Do not make the mistake of thinking that because my conclusion is the same as another person's that my reasoning is the same
When I started speculating about what would happen if all the needed production and services could be done by 25% of the available work force, that leaned strongly toward the "lump of labor" fallacy. But I wasn't trying to shape policy thereby.
Economists call it the "lump of labor fallacy." It's the idea that there is a fixed amount of work to be done in the world, so any increase in the amount each worker can produce reduces the number of available jobs. (A famous example: those dire warnings in the 1950's that automation would lead to mass unemployment.) As the derisive name suggests, it's an idea economists view with contempt, yet the fallacy makes a comeback whenever the economy is sluggish.
…The latest lump-of-labor revival came to my attention when I realized how eagerly certain commentators were picking up on a new study by economists at the Federal Reserve Bank of New York. In it, Erica Groshen and Simon Potter argue that the pattern of laying off workers during recessions and rehiring them during recoveries has changed: since 1990 employers have become much less likely to rehire former workers. It's an interesting study, and it might -- repeat, might -- shed some light on why businesses have added so few jobs during our so-called recovery.
But I was puzzled at first by the enthusiasm with which a relatively academic paper was seized upon by usually bullish, supposedly hardheaded business commentators. The puzzle vanished, however, when I read these remarks more carefully: they were mainly trying to make excuses for the administration's dismal job record. You see, they say, it's not that an economic policy consisting largely of tax cuts for the rich has failed to deliver. No, it's a structural problem with the economy, which just happens to have arisen now, and nobody could have done better.