In my previous post, it seems I misunderstood Jastonite’s post as an attack on Keynesian economics, when he meant simply to make the point that a job is a cost to be avoided rather than a benefit to be realized. I disagree, and I think this goes a long way to explaining why so I’ll outsource (irony duly noted) my rebuttal and instead address some other points.
Jastonite provides an example of a hypothetical factory that can choose to locate itself in either Mexico or Texas. In his example, all things are considered equal except that the Mexico sit would be cheaper. He argues that it is thus the superior choice because costs can be reduced and thus the Texans that buy the product will have more money left at the end of the day, and there are other employment opportunities in Texas anyways, they didn’t need the jobs. He goes on:
If it still feels wrong, replace the work Mexico with Arizona. Does it feel better now? How about replacing the word Mexico with Houston and the word Texas with Dallas? I understand there is an emotional attachment to jobs.
There is, of course, an emotional attachment to jobs, and for very good reason. But, the changing of Mexico to Arizona is important for plenty of non-emotional reasons as well. One of those is mobility. Our unemployed Texan friend will face a lot of very high barriers if she wants to work at the plant in Mexico. She will probably have to stop being a US citizen, and maybe she doesn’t speak Spanish, for example. But if the plant is located in Arizona, these are not problems. It is far simpler to move from one US state to another US state than from the US to Mexico (As an aside, this phenomenon was largely responsible for the comparatively impressive economic situation in Texas that Rick Perry never shut up about).
Next, Jastonite asks:
Does zero percent unemployment sound good? Maybe at first glance, but how does one start a business in that world? Presuming that everybody is doing something productive, the entrepreneur would have to convince people with existing jobs to quit and join him. That would mean the other business that lost its employees would have to cut back on production, potentially closing down. Wouldn’t it be hard to take a risk bringing something new to market?
Well, I agree. Zero percent unemployment is absolutely not a good thing, and for the very reason that Jastonite mentions. But high unemployment, as we are currently experiencing, is not a good thing either. We should do something about it.
520 Chestnut 
Leave a Reply