Lump of Labor Fallacy Shouldn’t Guide Retirement Decisions

It is difficult to know when to retire. Do it too early, and you might well be bored for the rest of your life, bereft of your workplace friends, not to say a bit of money. Do it too late and you miss out on the joys of a bit of well-earned relaxation. There are motives galore for going in either direction on this matter.

But there is one that is predicated upon an economic fallacy: retiring, so as to allow a younger person to take your job. All too many people in the sixties and older leave their jobs for this reason. They are, to be sure, well intended. But they are in thrall to what economists call the “lump of labor” fallacy. This is the view that there only so many jobs to be had, and if some people “hog them up” there will be just that many fewer for others to take. The thought is that if elderly workers stay on the job, younger ones will be precluded from employment; that if they leave, more youthful laborers will for the first time be able to land on the employment ladder.

Sometimes, this fallacy leads to Ludditeism: machines, technology, labor-saving devices, are to be opposed, since they banish employment slots. Ned Lud and his followers burned down knitting looms, since one worker could create as much cloth with this then new technology as 20 could before. No mean mathematician, Lud deduced that this would mean the loss of 19 jobs. Ted Kaczynski, the Unibomber, took this quite a few steps further; he attempted to kill dozens of people active in promoting new technology, for similar reasons. Eleanor Roosevelt, in her syndicated newspaper column of September 19, 1945, opined: “We have reached the point today where labor-saving devices are good only when they do not throw the worker out of his job.” She didn’t kill anyone, but she was equally gulled by this fallacy in labor economics 101.

Why is there no foreseeable limit to occupations? This is because human wants and desires are for all intents and purposes unlimited. As Zero Mostel said in the movie The Producers, “I want everything I’ve ever seen in the movies.” We want a cure for cancer, heart disease and diabetes. While the scientists are at it, we want an end to all disease. We’d very much like to live forever, in the bodies we’ve had (or seen on television!) when we were 20 years old. Who wouldn’t want to save the planet from whatever ails it, colonize the Moon and Mars, and all the other planets for that matter? Why limit ourselves to this puny out-of-the-way solar system? Let’s travel faster than the speed of light. If we had instantaneous teleportation, we could go anywhere, immediately; no need for space ships. Poverty? Let’s end it. Everyone should be one million times richer than Bill Gates. Ok, a quadrillion times more wealthy.

These are only some of the things on my particular, individual wish-list. No doubt the seven and a half billion people now residing on the third planet from the sun will each have many more ‘druthers to add to this humble compilation of mine.

The only time we will ever run out of things to do is when people no longer want more than they have. That will not occur anytime soon. But more. This is an outright logical impossibility, akin to the proverbial circle, since as Ludwig von Mises teaches us, people engage in human action in order to render the future more satisfactory than would otherwise have been the case.

As long as there are human beings out there, there will be scarcity, and, hence, plenty of job openings for people, young and old.

Without scarcity, there would be no discipline of economics, a very unsatisfactory state of affairs. The entire goal of the dismal science is to deal with insufficiencies. We may one day see the disappearance of the need for scientists, engineers, doctors, etc., but never, never, of economists, thank goodness.

Originally published at https://www.ocregister.com/2021/06/21/lump-of-labor-fallacy-shouldnt-guide-retirement-decisions/