Thursday, March 20, 2014

Tim Kane: "Overtime, rooted in the LOL fallacy"

Tim Kane is "chief economist at the Hudson Institute" "an economist and research fellow at the Hoover Institution at Stanford University" and co-author, with Glenn Hubba-Hubbard, of Balance: The Economics of Great Powers from Ancient Rome to Modern America. Wikipedia is his idea of an authoritative source:
Fact is that this overtime effort is deeply flawed according to mainstream economics. It is based in a theory of human labor as a muscle commodity, which was relevant in, economists say, 1861. This notion that raising the overtime threshold will create jobs is so wrong that it has a nickname among economists. It’s called the “Lump of Labor Fallacy” and even has a Wikipedia entry. Look it up!
It "...even has a Wikipedia entry..." Gosh, a Wikipedia entry! That must be way more authoritative than a peer-reviewed economics journal article -- you think?

"Why economists dislike a lump of labor." Tom Walker, Review of Social Economy, 2007, vol. 65, issue 3, pages 279-291

Abstract: 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.


Don Coffin said...

I like the notion of overtime being rooted in the "laugh out loud" fallacy...before it struck me that you meant "lump of labor."

Sandwichman said...

That was Kane's abbreviation. Made me think of the "laugh-out-loud farce" too!