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more economics-speak

Sat 23 February 2013 — filed under rhetoric

From Modeled Behavior, again:

Imagine if tomorrow we produced the optimal education system and elevated all workers to their highest and most economic valuable level of human capital possible. Does this mean that we would no longer need immigrants or guest-workers? No, the economy is not a peg-board full of holes called ?good jobs? and ?bad jobs? that we need a static number of workers to produce. Even if you hold everything fixed, there will be workers elsewhere in the world who at given the current supply and demand for labor in the U.S., and the resulting market wages, will find it optimal to move here and be hired. There will always be employers who find it optimal to hire them. There is no level of domestic education where foreign workers would move here, look around and say, ?Gee, all the jobs are taken. I guess they have everything covered here.? and then go home. [emphasis in the original]

Yes, you could write it that way, and it sure sounds like economics. All very rational, understandable, and it certainly sounds inevitable. My economics education is spotty, but I know enough that I’m pretty sure that an economist says “supply and demand” you can replace that obfuscation with “price”, “cost”, or “wage”. And when he says “find it optimal” you can replace that with “reduce costs” or “increase profits”.

So, applying these operations, you get: “Even if you hold everything fixed, there will be workers elsewhere in the world who at given wages in the U.S., will increase their pay by moving here and being hired. There will always be employers who will reduce their costs and increase their profits by hiring them.”

Look, American workers, this is saying, there’s always going to be someone willing to do your job for less money. And your employer is always going to want to pay someone else less money to do your job. Intimated, but not often clearly expressed is that this is both empirical and normative. It’s not just the way things are, it’s the way things are supposed to be. Any sort of economy that wasn’t predicated on everyone attempting to undercut everyone else, well, that would be inefficient. It’s a dog-eat-dog world out there, and that’s the way some folks like it. Makes the data fit the models.



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