Quotation of the Day…

by Don Boudreaux on August 10, 2018

in Myths and Fallacies, Trade

… is from pages 53-54 of Pierre Lemieux’s superb new book, What’s Wrong With Protectionism? (footnote deleted):

People produce in order to consume, not the other way around. Faced with the choice between working for an income or obtaining an equal (or even a lower) income without having to work, most people would choose the latter. The purpose of work is mainly to obtain an income and, even more fundamentally, the increased welfare that income makes possible. It’s true that the typical individual is both a consumer and a producer, and most people need a job to earn an income, but the goal is consumption, not sweat.

DBx: Protectionists attempt to counter the claim that consumption, not production, is the ultimate goal of economic activity by pointing out a fact that is denied by no one, namely, that the typical person cannot consume unless that person has a job. Yet this protectionist argument fails. The reason is that the typical person works in order to increase his or her ability to consume. The typical person does not work for the sake of working.

Let’s drive the point home. Suppose that the typical person – one with no savings or family resources on which to draw – is given a choice between option A, option B, option C, and option D.

Option A: Work and get paid lots of cash, but the cash is exchangeable for nothing.

Option B: Don’t work and get paid the same amount of worthless cash as in option A.

Option C: Work and get paid the same amount of cash as in option A, but the cash is now exchangeable for real goods and service.

Option D: Don’t work and get paid the same amount of cash as in option A, but the cash is now exchangeable for real goods and service.

How would the typical person would rank these four options? The answer is obvious: D>C>B>A. This rank-ordering is proof about as good as it gets that the ultimate goal of economic activity is consumption and not production. (Some people might reasonably insist that the ordering would be C>D>B>A – or C>D>A>B – on the assumption that the typical person gets greater fulfillment from working rather than from being idle. I deny neither the value of feeling useful and productive nor that such valuable feelings are often generated by working at one’s job. But [1] as an empirical matter, I’m quite sure that the typical ‘typical’ person’s ranking would be D>C>B>A, and [2] such feelings of self-worth and self-satisfaction are ‘consumption’ aspects of the job. Either way, the decisive point is this one: everyone would rank C higher than A.)

Note that to say that the ultimate goal of economic activity is consumption and not production is not to deny that production is a necessary means to satisfy the end – the ultimate goal – of consumption. But to say that the ultimate goal of economic activity is consumption and not production is to deny that the performance of an economic system is to be judged in the final analysis by how much toil its denizens exert and how much sweat they generate rather than by how much its denizens are able to consume in ways that elevate their standard of living.

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