Hamilton and Make-work Bias

Economists think differently than non-economists.  In "The Views of Economists and Non Economists On The Economy," I post on the four biases described by Bryan Caplan’s in his book, The Myth of the Rational Voter: Why Democracies Choose Bad Policies.  He calls one, "make-work bias," the tendency of the non-economist to focus on jobs and not productivity.  Many Americans and politicians from both sides of the aisle make this mistake.  In discussing trade, many mistakenly debate the number of jobs that will be gained or lost.  Expanding trade tends to move jobs from the import sector to the export sector.  A better question is does trade increases productivity and our standard of living?

James Hamilton of Econbrowser in a post titled "Green jobs," provides a second example, green jobs.  The debate about energy policy seems centered on jobs that will be created or lost through investment in green energy.  As Hamilton explains, the debate is focused on the wrong issue. 

If you have two people making the same amount of energy that one person used to make, would you want to describe that as creating one new job? I would say no, you're significantly reducing productivity. Ultimately, creating jobs has to do with promoting productivity....We might well make a decision that we want to be promoting economic growth in a way that's more friendly toward the environment. That's a fine decision to make, but I don't think we ought to be doing it under the pretense we're creating jobs for people.

Hamilton's quote was given to Bradley Fikes writing for the North County Times in "ENERGY: Green jobs, brown economy?" dated July 26, 2009.  It is a fine article, much above the standard, and is well worth the read.
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