Attention undergraduates: Here is an opportunity for you to get published. Take a look at today's Doonesbury as it's chock full of bad economics. I would like to have a contest to see which undergraduate can produce the best response to that comic pointing out those fallacies without defending Romney.
Make sure that under no circumstances do you defend Romney!
So announced Steve Horwitz in a post yesterday. So I went to the cartoon, expecting to see a lot of bad economics. "Chock full" is a strong term. And I thought it would be obvious because the contest is open only to undergrads. So an economics professor should be able to find the flaws easily, right?
Here's the problem: I couldn't find a single flaw. Doonesbury's cartoon was good economic reasoning. Trudeau's major point is that a president cares about unemployment and job creation. Unemployment: bad. Job creation: good. A person in the private equity arena cares about making money. Making money: good. Not making money: bad. He doesn't care per se about creating jobs. In fact, he often makes money by destroying jobs. So if Romney makes $100 million, he doesn't care whether he does it by destroying 10,000 jobs or creating 10,000 jobs.
One of the 10 Pillars of Economic Wisdom that I teach the first day of any economics class is Pillar #8: Creating jobs is not the same as creating wealth. Doonesbury's cartoon illustrates that. Notice that the President cares simply about whether jobs were created. He doesn't even ask if they were created because the government hired more DEA agents to hassle peaceful people; he doesn't ask if they were created to tear up sidewalks with ramps for people on wheelchairs and replace them with little bumpy things for people on wheelchairs; he doesn't ask if they were created to produce government-subsidized items that we could have gotten cheaper from China. I think that's accurate.
One example I use in class is Al Gore's or Barack Obama's "green jobs" idea. I give the students the following scenario: You could create 1,000,000 green jobs each paying $50K and produce a total of X value of output. Or you could create 500,000 green jobs each paying $50K and produce the same total X value of output. Pretty much all of them get it. If you choose the second option, you can free up 500,000 people to do something else productive.
Someone in the private sector doesn't say, "Gee, I want to maximize jobs." Instead, he wants to maximize profits. If he can do so by cutting jobs, he will. Now that's good because that frees up people to work elsewhere. Labor is a scarce resource. It's because of people not maximizing jobs that we get as productive an economy as we get. If businesses did what the president does, this economy would be in even worse shape than it is. I bet Trudeau doesn't understand that. But there's no economic error that I can find in the cartoon.