The NYT today features a bizarre op-ed by former Bush (the elder) economic advisor Too Buchholz. He argues that slowed job creation is at least partially caused by companies buying machines and computers that reduce the number of employees necessary to make a business run. He suggests a number of things that Congress should do to encourage businesses to hire workers, including reducing employer contributions to Social Security. I wonder whether he has a plan to make up the millions of dollars we’d come up short if his plan were implemented–taking more from each worker’s paycheck seems the only feasible answer–but that’s an issue for another day.
Buccholz states specifically, “we certainly shouldn’t dissuade businesses from investing in machines. Huge productivity gains help raise our standard of living.” And yet he clearly understands that in some cases, machines replace workers, so an incentive to hire more workers is de facto an incentive not to invest in technology with more long-term profit-building potential. But the really bizarre part is yet to come. In the last paragraph of the piece, he admits that the problem he’s wasted several minutes of my time discussing isn’t really a problem at all:
“Barring action by Congress, however, there is still hope for job seekers. Stein’s law, named after the economist Herb Stein, declares, “If something cannot go on forever, it will stop.” Over the next year, as American businesses take delivery on all the technology and machines they have ordered, the “Help Wanted” signs will finally go up. Human workers are not yet an endangered species. After all, somebody needs to operate the equipment — or at least turn on the coffee machine.“
In other words, the purchase of more technology will likely bring more jobs to the marketplace, not fewer. As technology and innovation make production cheaper, more workers will be needed to help fulfill growing demand for the products they produce. Just as our free market economist friends have told us, innovation does not harm economic prospects, it improves them. But I suppose that just saying that wouldn’t get one published in the NYT…