danieldwilliam | On the 8th Pillar of Economic Wisdom

My series of blogposts on the Ten Pillars of Economic Wisdom has been in hiatus over the summer but I have a quite afternoon and long lunch to devote to the next in the series.

Actually, I’m going to take the next of my Ten Pillars articles out of sequence and go to Pillar Number 8, Creating Jobs and Creating Wealth are not the same thing.

If you lost your job it would be a disaster. If you lost your job but got to keep all the stuff you would consider yourself to a lottery winner, to be really wealthy.

What is Wealth?

You might define it as material things, including the technology embedded in them. Or you might count the amount of labour required to produce the objects. You could include services that are rendered to you. Some where in between goods and services are things like clean air and clean water.

You could include some good things like a reduced fear of crime.

You might say that wealth was about mental well being. That people don’t buy products they buy solutions to problems they have. You might think about Maslow’s Hierarchy of Need and see wealth as a continuum from meeting basic material needs up to meeting our desire for self-actualisation. You could include in this issues of choice and control. You could equate wealth with good mental and physical health.

I’ve always liked the idea of wealth as a set of solutions to problems. And the less labour that is needed to solve my problems the better.

In a kind of self-referential implosion I’ve seen wealth defined as things of value, as defined by their ability to be exchanged for other things of value. Wealth is what you think it is.

It’s your money, pick your own defination.

What’s clear to me is that wealth is not the same as a job. A job is something that allows you gain access to wealth. Other things that enable you to gain access to wealth are owning capital, social transfer payments and crime.

For me a job is labour that is exchanged for wealth through it’s ability to contribute to wealth for other people. Wealth and job are not the same. A job is just one way that we gain access to a share of the wealth that we collectively create and own. And in some ways they are a waste of time. I’m going to talk briefly about driverless cars (1). Specifically taxis and I’m going to assume that you, like me, find chat from taxi drivers to be of limited value. If I wish to get in a metal box and be taken from Waverley Station to where I live I could have a taxi, with a driver or I could soon have a taxi, without a driver. I will arrive at my home in the same time. I’m indifferent between the driven or the driverless cab. But one technology involves a human being having a job.

I’m no better of for them having a job. In fact, if I weren’t paying for a human driver my cab ride home would have been signifcantly cheaper. (2) I could have spent the saving on a nice coffee from Starbucks. I’d have been better off.

There is a familiar pattern in the Developed world over the last few hundred years of mechanisation, of work that was done by human beings being done instead by machines. Often the machines are better at it. A mechanical pump can pump more water from a coal mine than all the humans you can fit in the coal mine ever could. Often the inventor can take the skills needed to do the job, embed them in a machine and then run that machine faster than humans can work. In any event, work that once was part of someone’s job is now done by a machine.

That process of jobs disappearing as new technologies build machines that can do them better has been going on for centuries. Many of the jobs, most of them, are of no loss to the job holder, so long as they can find another job – in order exchange their labour for a share or wealth. Who misses going to the well to draw water and would tear down the aquaduct? Who misses spending a month’s wages on a hand knitted jumper shirt when a machine can knit it in minutes? Not me.

More stuff is available for less overall human effort. What happens to the person who used to do the job? What happens to my taxi driver once I tell him that I no longer care enough for his chat to pay for him time? Unless he can find another job he loses access to wealth, and some measure of dignity.

This is the crux of the discussion about creating jobs. Without a job most people have no way of accessing the wealth that is being created. The agenda behind talk of job creation is a desire to avoid having a conversation about reallocating capital or continuing to widen and deepen social transfer payments. We’d rather pay someone to dig holes in the road and then pay someone to fill them in again than create a fairer society or admit that we’ve got plenty of stuff and share it around a bit more equally.

Jobs naturally follow opportunities to create wealth in ways that can’t currently be done by a machine. I don’t think there is any reason to think that the only worthwhile jobs are created in the private sector but we do have to be careful about taxing some citizens and using that wealth to create jobs for other citizen. That’s just a transfer payment in disguise. (3) The money taken in taxes would have been spent on wealth for someone. Whenever I hear politicians talking about the state investing in Green-Collar jobs (4) for example I wonder if they can tell the difference between us subsidising a new technology so that we can all enjoy the wealth that might come from cleaner, cheaper, more politically secure energy and subtly taking money out of our pocket using electricity bills instead of taxes so that no-one notices that we’ve given a bunch of wealth to people but not created any additional stuff.

Our aim as humans should be to elimate the need for jobs. To move to a state where everyone one alive could not distinguish between their work and their play and where the reason for doing the work is not because we need a job to buy some stuff but because we need the work to lift our souls.

(1) Who would have guessed.

(2) I estimate between 1/10^th and 1/20^th the price.

(3) Are you Rangers in Disguise?

(4) A neologism which is in the dictionary due in part to my efforts

http://zenpencils.com/comic/75-l-p-jacks-work-and-play/