2011 at 3:27 pm

So, why not just change all the Government Procurement Laws to award contracts to the highest bidder? Maybe $500 hammers aren’t so bad afterall.

Richard Stands September 21, 2011 at 11:47 am

Make them all $1000 two-man hammers.

SweetLiberty September 20, 2011 at 3:28 pm

From the article…

While he has a council of business advisers, he has apparently chosen not to offend them by suggesting more immediate and practical ideas that force large businesses to begin hiring immediately.

You’ve got to hand it to a liberal who proudly uses the word “force” without any spin. For those paying attention, this is the “gun to the head” argument libertarians use and often get scolded for. How do liberals imagine this “force” happens if not at gunpoint. Perhaps lollipop-point.

W.E. Heasley September 20, 2011 at 5:08 pm

Liberty:

“While he has a council of business advisers, he has apparently chosen not to offend them by suggesting more immediate and practical ideas that FORCED large businesses to begin hiring immediately“.

Hmmmm. To arrive at the action of “forced” then begs the question that did Mr. David D’Alessandro asked himself this interrogatory: What would Joseph Stalin do?

BlogDog September 20, 2011 at 3:39 pm

Just one point: pedals, not peddles.

SheetWise September 20, 2011 at 5:37 pm

I thought it was ‘petals’ — turn off the dragon ware, and sharpen up the other tools.

Mcwop September 20, 2011 at 3:49 pm

Taxis should be required two drivers. One drives, the other translates to overcome the langauge barrier.

Andy Foster September 20, 2011 at 4:28 pm

“That schools man each classroom during every minute of the school day with two teachers.”

Don, I beg of you, be careful what you put in this blog. Someone somewhere is going to suggest this and quote this one sentence out of your blog to claim that you support this idea.

That said, more teachers, less administrators is a better way to spend the tax dollars that go to public schools.

ArrowSmith September 20, 2011 at 7:02 pm

Seems like a brilliant idea to me. Gets people back to work! Why shouldn’t our corporations be more patriotic and little less greedy?

vidyohs September 20, 2011 at 8:54 pm

When I was stationed in Japan, 1967-1970, the Japanese bragged they had 100% employment, and they did it by following the principle suggested by David D’Alessandro, It was as common as dirt to see government workers, especially in the public works sector, in crews of as much as six or seven out on a job that really only required one man. One would be in the hole shoveling and the rest standing around waiting to take a turn with the shovel.

Yes, government can hire, but they can never be efficient. Not in planning or execution, and definitely not in procurement. Only a government bureaucrat would ever approve a $32 screw.

Fred September 20, 2011 at 9:01 pm

“a $32 screw”

Was that before or after the man-in-uniform discount?

Invisible Backhand September 20, 2011 at 9:08 pm

Did you fight a lot of Vietnamese in Japan?

vidyohs September 21, 2011 at 6:07 am

Of course O’ brilliant looney, that was heavily implied in my comment, glad you caught it.

Richard Stands September 21, 2011 at 12:05 pm

Isn’t the current executive of the federal government currently trying to sell a $447 trillion screw?

GiT September 20, 2011 at 10:01 pm

Instead of taking an absurdist line, one could easily carry the argument about mandated inefficiencies over to the 8 hour working day, the 40 hour work week, the weekend, the minimum wage, child labor laws, and so on.

Of course, I have no doubt that for many here most, if not all, of these are things that should be eliminated, because they are inefficient.

This rather misses the point that these protections, though at times voluntarily instituted for the sake of efficiency (Ford and the shortened working day), were ‘forced’ on businesses because people were much less concerned with what made for an efficient business and much more concerned with what made for a decent quality of life for all.

D’Alessandro never once mentions ‘efficiency’ in his opinion piece. And he never says his interest is in improving the American economy. He does mention unemployment and job preservation and creation, and he does speak of improving America.

One might wager that he thinks what is good for America is not simply reducible to what is good for its economy, and, therefore, what is economically efficient is not necessarily what is efficient at addressing what he seeks to address, which is American unemployment, not American efficiency.

That what is best for American unemployment is reducible to what is good for the efficiency of American business is not an obvious conclusion. I gather it’s actually a conclusion with which d’Alessandro would disagree. I also assume it’s a conclusion most here do agree with (and may even think is obviously true).

If the population of people who need jobs does not moderate itself in any expedient and tolerable way to the supply of jobs dictated by market efficiencies, then if the problem a society seeks to solve is ‘supplying people with jobs,’ by necessity, any attempt to solve this problem will require creating market inefficiencies.

That the requisite solutions create market inefficiencies is not prima facie reason for saying that the problem is not, in fact, a problem. Not that there aren’t reasons for saying that unemployment is not a problem. You just don’t see any of these reasons in the letter provided.

kyle8 September 21, 2011 at 11:33 am

say what? Ok, sure you can reduce any argument to it’s absurd level as Don often does, but dies the kernel of truth in the argument elude you?

Bringing up work week hours and child labor is not germane. Those things came about not because of action by crusading politicians and journalists, nor action by labor unions. They came about because the public considered them desirable, and our economy had matured to a point where we could afford them.

Full employment is quite different because we can reach near full employment by classical economics, we know this because we have experienced it before.

We cannot reach full employment by government mandating that firms hire more people because if those firms cost go too high they simply go out of business.

You missed the entire point of the post which was that what D’Alessandro was suggesting was not only bad economics but quite impossible. In other words a really really bad idea.

GiT September 21, 2011 at 6:52 pm

The post in no way shows that what is being asked is impossible. It says it is inefficient. Keeping inefficient enterprises running is not impossible, and as you note legislation which forces inefficiencies, both to the detriment of employment levels (minimum wage) and to its benefit (maximum working hours) have been passed.

The article in question does not ask for full-employment, it asks for increased employment.

Increased employment, which has costs when human labor isn’t productive enough, is just as possible for the public to afford as other publicly required ‘inefficiencies’.

D’Alessandro premises his argument on the basis of corporations realizing a profit. It’s pretty basic that an increase in costs will not necessarily lead to the shutdown of a firm when they earn profits, even if they aren’t earning economic profits.

And given that we’re talking about government contracts, if the cost of government contracts goes up because of the requirement, the government can just tax/borrow more.

One can argue all this will lead to a decrease in quality of life and total economic output for the sake of raising employment levels. One can’t argue it is impossible.

As a final note it is really quite odd the insistence on attributing goals to the author which appear nowhere in his piece. D’Alessandro never mentions full-employment. He never says he’s after economic efficiency. And yet, apparently you think he’s talking about full-employment and Bourdeaux thinks he’s talking about optimizing economic efficiency.

Richard Stands September 21, 2011 at 11:57 am

Why hire one when you can hire two at twice the price?

John Kannarr September 21, 2011 at 1:51 pm

I think Mr. D’Alessandro’s plan is already in effect at the Justice Department. There must be at least 3 or 4 extra bakers working on those $16 muffins!

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