Sentences I do not Understand
By Arnold Kling
From a McKinsey report,
A detailed analysis of the French economy, for example, showed that while the Internet is reported to have destroyed 500,000 jobs over the past 15 years, it created 1.2 million new ones.
From a PSST perspective, when a job is destroyed, that means that a person leaves the market work force, unable to find a job at an acceptable wage. When a job is created, someone is pulled out idleness or home production and into market work.
For example, electric motors helped destroy the jobs of some men, by replacing their muscle power. However, when these motors were used in washing machines, vacuum cleaners, and other household appliances, women were pulled into market work, because housework took less time.
So, if (in France) 1.2 million jobs were created by the Internet, where did they come from?
1. Some of the 500,000 people whose jobs were destroyed by the Internet joined the Internet-based work force. Think of somebody from a defunct book store working for Amazon.
2. Some people who were not in the labor force or who were unemployed found jobs in Internet businesses. Maybe the labor market became more efficient. Maybe the Internet allowed people to better demonstrate their comparative advantage.
3. Some people who were in other jobs switched to Internet businesses. Their old jobs were not counted as destroyed by the Internet, because they left voluntarily rather than being laid off due to Internet-based competition.
I guess I am skeptical about one’s ability to pinpoint jobs created or destroyed by the Internet.