Don't deprive people of work - the bigger payoff is dignity

Economists like to tell a possibly apocryphal story about Milton Friedman. The prophet of free markets, visiting an Asian country in the 1960s, witnessed a public-works project that had people making a road with picks and shovels. When he asked why they did not use earth-moving machines instead, a local official responded that the goal was to provide people with jobs. In that case, the economist asked, why did the government not just have the workers use spoons instead?

This parable elicits a chuckle from many economists, who use it to contrast the hard-nosed, efficiency-minded thinking of their discipline with the ineffectual mandates of bumbling bureaucrats.

But to many outside the profession, the story demonstrates a wilful ignorance about the importance of work and human dignity. I recently wrote that the government should focus on getting people jobs instead of just mailing them money. Ideas for doing that range from government employment guarantees to public-works programmes to tax incentives for corporations that hire more employees.

Inevitably, the people who chuckle at the "spoons" story are going to label these programmes as make-work. If the market is not willing to pay people to do a job, they will say, it is not worth doing.

Already, I have received a few responses along these lines. People who take these jobs might do it for the money, they say, but they will know the work was not really needed, and they will not derive dignity or self-respect from doing it. Better to just mail them a cheque.

I think this kind of thinking is very wrong. Yes, if you gave people spoons to build a road, they would realise it was silly. But it is absurd to jump from that to the conclusion that any worker who gets paid more than what the market will bear is just a welfare recipient with a made-up job.


The work put in by window cleaners in Tokyo, dressed as Santa Claus and reindeer, may not be high-tech, but it gives a real, tangible benefit to the city when visitors are vowed by its clean and well-run image. PHOTO: EUROPEAN PRESSPHOTO AGENCY

People realise that the free market rewards people differently, based on things beyond their control. A janitor in the Philippines does the same work as a janitor in Texas but the latter gets paid a lot more. Recessions, local economic conditions, development policy, the winds of global trade and a million other factors all play a part.

That is one big reason why free-market outcomes are not always seen as fair. Most of us want to be valued not just for how much money we can manage to wring out of the system, but also for how much effort we put in.

As economist Brad DeLong aptly puts it: We like neither to feel like cheaters nor to feel cheated. We like, instead, to feel embedded in networks of mutual reciprocal obligation… We want to be neither cheaters nor saps.

Where American cities like Chicago and Detroit are full of broken windows and crumbling facades, Japanese cities are clean and modern, with well-maintained, reliable public transit. Before we start complaining about make-work, let's make the US look like that... These are all jobs that produce real, tangible results.

If we work hard and produce something of tangible value, we tend to feel a sense of self-worth when society rewards us for it with a decent, middle-class life. This was the essence of Franklin Roosevelt's New Deal - if you work, you eat.

The continuing power of this idea is visible everywhere. Witness Albuquerque, New Mexico, where the city gave homeless people jobs and it made them feel "human again". Or look at the Job Corps programme, where giving poor people jobs made them more likely to get married. If you give people work with tangible, visible value, you give them dignity. This, of course, is a reason the United States' falling labour participation rate is such a concern - so many Americans are out of the workforce and are missing out on the dignity that comes with a job.

So is there work to be done in the US that produces tangible, visible value? Of course, there is. To realise this, just take a one-week trip to Japan. Where American sidewalks are cracked and uneven, Japanese ones are neat and beautiful. Where tables in American Starbucks are littered with crumbs and dirt, Japanese Starbucks tables get wiped down after every customer leaves. Where American cities like Chicago and Detroit are full of broken windows and crumbling facades, Japanese cities are clean and modern, with well-maintained, reliable public transit.

Before we start complaining about make-work, let's make the US look like that. Let's fix the sidewalks and renovate - or knock down and rebuild - all the old buildings. Let's wipe down every Starbucks table, build quality public-transit systems and hire the workers to make them run on time.

Let's provide childcare for working mums and eldercare for old people. Let's hire more teachers to reduce class sizes.

These are all jobs that produce real, tangible results. When you fix up a building or build a train station, you can see the fruits of your labours. When you take care of an old person, you can see a real human being benefit. The value created by these jobs is a lot more tangible and clear than the value created by a lot of activities that the market rewards much more, such as high-frequency trading.

The free-market age has made the economy more efficient but it has come at a dramatic price - lost dignity for so many. The US has moved away from the idea of a social compact with work at its core. That is something that deserves to be reversed.

BLOOMBERG VIEW

A version of this article appeared in the print edition of The Straits Times on December 24, 2016, with the headline 'Don't deprive people of work - the bigger payoff is dignity'. Print Edition | Subscribe