Tuesday, November 8, 2011

"Job Creation" in New Jersey

I had almost forgotten this ridiculous law, but it was recently brought back to my attention. In New Jersey, you are not allowed to pump your own gas. Why not? Because it creates jobs of course! What kind of crazy economist would criticize this law? It creates jobs, which must be a good thing, right? Don't you care about the jobs?

Let me begin by explaining the mentality that leads to the belief that this is good for the economy. Self-sufficiency is bad for the economy (only when it prevents specialization of labor, comparative advantages, etc...but let's ignore those for now). Jobs are good for the economy (again there are constraints to this and this overgeneralizes and assumes a contextual vacuum, but again let's move on). Therefore, we should prevent people from being self-sufficient to then create jobs, which are good for the economy.

This is entirely backwards, and I cannot believe this law hasn't been repealed. If I pull up to a gas station, get out of the car and pump my own gas (imagine!), I will be fined. Implicit here is the concept that pumping your own gas is damaging to the economy. Really? Does this make any sense? Think about it. If this were true, why should we do anything ourselves? Here's an illustrative challenge: Take everything you do during the day, and break it into its smallest components. Now imagine you had to pay someone else to do each individual job, one person per component. Would this help or hurt the economy? More specifically, would this make you better or worse off? Now imagine everyone had to do this. Would we have time to do anything? Or any money left to spend? NO! The cost of doing anything would rise significantly, since the costs would be spread over a larger population. Efficiency would become non-existent.

Here's another illustration. When I go to Danforth, I should sit down at a table and have people serve me. If I want water, I pay someone to do it for me. If I want to get food, I don't have to leave my chair, I just pay someone to do that too. Voila! I have created two jobs. Forget the fact that the jobs are useless, isn't this good for the economy? As Rizzo mentioned, jobs are a cost, not a benefit! It is now harder for me to acquire water and food. Where there was previously minimal cost for getting my own food and water, there is now a real, tangible cost. I have to pay people to walk for me. Water and food are now less available to me.  I have just wasted money paying someone to do something I could easily do myself without paying anything. Instead of spending the money on a more useful endeavor, I have just put it towards having a servant.  What an awful concept. There is no benefit here.

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