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New York Times October 7, 2003
Lumps of Labor
By PAUL KRUGMAN
Quotes
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. ...
Since 2001, sensible economists have been pleading for federal aid to state
and local governments so schoolteachers and police officers needn't be laid off because of a temporary fall in revenues. They've
also urged the administration to stop dragging its heels on much-needed homeland security spending, not just because such
spending is needed to make the country safer, but also because it would create jobs and put more income into the hands of
Americans likely to spend it. (And if you're worried about spending's leading to increased deficits, why not cancel some of
those long-run tax breaks for upper brackets?) Until we've done the obvious things, there's no reason to despair about job
creation. ...
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