An economics rambling

I had a conversation recently with someone and I brought up how automation in the industry I work in may prove to someday be the way to go since labor costs tend to go up (generally unionized industry) and technology costs tend to go down. His response was essentially that doing so would be short-sided because once everyone did this, no one would have a job. I'm not one to argue, so I left it at that.

But frankly this kind of thinking could have come from an economist. They frequently think like this (I remember the 'economics' articles on how even wasteful stimulus money could be beneficial.) Let's just think of this in very simple terms. In planet A, they have all kinds of stuff that they build with their hands; on planet B, they have the exact same stuff, but all of it is built by machines they built years ago that require only limited maintenance. Planet B is a better place to live without any doubt. But Planet A has more jobs. So what, both places have the same stuff-that's the point of money and jobs and profits-to improve lifestyle materially. And those on Planet B have greater leisure. Classic case here of making the means the ends. But given the prevalence of the mindset (and other ridiculousness), more so that this recent conversation (the person who I had this discussion is actually very sensible and thoughtful), I'm commenting on it.

Of course the wonderful example today of great economics is Cash for Clunkers. Like World War II and Hurricane Katrina ended up helping the economy, our government essentially paying way to much for cars and then turning around and destroying them is supposedly a good thing. People buy new cars with the money, and that puts autoworkers back on the job, etc., etc. The bottom line is we are going to collectively pay, sorry borrow $3 billion for the right to tear stuff up. And yes, there was a supposed green component in getting "guzzlers" off the road, but the first tenet of being authentically green is to conserve and reuse what already exists and not waste (also a good tenet of sound fiscal management).

I've seen a GDP fallacy argument that the government could just hire people to dig a trench and others to fill it. GDP goes up, and overall nothing actually changes. Always saw that as a ridiculous hypothetical, but it may be coming.