Republican gaffe: mangled grammar, malapropisms, trivial errors on historical details, claims of dubious relevance.
Democratic gaffe: statement that reveals fundamental ignorance of basic economics and business.
Results of Republican gaffe: nationwide derision.
Results of Democratic gaffe: crickets.
“There are some structural issues with our economy where a lot of businesses have learned to become much more efficient with a lot fewer workers,” President Obama told Ann Curry on the “Today” show Tuesday. “You see it when you go to a bank and you use an ATM, you don’t go to a bank teller, or you go to the airport and you’re using a kiosk instead of checking in at the gate.”
Let’s quickly run through some of the major conceptual errors behind that statement: ATMs and airport check-in kiosks are not new, though persistently crushing levels of unemployment are. Moreover, the number of bank tellers actually has grown over recent decades.
And if we should fear machines for stealing jobs, a notion that economists such as Frédéric Bastiat, Joseph Schumpeter and Henry Hazlitt have been debunking for 200 years, Obama should step right up to the implications of his logic and announce his great bill: the De-Automation Full Employment Act.
Goodbye, electric dishwashers: Manual laborers could be doing your work. Goodbye washing machines, hello washerwomen. Think of the explosion in jobs for messengers that will follow when phones are outlawed.
But wait a minute — uninventing high-tech wonders to create brainless menial work doesn’t sound quite right, even to Obama. Why? A casual overview of economic history backs Obama’s misunderstanding. Farmhands were made redundant by tractors. They went into factories, where they were made redundant by Chinese workers.
French economist Bastiat wrote dryly in 1845, “The discoveries of the human mind do limit the opportunities for the employment of manual labor . . . every day I see some machine replacing twenty or a hundred workers; and then I am obliged to acknowledge the existence of a flagrant, eternal and irremediable antithesis between man’s intellectual and his physical capacities . . . I am forced to conclude that the Creator should have endowed man either with reason or with physical strength, either with force of character or with brute force, but that He mocked him by endowing him at the same time with faculties that are mutually destructive.”
Technological brainpower, in other words, makes manual labor less and less valuable.
So are things different today? Should we fear an iPad economy in which all the middle-class manufacturing jobs go overseas and only a few software developers in Cupertino get rich? Consider this surprising sentence from Wednesday’s Wall Street Journal: “One anchor of Apple’s success is surprisingly low tech: its chain of brick-and-mortar retail stores.” Apple stores are popping up everywhere, and they’re bustling with workers, most of whom have advisory jobs that involve considerably more expertise than simply ringing up your purchase. Should we un-invent the iPad in an effort to save those last few jobs in newsprint?
The economy isn’t changing as quickly as you think. That’s why the president was unable to come up with an example of something invented in the last few years that he could blame for 9.1% unemployment. Online retail sales may have put a lot of electronics and bookstores out of business, but 93% of US retail sales are still conducted in physical stores. Wal-Mart said its research shows that its declining sales are linked not to the centuries-long march of innovation but a factor Obama could actually do something about — gasoline prices, which make its customers less likely to drive to the store.
People who might have worked in factories two generations ago have gone into services like homebuilding and being real estate agents. Many such jobs were wiped out in the recent recession. Many might not return.
But that means what is plaguing the US economy is unrelated to the “structural problem” of too much innovation. It is a hangover from the era of federally subsidized cheap credit and the housing bubble it inflated. Households are paying down debt instead of spending, and people aren’t building and flipping second houses with the expectation that they’re bound to double in value in a few years.
Obama prolonged the woes by handing out subsidies for cars and houses. He discouraged business and raised gas prices with new restrictions such as his moratorium on deep-water oil drilling. His health-care law makes it more expensive for employers to hire, a fact his administration has implicitly acknowledged by granting more than 1,000 waivers from the law to businesses including McDonald’s.
None of this has anything to do with technological advances. The only “structural issue” is the structure of Obama’s mind, which keeps telling him to pass a law or regulation first and pick up the pieces later.
As Philadelphia Federal Reserve Bank President Charles Plosser put it, “You can’t change the carpenter into a nurse easily, and you can’t change the mortgage broker into a computer expert in a manufacturing plant very easily. Eventually that stuff will sort itself out.” Technology means progress; a popped bubble simply leaves a mess.
Kyle.Smith@nypost.com