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Once Again, Effort Is Productive Only If It Enhances Consumption

Here’s a letter to a new correspondent:

Mr. M__:

Thanks for sharing the link to Luigi Zingales’s and Bethany McLean’s recent podcast with Oren Cass. I’ll listen. But judging from the written summary, I’m pessimistic about its substance. My pessimism is fueled especially by this sentence in the summary: “A successful economy, according to him, should not be measured by consumption but by opportunities for all to be productive with a wide range of aptitudes and interests.”

Oren hits this theme often. Yet it’s a theme that reflects a failure to understand an important reality – namely, people are productive only insofar as they enhance the ability of human beings to consume. Spending time and effort to transform inputs into some output is productive only if that output satisfies more human wants than would be satisfied if that time and effort had been spent otherwise.

If you doubt me, ask how productive you’d be if you spent half your workweek digging holes in your yard and the other half of the workweek refilling those holes. Were you to devote yourself to this task, you’d indeed work – and very hard – but you’d not be productive. You’d be wasteful. You’d be of no use to your fellow human beings (and, unless the enjoyment that you personally derive from repeatedly performing this task is enormous, you’d be of no use even to yourself). And if you coerced your fellow human beings into paying you to perform this task that is of no value to them, you’d become worse than wasteful; you’d become predatorily destructive.

Therefore, to declare that “a successful economy should not be measured by consumption but by opportunities for all to be productive” is nonsense. Opportunities to be productive are necessarily and exclusively opportunities to increase the flow of goods and services available for consumption. Production means producing goods and services for consumption.

Furthermore, the only reliable way to determine if any particular outputs are of use to people is to allow people voluntarily to purchase, or not to purchase, outputs using their own money. It follows that tariffs and other government interventions of the sort that Oren advocates obstruct the market’s ability to identify and signal which activities are truly productive, and to distinguish these activities from those that are wasteful or destructive.

In short, the policies that Oren supports as a means of making American workers more productive will necessarily make these workers less productive. And workers under his scheme will be protected from feeling useless and contemptible – from suffering shame for being socially destructive – only because they are blinded by the same economic misunderstanding that blinds Oren.

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030