Last Friday, I wrote a piece about When Work Disappears. On twitter, by email, and in the comments, I got pushback. Wasn't I committing the Lump of Labor Fallacy, assuming that the jobs that were disappearing meant permanent unemployment?
No, but I can see why people were worried. Let me explain.
For starters, let me define the Lump of Labor Fallacy for those who don't fill their spare hours by reading classical economics texts. Or rather, let me let The Economist define it for you.After citing the "one of the best known fallacies" BS from The Economist's Economics A to Z, Ms. McArdle asks: "Is that what I am worrying about? Am I under the delusion that when we lose 10,000 steelworker jobs, that necessarily means 10,000 fewer people working?"
McArdle then answers her own question: "No, not at all. Nonetheless, I am worried about unemployment at the bottom of the economy..."
It doesn't dawn on McArdle that she is no exception. If she is not guilty of the alleged Lump of Labor Fallacy (and I agree with her that she isn't), then on what basis does she assume that the fallacy claim is valid for other people? Maybe if instead of relying on The Economist's Lump of Labour hackery, Ms. McArdle would consult a peer-reviewed economic journal article...
"Why Economists Dislike a Lump of Labor"
"The lump-of-labor fallacy has been called one of the “best known fallacies in economics.” It is widely cited in disparagement of policies for reducing the standard hours of work, yet the authenticity of the fallacy claim is questionable, and explanations of it are inconsistent and contradictory. This article discusses recent occurrences of the fallacy claim and investigates anomalies in the claim and its history. S.J. Chapman's coherent and formerly highly regarded theory of the hours of labor is reviewed, and it is shown how that theory could lend credence to the job-creating potentiality of shorter working time policies. It concludes that substituting a dubious fallacy claim for an authentic economic theory may have obstructed fruitful dialogue about working time and the appropriate policies for regulating it."