Arnold Kling  

Sentences I do not Understand

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From a McKinsey report,


A detailed analysis of the French economy, for example, showed that while the Internet is reported to have destroyed 500,000 jobs over the past 15 years, it created 1.2 million new ones.

From a PSST perspective, when a job is destroyed, that means that a person leaves the market work force, unable to find a job at an acceptable wage. When a job is created, someone is pulled out idleness or home production and into market work.

For example, electric motors helped destroy the jobs of some men, by replacing their muscle power. However, when these motors were used in washing machines, vacuum cleaners, and other household appliances, women were pulled into market work, because housework took less time.

So, if (in France) 1.2 million jobs were created by the Internet, where did they come from?

1. Some of the 500,000 people whose jobs were destroyed by the Internet joined the Internet-based work force. Think of somebody from a defunct book store working for Amazon.

2. Some people who were not in the labor force or who were unemployed found jobs in Internet businesses. Maybe the labor market became more efficient. Maybe the Internet allowed people to better demonstrate their comparative advantage.

3. Some people who were in other jobs switched to Internet businesses. Their old jobs were not counted as destroyed by the Internet, because they left voluntarily rather than being laid off due to Internet-based competition.

I guess I am skeptical about one's ability to pinpoint jobs created or destroyed by the Internet.


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COMMENTS (2 to date)
Ed Hanson writes:

Arnold,

I agree with your statement that, "I guess I am skeptical about one's ability to pinpoint jobs created or destroyed by the Internet." Or anything else of a technical nature.

You also wrote, "However, when these motors were used in washing machines, vacuum cleaners, and other household appliances, women were pulled into market work, because housework took less time."

It just may be that these inventions caused a similar loss of jobs you attempt to describe and categorize. I suspect you will find that these household appliances are not the reason for women being pulled into the market, but a capital investment which destroyed much of the market for hired help such as maids, cleaning helpers, and nannies. The labor saving allowed the housewife time to do more of the household workload without additional hired help.

Women first entered the market permanently decades after these devises became common.

MikeP writes:

How about...

4. Businesses that aren't Internet businesses could become more efficient because of the Internet, and therefore scale up and hire more workers.

Now those are even tougher to pinpoint, and it stinks of multiplier -- as well as having its own counter-effects as the meat market hires a new butcher while it fires the admin. But isn't it the standard argument for why innovation is better for economies in the long run?

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