Economics & Romney’s Walkway

This is an amazing story.

Economic Ignorance Accelerates – Cato: Just when you thought economic ignorance couldn’t sink any lower, a letter in the Washington Post criticizes Mitt Romney for repairing a brick walkway at his house rather than hiring a contractor — and thus “cheating people out of jobs.”

It goes on. and David Boaz handles it well, imho.

“Uh-oh. I just made myself a sandwich, thus cheating a deli employee out of a job. I drive myself to work instead of using a chauffeur, thus putting chauffeurs out of work. I do my own laundry — well, this could go on all day.

Of course, the writer’s argument isn’t really any different from the usual complaints about trade, outsourcing, and shutting down unprofitable businesses. Everyone seeks to produce as much output for as little expenditure as possible. That’s why we trade with each other, so as to improve our standard of living.”

Yup.

“Economic progress happens when people find more efficient ways of doing things. Sometimes that means “outsourcing” a task, whether it’s a business’s payroll function or taking your laundry to a service. Sometimes it means “insourcing,” as when word processors made it easier for writers and executives to do their own typing …”

I would go even further than Boaz with a response. First, it seems that when a business or other economic actor of some kind takes part in what we often call “outsourcing,” he is vilified as evil. Yet for some reason here in this writer’s letter, she is calling for more outsourcing.

Second, let’s say that Romney did indeed hire a contractor to fix the walkway, and the contractor did the job himself over a span of perhaps five days. Would the contractor have then been guilty himself of depriving others of jobs if he didn’t sub-contract the work to five other individuals who as a group could have done the job in a day?!

Third, if the contractor could do the job in five days with a shovel, would it be better for the economy if he instead used a spoon and did it in fifteen days?

We become richer and more prosperous (both individually & collectively) when we learn to do more with less, and do things more efficiently. Merely shuffling things around as an end in itself or by govt. edict does not help us.

Related links:
Let’s Talk Outsourcing, It’s ALL Outsourced …
If Jobs Are The Goal, Use Spoons
There Is No Need To Create Jobs

  • Tom in Iowa

    And yet the economic argument against Mr. Romney performing this task that Mr. Boaz fails to make is that of comparative advantage. The time Mr. Romney spends on his side walk is time he is NOT doing his job earning $10,000 per hour. Of course Mr. Romney may rationally like the feel of the bricks in his hand and the sweat on his brow and value the activity even higher than the speakers fee he had to forgo to dig in his yard.

    • http://pretenseofknowledge.com/ speedmaster

      Yes, from a purely dollar perspective it was quite likely not the best use of his time. But I presume that he added in his head the value he gets from some physical labor, time with the family, and work on his own property. And of course no one can know how he values each of those subjective items better than he does.