Backgrounder: Don’t Cry for the Iceman
by Norman Van Cott, Ph.D.
One of my earliest memories is the iceman delivering large blocks of ice to my parents’ small triplex apartment in southern California. The ice was deposited in our “ice box” and kept food cool. Frozen? Nope; just cool. Of course, the ice didn’t last forever. It melted and drained into a drip pan at the bottom of the ice box. The pan had to be emptied periodically to prevent water overflowing onto the kitchen floor. Once the ice had melted sufficiently, the iceman would appear with another large block of ice.
My ice-box memories are abbreviated because my parents soon bought an electric refrigerator. So did a lot of other people. As a result, iceman jobs disappeared. Or in the language of politicians and pundits, refrigerators and their producers “destroyed” icemen jobs.
Nevertheless, most of us would say that Americans are better off as a result of electronic refrigeration. What about the icemen? Did they smoothly transition into production of refrigerators? Probably not. More likely they moved to their next best employment opportunity, and next best is precisely that, next best. In other words, icemen lost. Iceman received a smaller piece from a larger economic pie. A rising economic tide does not necessarily raise all ships.
The “invention” of the wheel in pre-recorded history surely increased peoples’ living standards.What about the number of lost icemen jobs compared to the number of refrigerator production jobs? Does it matter? Yes, but not in the way you think or wish it were. To wit, the fewer jobs associated with producing the refrigerators, the better.
Having fewer people employed in producing refrigerators means people cannot only have superior refrigeration, but more of other things. This is how technological advances raise living standards. We ignore it at our peril.
Losing Jobs but Gaining Prosperity
I have found that people are more willing to accept this line of reasoning when it is supported by examples from the distant past. For example, the invention of the wheel surely increased peoples’ living standards, even though it reduced the number of jobs associated with moving things from one point to another. And the tremendous advance in U.S. agricultural productivity over the last 150 years or so is another example. Agricultural jobs fell while living standards rose.
As examples get closer to the present, however, political and economic pundits change the script. The consequences start being defined in terms of jobs lost in the industry adversely affected by economic change. Losers become targets for political entrepreneurs promising to reward job losers with special favors in exchange for their votes. This is not possible for changes that occurred in the distant past because losers of jobs are now dead and have no votes, except, maybe, in Chicago.
Don’t Stop Progress
Nowhere is the latter more evident than when U.S. jobs are “lost” because of imports. Suppose an influx of, say, Chinese umbrellas occurs at prices that undercut U.S. umbrella producers. Like the icemen, the umbrella producers lose regardless of whether they leave or stay in umbrella production. But they become a potential voting bloc that on which political entrepreneurs can capitalize. To the extent that these entrepreneurs can delay or restrict the entry of Chinese umbrellas into the United States, they become analogous to a political movement that would have restricted electronic refrigeration. Not good.
Incidentally, who gets what the U.S. umbrella producers lose? Not the Chinese, that’s for sure. All the Chinese get is the lower price Americans now pay for umbrellas. The beneficiaries of the lower price are Americans who buy umbrellas. None of the U.S. economic pie goes to the Chinese. Rather, a larger U.S. economic pie is re-sliced among Americans such that some get a larger piece and others a smaller piece, with the increases summing to more than the decreases.
The bottom line is that economics as a field of study is grounded in the proposition that people, individually and collectively, cannot command sufficient productive resources to satisfy unlimited consumption desires. This resource shortfall means that all societies, rich and poor alike, have living-standard ladders with yet-unreached rungs. The only way to reach higher rungs is to devote less productive effort into reaching rungs.
Less means more? You bet. That’s why University of California at Irvine economist, Richard McKenzie, could pen a Wall Street Journal op-ed some years ago titled “Help the Economy: Destroy Some Jobs.”
(Personal Note: Because of my early experience I have long called electric refrigerators “ice boxes.” So when I’ve asked my children to clear dinner table, I’ve sometimes told them to put things like leftover salad in the “ice box.” At which point they would deposit the salad in the refrigerator’s freezing compartment, because that was where the ice cubes were kept. Of course, the leftover salad would be ruined in short order. Alas.)
T. Norman Van Cott, an adjunct scholar for the Indiana Policy Review Foundation, is professor of economics at Ball State University. A version of his essay was published by the Foundation for Economic Education.