With the rise of Xenophobia all over the world, from Trump to Brexit to the Freedom Party, it’s worth pausing for a second and asking ourselves why. Why are people so threatened by immigrant workers? Why are people so threatened by the growth and progress happening in foreign countries? Why are people so threatened by women and people of color making their foray into the workplace and demanding equal rights?
The answer almost always comes back to the same root cause. A flawed outlook on the world. An erroneous perspective of the way societies work. The Lump of Labor fallacy.
The story usually goes like this: There is only so much work that needs to be done. A finite number of jobs. Having more workers than there is “work to be done”, will only lead to unemployment and underemployment. Any increases in population or labor supply, either due to immigration or foreign competition, will necessarily lead to worsening quality of life for everyone.
Not only that: There is only a finite amount of natural resources out there. This fixed pool of resources will have to be shared by everyone who lives in the country, and/or the world. One additional immigrant in your country, is one additional mouth that you need to feed. One additional foreigner becoming rich, is one additional foreigner who’s burning oil that you could have been using for yourself instead.
This argument certainly seems very intuitive. So intuitive that economists have an entire fallacy named after this idea.
“The lump of labour fallacy is the misconception that there is a fixed amount of work—a lump of labour—to be done within an economy which can be distributed to create more or fewer jobs. The term originated to rebut the idea that reducing the number of hours employees are allowed to labour during the working day would lead to a reduction in unemployment. The term is also commonly used to describe the belief that increasing labour productivity, immigration, or automation causes an increase in unemployment.”
“This assumption in regarded as fallacious, as the consensus view among economists today is that the quantity of labor demanded varies with respect to many factors. Foremost, these economists argue that employment of labor can expand the overall size of the economy, leading to further job creation. In contrast, reducing the amount of labor employed would decrease overall economic activity and thus further decrease the demand for labor.”
To see just how flawed this fallacy is, let’s look at the historical data. Over the past few centuries, the amount of natural resources in the world has either been fixed (land area), or declining (fossil fuels). Simultaneously, the population has been growing exponentially. We’ve gone from 1 billion people in 1804, to 3 billion people in 1960, to 7 billion people today. Looking closer to home, America’s population has grown from 10 million people in 1820 to 100 million in 1910, to 320 million today. According to the lump-of-labor thesis, this should then imply a hellish quality of life for anyone unfortunate enough to be born in the 20th or 21st century.
In reality, the exact opposite has occurred. Quality of life for the average person has increased incredibly. Average income has grown 1000%, worldwide. At home, American GDP per capita has grown from ~$2,000 to ~$50,000 (even after adjusting for inflation), during the exact same time frame as our population boom. We are today living lives of economic, educational and cultural prosperity, that our ancestors could only have dreamed of.
The most straightforward explanation for the above: Improvements in technology. The industrial revolution, automotives, medical advances, agricultural improvements, and electronic devices, have all had a transformative impact on our lives. And there’s no reason to suspect that these technological advances are going to slow down in the upcoming century.
But where do these technological advances come from? It’s tempting to think that they were simply the result of good fortune, and the passage of time, but that is not the case. Technology isn’t simply brought to us by storks. It’s made. It’s conceived in the minds of people, and brought to fruition through human effort.
And unlike fossil fuels or gold, once we achieve a technological breakthrough, it can be freely disseminated and shared with the entire world, for no additional cost. The consumption of oil might be a zero-sum game, but teaching others to build more fuel-efficient cars benefits us all.
Which brings us back to the original claim, and why it has failed so utterly in predicting the course of human history over the past few centuries. “Any increases in population will necessarily lead to fewer resources-per-person, thus worsening quality of life for everyone.” A claim that sounds so intuitive and logical, and yet, is predicated on the flawed notion that our quality-of-life is bottlenecked by natural resources. If anyone truly believes that natural resources, such as land or energy, are holding us back, consider this:
Less than 0.1% of all solar energy striking the earth actually ends up being harnessed by life forms. All urban areas worldwide comprise a mere 3% of the Earth’s land. 60% of the world’s entire arable land, remains uncultivated, in Africa alone. 99.99% of all water in the world is completely unused by humans, due to technological (desalination) constraints. If the entire world lived in cities as dense as New York, we would all fit inside of Texas. If we all lived in cities as dense as Houston, the US alone could house all 7 billion people in the world.
In reality, if there’s one thing we can learn from in the past few centuries, it is this: There is more than enough natural resources out there in the world to sustain a heavenly quality-of-life. The physical world around us offers us more resources than we could ever use. The main bottleneck to economic prosperity is not natural resources – it is technological advancement. The albatross weighing us down is not the physical constraints imposed by our environment, but rather, our technological ability to make full use of what we have. Hence why all our lives have improved exponentially over the past centuries, even as our population has exploded.
Which leads me to propose the following alternative to the “lump of labor” fallacy that is now taking over the world. One that champions human ingenuity, camaraderie, and a spirit of cooperation:
There is more than enough natural resources to meet our needs for centuries to come. The single biggest bottleneck holding us back, is our technological capabilities. Unlike most other resources, technology benefits from economies of scale. The more people we have harnessing a certain technology, the cheaper it becomes to use. The more people we have working and trying to innovate, the faster we as a civilization can progress. All it takes is a few people to achieve a technological innovation, and all of humanity can benefit from its shared use.
Gold is scarce, but knowledge is free. Forget old rivalries and turf wars. Forget xenophobic fears about “immigrants stealing our jobs” or jingoistic posturing towards “beating other countries.” The world is not a zero-sum game. By working together, we can all win.