Saturday, January 23, 2016

Sandwichman's Lump-of-Labor Odyssey Part III

In Part I of my lump of labor tale, Sandwichman told about how he had first encountered the fallacy claim back in 1997 and then delved way back in history to the earliest inklings of the idea of a fixed amount of work in the mid-17th century and the first known repudiation of that idea toward the end of the 18th century.

In Part II, I riffed off of Larry Summer's newly found scorn for the Luddite fallacy -- one of the several alias for the lump of labor -- talked about an answer to my query I had received from Paul Samuelson in which he was remarkably vague about the origins of the fallacy claim that appeared for half  a century in his textbooks and concluded with a transcript of an exchange from 1999 with Brad DeLong.

I haven't yet mentioned publications of my research on the lump and the acknowledgement (or lack of one) that scholarship has received from economists who have continued to invoke the lump of labor fallacy as if there was utterly no question of its authority.

About a week ago, Alan Manning, professor of economics at the London School of Economics gave a talk there on "The Economics of Migration" in which he evoked the so-called lump of labor fallacy as a way of interpreting people's anxieties about the effect of immigration on unemployment.

Most of the presentation is informative and well argued. At about 38 minutes and 50 seconds into his lecture, though, Professor Manning appears eager to persuade his audience of a matter than he thinks is an "important point" -- that the amount of work to be done is not fixed. Who would have thought otherwise? Is water dry? Is up down? But for some reason, Professor Manning expresses doubt that he can convince people of this rather unremarkable fact. Could the problem possibly be that it is difficult to persuade people to stop doing something that they are not actually doing? Maybe he didn't think of that.

I have edited a 3 minute and 44 second segment of Professor Manning's lecture in which he mentions the lump of labor fallacy and virtually begs his audience not to believe that the amount of work is fixed. "It's completely wrong to think/ of the number of jobs as being fixed." At about 2:09 of this excerpt, Manning mentions that "labor economists have a word for the view that the number of jobs is fixed. They call it --  the sort of -- the lump of labor fallacy. And it really is exactly that. The number of jobs in an economy is not fixed." Again at 3:34 he exhorts his audience, "but please do not believe in the lump of labor fallacy that's just one thing I would say." (And while you're at it folks, please, please stop believing in unicorns.)

So here is the text of the email I dispatched to Professor Manning:

Dear Professor Manning,

When economists invoke the "lump-of-labour fallacy" I have to wonder how much research they have done on the history of the fallacy claim and how much documentation they have looked at on opinions of people who are alleged to believe there is a fixed number of jobs in the economy. I have done extensive research on these matters and the answer seems to be 0 and 0. This doesn't seem to matter, though, because they are economists repeating what other economists have said repeating what other economists have said, etc., in other words, an appeal to authority ad infinitum ad nauseam.
"Professor Manning expanded on the “lump of labour” fallacy, which assumes that the number of jobs in an economy is fixed, and therefore an influx of labour must take away jobs from some people. He refuted this by showing that countries with big increases in the labour force have proportional increases in the employment rate, and emphasising that the economy is elastic and the number of jobs in an economy is not fixed."
I don't suppose you would be interested in my research on the lump of labour fallacy but in case you would care to challenge you preconceptions rather than indulge them, here are citations of my published articles on the fallacy claim:

2000, "The 'Lump-of-Labor' Case Against Work-Sharing: Populist Fallacy or Marginalist Throwback?" in Working Time: International trends, theory and policy perspectives, Lonnie Golden and Deb Figart, eds. 
2007, "Why economists dislike a lump of labor," Review of Social Economy, Vol. 65, Iss. 3.
There is also a bit of an update and background in a couple of blog posts at EconoSpeak:
Sandwichman's Lump-of-Labor Odyssey 
Sandwichman's Lump-of-Labor Odyssey, Part II
I expect that I will take the occasion of your recent lecture on migration as an opportunity to post a third part of the odyssey, in which I may discuss the reception (of lack of any) of my research by folks who keep beating the old lump of labour drum. It would be delightful if I could get a response from you to my rebuttal of the fallacy claim.  I don't pretend to be the first to rebut this claim, among my predecessors are A. C. Pigou and Maurice Dobb who both characterized the "fixed Work-fund fallacy" claim as itself an ignoratio elenchi fallacy. Looking forward to your reply.


Tom Walker

P.S [in separate emai]:

By the way, Alan, I have now watched the video of your talk and reviewed your power point and it is otherwise a fine presentation. The lump of labour interpretation of your background information is not grounded in your research, which doesn't really investigate the relationship between the empirical findings and people's alleged tacit theories about the labor market. Essentially, your interpretation, then, is speculative and extraneous to your empirical evidence.

This may seem like a trivial matter but I think not. You mention Trump's demagoguery on immigration in passing. Obviously, disparaging a hypothetical fallacy is not persuasive to Trump's audience who view it as condescending. Have you considered that their perspectives might not be driven by the assumption of a fixed amount of work but by a disappointed expectation that they should have "gotten ahead" more than in fact they did? Whether or not such expectations are realistic, it seems to me a more plausible assumption than that there is a fixed amount of work in the economy as a whole. What do you think?


Tom Walker

I want to emphasize again the bolded line in my postscript to Professor Manning. In his lecture, Manning envisions a scenario where somebody doesn't get a job and thinks to himself, "if it wasn't for that person over there I would have gotten that job." While true for that individual, such experience has very little to do with the level of employment in the economy as a whole. My alternative suggestion has to do, though, with an individual experience that cannot be contradicted by Manning's empirical evidence. While the total number of jobs may expand following growth in the labor supply, what evidence is there that promotions and pay increases will live up to people's expectations? None. And even if those expectations were, in fact, "unrealistic" what empirical evidence is there that they were unrealistic? None.

The above would make a worthwhile research project. Meanwhile, Paul Krugman still hasn't replied to the open letter I sent him (hard copy postally) nearly five years ago.

1 comment:

Magpie said...

A few years back the Governor of the Reserve Bank of Australia was frequently in the media speaking about employment creation, among other things.

He would go around every so often telling journalists how many jobs were created. Australia, as you might know, sort of escaped the downturn then hitting the rest of the developed world and the Governor was feeling cocky. The thing is, he would only speak of a couple of numbers. For some reason working conditions and pay were never mentioned, like all jobs were created equal.

About that time, the Labor government finally learned (through the RBA annual report) the RBA Board had decided internally to increase the Governor's compensation package to a little over AUD 1 million a year (more than the Prime Minister, more than Ben Bernanke or President Obama, in the US).

For some reason, that was the only job whose associated remuneration and working conditions the RBA Governor was really interested in and, given their policy of saying nothing about those matters, they never bothered telling the Prime Minister.