According to the Republican National Committee in a letter they sent to me: “On his very first day in office, Joe Biden destroyed 11,000 American jobs and $1.6 BILLION in wages when he halted construction of the Keystone XL Pipeline.” This was coupled with a plea to “Please contribute $45 IMMEDIATELY to help your Party win back the House and Senate.” I reject both messages.
Ok, ok, if you want to say that this decision of President Biden’s destroyed jobs, fine. But, then, if you want to be logical, you also have to opine that:
* The horseless carriage destroyed jobs in saddle making, horse training, blacksmithing, whip manufacture, and cleaning up manure.
* The cell phone demolished employment opportunities at Kodak in film-making, camera production.
* The computer eviscerated occupations in typewriters, carbon-paper, white-outs (for typing errors), forestry (less paper now needed)
* Automatic elevators devastated careers for manually operated elevator attendants.
* Air conditioning put paid to the fan industry.
* 78 records gave way to 45s, which were supplanted by tapes and then discs the streaming; jobs were “lost” every step of the way.
* Air travel to a great degree supplanted alternative means of transportation (well, not right now, to be sure, but, hopefully, soon again).
* Changes in taste have eliminated numerous careers in manufacturing hula hoops, pet rocks, men’s hats and women’s too
This list could go on and on. The RNC should take it as a homework assignment to add to it.
Yes, it cannot be denied, in all of these cases job slots were eliminated, including in the present administration’s decision that construction be halted in pipeline construction. But to put matters in such a way is an exercise in economic illiteracy. A more accurate description is that occupations are/were/will be shifted from one avenue to another. Unemployment did not rise when the automobile, the cell phone, the computer, automatic elevators were introduced. Rather, people were transferred from working on items no longer needed to others in greater demand. Instead, they were allocated in the direction of new goods and services more greatly desired by consumers.
In all these examples it is clear from the position of the Monday morning quarterback that these were economic improvements. Whether reducing fossil fuels and oil, which are complementary goods to pipelines, and embracing alternative energy sources will be an improvement to our economic welfare is an entirely different matter. All that can be said about this decision is that it will not destroy jobs; it will rather rearrange the labor market in the direction favored by the new administration.
The natural tendency of the market system is in the direction of full employment. When industries collapse, due to progress, new technology, changes in taste, etc., this releases workers to seek alternative employment. Such phenomena do not “destroy jobs”; rather, they move them elsewhere.
True, Mr. Biden’s pipeline decision did not stem from changing consumer tastes, new technology, etc. But in our system, he is now the representative of the people, all the people, those who voted for him and those who did not. Was this a wise move on his part on our behalf? Save that question for another day. For now, we must see through the foolishness of declaring he has “destroyed jobs.”
READER COMMENTS
Jon Murphy
Mar 30 2021 at 11:25am
I’m not quite sure what your objection to the phrase “jobs destroyed” is. They are destroyed in the sense that “these jobs are going, boys, and they ain’t coming back.”* It’s true that the resources are then freed up to be parlayed into something else, but the jobs are, indeed, destroyed. It’s creative destruction.
*Bruce Springsteen, My Hometown. On Born in the USA, 1984
TMC
Mar 30 2021 at 1:25pm
No, it’s just destruction. Pipelines are a more efficient way to transport oil. Now, the same amount of oil will continue to be transported via train car or truck. This is a step backwards.
Mark Z
Mar 30 2021 at 5:34pm
Agreed. Job-killing innovation is the primary means of economic progress. It would be more accurate to say: the total number of jobs in the economy has not been permanently reduced (which, fair enough, some people may erroneously believe this happens when jobs are eliminated). But those specific jobs, absolutely killed. The computer did indeed kill typewriter-related jobs, which is fine.
David Seltzer
Mar 30 2021 at 5:46pm
Jon,
Thanks for the Bruce reference. BTW, I’ve seen 15 of his concerts. Youngstown is the song with which I most identify. I grew up in Gary and worked at US Steel during my college summer years. As for creative destruction, in many cases, yes. Some times, no. US Steel Gary Works employed over 30,000 people in the early 1970s, but only 6,000 in 1990, and 5,000 in 2015. Coupled with White flight and little incentive for private investment, this once vibrant city is now “My City Of Ruins.”
Jon Murphy
Mar 31 2021 at 9:29am
I’m a huge fan of The Boss. I’ve only seen him once (Workin’ on a Dream Tour. I think it was 2009). But he puts on an awesome show.
Regarding Gary Indiana:
I get what you are saying when you say “As for creative destruction, in many cases, yes. Some times, no.” A lot of cities and towns are like that. Just two towns I know of, (Lowell MA and New Bedford MA) are shades of their former glory.
David Seltzer
Mar 31 2021 at 7:32pm
Jon, “Jungleland” from the Born To Run album is his opus magnum. NJ state assembly considered using it as the state anthem.
Jon Murphy
Apr 1 2021 at 8:51am
I did not know that! Jungleland is my pump-up song. I play it before any talk or class I give. That sax solo is something else
Frank
Mar 30 2021 at 12:49pm
“Rather, people were transferred from working on items no longer needed to others in greater demand.”
No, they weren’t transferred. They just transferred.
Andre
Mar 30 2021 at 1:13pm
“Destroy jobs” is a metaphor: a project that was planned and would have employed people will no longer happen, so those jobs that would have happened no longer will. The metaphor is reasonable. It is a metaphor about a concrete business operation that had funding.
The project ended not because it wasn’t viable, not because the companies involved deemed it no longer worthy, not because consumer preferences changed, but because government said no.
