In a recent post, I described a thought experiment where someone is stranded on deserted island, where resources are abundant but their ability to make productive use of those resources is very limited. In this situation, what happens if a new castaway washes ashore? With two people working together, things can improve. They can specialize and begin a division of labor, and collect more resources together than either could do alone. This would also be true if a third castaway washed ashore, and a fourth, and so on.
There’s another point this kind of thought experiment can help clarify. When envisioning this scenario, we’re just thinking about what would improve the castaways’ standard of living. With more people working together, their standard of living can increase. They can gather more food, build better shelters, and store more supplies. In this scenario, there are no “wages” being considered. We aren’t thinking about how many seashells they can gather to trade with each other as a primitive form of currency. The only way their standard of living can increase is if they can increase the amount of goods and services they can produce. As long as more people working together with an ever more extensive division of labor can produce more than before, their standard of living will continue to rise.
This fundamental idea is not changed in a modern economy with currency and wages. For people who are concerned about the American worker and want to ensure the wages of the American worker continue to rise, there is no way for that to happen unless productivity is also rising. Without an increase in the amount of goods and services available to Americans, wages cannot rise in any real sense, just as our castaways’ standard of living cannot rise unless they can make more productive use of their resources.
I’ve written before about Harold Daggett, the head of the a labor union known as the International Longshoremen’s Association. Daggett recently made many headlines with his simultaneous demands for massive wage increases for unionized dock workers along with insisting that American docks not implement modern automation – and his threats to shut down docks and cripple the American economy if he doesn’t get his way.
As John Stossel has recently noted, of all the world’s ports, not a single American port is in the top 50. This is because American ports, at the behest of the unions, have refused to implement the kind of productivity and efficiency enhancing automation that other nations use – at the added cost of making port work significantly more dangerous that it needs to be, leading to workers being needlessly killed and maimed on the job.
Daggett and the ILA, along with so many other union leaders and organizations, are demanding their workers get higher wages while also preventing the kind of advancements that would increase worker productivity. So if the port workers get a wage increase without increasing the productivity of what they do (and in fact keeping that productivity artificially low), their wage increase can only happen by means of making other Americans worse off. It is a naked and open demand to enrich one’s self at the expense one’s fellow citizens.
And this is the kind of behavior we would expect to see from people whose mindset is built upon a zero-sum fallacy. Just as this thinking can lead you to believe that an increase in the number of workers harms existing workers because more labor must mean cheaper labor, if you believe one person’s gain must be another person’s loss then of course you won’t hesitate to demand others be made worse off for your situation to improve. Because, in your mind, that’s all anyone can ever do anyway, in a zero sum world. Economics teaches us that we have opportunities to work together and make each other better off in the process. Protectionist populism teaches people that if they ever want to rise up they have to step on the necks of their neighbors to do it.
Perhaps we should update Thomas Carlyle’s (widely misunderstood) declaration that economics is a “dismal science” and apply that moniker to the zer0-sum thinking of populists and protectionists. But then again, it might be too generous to such a mindset to call it a “science,” dismal or otherwise.
