More on Job Losses and the Costs of Trade

by Don Boudreaux on March 25, 2017

in Myths and Fallacies, Trade

Many are the posts on this blog that challenge, from different angles, the common habit of calling or classifying the loss of particular jobs to imports as a “cost” of trade.  (Here’s just one example.  And here’s a second.)  Because the loss of particular jobs typically occurs whenever consumers change the ways in which they spend their money – and because consumers often change the ways in which they spend their money by buying more imports – the loss of particular jobs is indeed an effect of trade (or, more precisely, an effect of economic competition).  But it is not legitimate to call or to classify such job losses as a cost of trade.

If you doubt me – or if you think that I make too much of the language that we use here – answer this question: Does my habit of not intentionally and routinely breaking my neighbors’ legs have as a “cost” the jobs that are thereby not created in my community’s health-care sector?  No one can doubt that if, say, every nine months I were to break the legs of a dozen of my neighbors, my neighbors would increase their demands for medical treatment.  Jobs or wages (or both) in the Fairfax health-care market would increase.

And yet, I do not break any of my neighbors’ legs, ever.  Chalk up my inaction to ethics, or to the fact that I simply don’t wish to be imprisoned, or to the reality that I fear that my neighbors would likely kill or maim me in their self-defense were I to attempt to break their legs.  Chalk up my inaction to whatever you like.  The fact is, something prevents me from routinely breaking my neighbors’ legs – which means that something prevents as many jobs as otherwise from being created in my local health-care market.

So when calculating the costs and benefits of an ethic of civility and peace (an ethic that makes us horrified even at the thought of breaking other people’s legs), or of successful law-enforcement efforts to prevent violence, or of people’s ability and right to defend themselves against aggressive others, do you – would you – list on the “cost” side of the ledger “fewer jobs in medical care.”  I suspect that you wouldn’t.  And you’d be correct not to do so.  The same logic and assessment of each our rights and obligations toward each other should, then, also prevent you from listing job losses as a cost of trade.  No one had a right to those additional health-care jobs to begin with or, more to the point of a post on economics, no one had any legitimate expectation of landing those additional jobs.

If you think the above example too extreme, let’s change it just a bit.  I do not routinely break my own legs.  And you do not routinely break your own legs.  Does, therefore, the “cost” of our habit of not breaking our own legs include the jobs in the health-care sector that we thereby do not create?  Is there some number of such jobs that were it sufficiently high – or some level of wages paid to nurses and physicians who set broken bones that were it sufficiently high – would cause you to say “Well, cost-benefit analysis leads me to conclude that more of us should routinely break our own legs”?


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