Wall Street Journal Commits Elementary Economic Error
Posted by M. C. on April 3, 2023
Will women who join, or rejoin, the workforce strengthen the economy? Of course, they will, at least in the ex ante sense. But all of human action “strengthens the economy.”
According to a headline blaring on the front page of one of America’s leading newspapers, “Women Rejoin the Workforce, Adding Strength to Economy.” This is wrong in more ways than you can shake a stick at. Strangely enough, as written exactly as is, it is also entirely correct. Let me explain.
Will women who join, or rejoin, the workforce strengthen the economy? Of course, they will, at least in the ex ante sense. But all of human action “strengthens the economy.” A man purchases a shirt for $20. At what rate did he value this shirt when he bought it? Not at $20. Then, there would have been no profit in the transaction for him. Why bestir himself in this manner if he couldn’t even imagine thereby improving his economic well-being? He must have valued this article of clothing at more than $20, say, $25, so there would have been a $5 profit in it for him. Well, I speak too quickly. His main motive in so doing might have been to get a date with the attractive female seller. So, all we can say is that there was something about this transaction, the shirt or something else, or maybe a combination of the two, that he ranked more highly than the sales price. All that of course is ex ante, in anticipation. Ex post, this may or may not have been true. After the fact, he may rue his purchase; the shirt was not that much to his liking, the woman refused his offer of dinner.
The same applies to women rejoining the labor force. They would not have done so, did they not prefer this course of action to all others open to them, such as enjoying leisure, entering college, engaging in child care, etc. The economy necessarily improved, again, necessarily ex ante, but as upon all such occasions, it is by no means certain that this occurred ex post as well.
Now consider an alternative headline: “Women Quit the Workforce, Adding Strength to Economy.” The same identical analysis applies! Females would not have quit their jobs did they not contemplate thereby an improvement in their economic welfare. Perhaps they ranked child care, or leisure, or education, etc., more highly than the money they garnered from their jobs. They necessarily gained, again, ex ante from this decision of theirs, and may or may not have also done so ex post depending upon how they looked upon it after the fact.
The point is, whatever they did, quit, join, rejoin, the workforce, they improved the economic in general, because their own well being was boosted. So the headline was problematic in that it strongly implied that work, not any of these other alternatives, was the path to economic improvement.
What, then, are the unmitigated benefits of laboring, that do not apply to any of these other options?
Be seeing you
MCViewPoint 
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