(I’m pretty sure that most unemployed whip-makers didn’t become auto-factory workers. Though most may have found something else to do.)
The claim that “occupations are shifted” is intellectual sleight of hand. It is used as a stand in for “jobs are naturally replaced by others.” At an aggregate level, this appears to be the case, but it isn’t true.
We are talking about specific jobs here, not general shifts in job categories – not the natural decline in employment in some industries and an apparent “offsetting rise” in others.
Some of the individuals who would have had those pipeline jobs will not get or have other jobs. Moreover, jobs that disappear are not automatically replaced. That is isn’t true at a granular level; it only appears to be so when economists are looking from such a high level they forget that the aggregate shifts they are describing have “winners” (in the new industries) and “losers” (from the old industries).
Most people will adapt and find other work, for sure. But not all. Some of the jobs they find will be far worse in pay than the pipeline jobs they would have had. Some may get even better jobs. But the claim that jobs are not destroyed is false.
The government has said that these jobs may no longer be offered – but it is not creating jobs to replace those it is preventing.
When an employer terminates a position and fires a worker, no new job is automatically created elsewhere to replace it. Odds are that the individual may seek work elsewhere, but they may or may not find work. Some will choose not to move and remain unemployed. Some will retire early. Some will look for work and not find it. Some will give up.
Andre
Mar 30 2021 at 3:52pm
Did this blog post get edited?
Thomas L Knapp
Mar 30 2021 at 1:32pm
Biden’s reasons for putting the kibosh on Keystone XL were dumb ones, but it was still a good move. Keystone XL was an eminent domain/corporate welfare scam designed to subsidize cheaper oil transport for a foreign (and partly state-owned) company.
Mark Bahner
Apr 1 2021 at 12:22am
I agree, the loss in property rights from eminent domain (unconstitutional eminent domain, regardless of what the Supreme Court dreamed in Kelo vs New London) possibly makes the move to kill the pipeline a good one.
Espiridión Enriques
Mar 30 2021 at 1:42pm
Perhaps someone should reread The Candlemakers’ Petition.
zeke5123
Mar 31 2021 at 4:06pm
This post seems to suggest that regardless of why X job disappeared, that Y job will come along to replace it. Maybe it is true in a technical sense, but I don’t think it is true in a real sense. ATMs expand our resources making us able to divert labor that was in banking to other needs. Now perhaps it is true that those former bank tellers end up in a worse job vis-a-vis bank telling. However, the process of creative destruction has left the bank tellers amazingly better off compared to no creative destruction. Stated differently, if there was much less creative destruction then the job the former bank tellers would have would be worse than either a bank teller job or a new job. Therefore, you take the downside with the upside.
Government policy that kills a particular project is different; it is only downside. So while in a technical sense those people not working on the keystone pipeline may indeed end up shifting to a new job it is different than in the context of create destruction.
Mark Bahner
Mar 31 2021 at 4:49pm
Yes, but that has no relevance to this situation. The Keystone pipeline wasn’t stopped because people were transferred to other things in greater demand. Joe Biden, who knows virtually nothing about energy, shut down the pipeline for political reasons.
Suppose, for example, Joe Biden had issued an (completely illegal) executive order requiring a minimum wage of $30 an hour. Would you say that the chaos that would result did not destroy jobs?
oldcolt357
Mar 31 2021 at 6:03pm
Isn’t there a difference between jobs becoming obsolete due to technology – such as the proverbial buggy whips going away as automobiles becoming more popular – and a government body stepping in and declaring one dead – Keystone Pipeline?
JK Brown
Mar 31 2021 at 8:09pm
Well, it’s politics and 11,000 jobs can demonstrably be shown to no longer be there. Joe Biden can, attempt to show 11,000 jobs made elsewhere in the economy, but they won’t be nearly so visible. And are very unlikely to have near the same pay level as a pipeline worker. Skills required, labor need and discomfort cause higher wages.
The proffered solar panel/green energy jobs are also not likely to pay near as much to a welder, although, perhaps to someone skilled in keeping power generation up, at least electrically. Those skilled in keeping the coal moving, the gas lines flowing, not so much.
When the manufacturing dumped thousands of those experienced in machining, welding, pipefitting, it is true, many found jobs. The flooded the service side, opened machine shops. I looking for work in the 1980s, knew the trades were not a good option as they were flush with better skilled ex-manufacturing workers. Now, 40 years later, there’s a deficit of skill trade workers because few were recruited in until recently and students were warned against such work toward college. Good news for the 20-something with a working on machines bent today, but 40 years is a work life for those who wanted work in the ’80s.
J Mann
Apr 1 2021 at 10:30am
I don’t disagree with the economics, but as a matter of language, I can’t see how the RNC doesn’t have the right of this one. Schumpeter would have said those jobs were destroyed; why can’t the RNC say so?
If I go out and cut down a forest full of trees, and someone complains that I “destroyed the trees,” it’s not really a fair response to say the forest hasn’t been destroyed, it’s merely been changed into toilet paper, while other plants will grow to fill the space.
If that person preferred the existing trees to a bunch of toilet paper and new plant growth, it’s not unreasonable to say that the trees were destroyed – they are no longer there, and its sophistry to quibble on the term. Similarly, if someone prefers the pipeline jobs to the alternatives, it seems reasonable to complain about the jobs being destroyed.
Schumpeter would say that if the market resulted in the jobs being destroyed, the destruction would generally be a net good over time. As people have pointed out upthread, this is a tougher case to call – Biden’s decision is likely to result in less efficient energy production, but the pipeline itself has been achieved through eminent domain.
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