Mike Munger explains that “the only way to gain jobs is to lose jobs.” Two slices:
Politicians want to create jobs, “good-paying union jobs,” in existing industries. But that’s not what markets do. The “destructive” part of creative destruction eliminates jobs in existing industries. In a dynamic economy, innovations indivision of labor can create good-paying jobs in newindustries, but new industries require entrepreneurs, not politicians.
Frederic Bastiat had two devastating satires of how policies designed to “create jobs” actually cause economic disaster. The first was the “Candlemakers’ Petition,” asking government to require heavy curtains and blacked-out windows, to create jobs making candles. Second was the “Seen and Unseen,” where breaking windows would create jobs for glaziers and carpenters.
In both cases, the problem comes from ignoring “the unseen”: the people making candles, or repairing broken windows, would be doing something else without the misguided policy. And the resources spent on unneeded candles, and wasted windowpanes, would have been spent on something else. We see the jobs, but we don’t see the costs of foregone alternatives given up to “create” those jobs.
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In short, the US did not “ship our jobs” to China. If anything, China lost more manufacturing jobs than we did.The whole world lost jobs to increased productivity. As a result, prices of many products have fallen, in some cases substantially, if we adjust for inflation.
Why did this happen? China began to use a market system to reward investment in increased productivity. When one factory converted from a thousand people with sewing machines to twenty people operating an automated production line, the 980 people who had “lost” their jobs found other jobs elsewhere, and at an increased wage, because those industries were automating also. In many cases, that is true in the US as well, though there are some industries where the transition to new jobs has been slower.
GMU Econ alum Dominic Pino writes that “progressives hate Jimmy Carter’s best accomplishments.” A slice:
Since Phil already laid out the comprehensive case against Jimmy Carter, with which I agree, I wanted to note that despite all of that, Carter did sign three of the best laws Congress has passed in the last 100 years — and many of the progressives who love Carter hate all three of them:
- The Airline Deregulation Act of 1978. Before this law, the Civil Aeronautics Board (CAB) got to decide which airlines operated which routes and what prices they were allowed to charge. Carter appointed regulatory economist Alfred Kahn as CAB chairman and charged him with dismantling the agency. The Airline Deregulation Act eliminated the Civil Aeronautics Board — abolished a federal agency, in real life! — and freed airlines to compete with each other. Deregulation resulted in the advent of low-cost carriers and the wider availability of air travel to the middle class.
- The Motor Carrier Act of 1980. Before this law, the Interstate Commerce Commission (ICC) got to decide which trucking companies operated which interstate routes and what prices they were allowed to charge. The Motor Carrier Act removed those powers, and today the trucking industry is one of the most competitive industries in the United States. Thousands of independent owner-operators compete to offer the lowest prices and fastest service, with constant churn of firms entering and exiting the trucking market. The law also helped break the power of the Teamsters, who were no longer negotiating with legally protected monopolies for labor contracts and could not unionize the mass of independent truckers.
- The Staggers Rail Act of 1980. Before this law, the ICC also got to decide which railroads operated which routes and what prices they were allowed to charge. The Staggers Act, named for Representative Harley Staggers (D., W.Va.), removed those powers, preventing freight rail from reaching the same fate that passenger rail had reached nine years earlier: federal takeover. Railroads were allowed to close down unprofitable routes that the government had been forcing them to operate, leaving them more money to invest in their fleets and infrastructure. The rates freight-rail customers paid declined while railroads’ profitability increased, and the U.S. today has by far the largest freight-rail network in the world.
Roosevelt and his allies engaged in a trickier sort of coalition building among diametrically opposed ideological factions. White supremacist Southern Democrats got federal support for their local police, while civil rights activists hoped federal officials would use their new powers to stop lynchings. The administration largely refused to do the latter, but officials walked a fine line that allowed them to keep the anti-racists in their coalition: Some Democrats sponsored unsuccessful anti-lynching legislation, Roosevelt occasionally spoke against lynching, and he met with anti-lynching activists.
