Wednesday, December 8, 2010

Economic Reality Check #3

Total wealth can not be increased by being purposely inefficient.


  1. Wealth and wellbeing are not synonymous.

  2. I agree, but I'm talking about make-work jobs.

    I'm really glad there are sites like and out there that host video clips and type up transcripts of things I want to read. C&L did the legwork to bring us George Will's retelling of a Milton Friedman story:

    "It put me in mind of a great story Milton Friedman used to tell. He went to Asia in the 1960s and was proudly taken by the government to see a public works project. They were building a canal. He was struck everyone was digging the canal with shovels. Friedman says, why no heavy earth-moving equipment?

    "They said, oh, this is a jobs program. So Friedman says, why don't you give them spoons instead of shovels? I think we understand, now, the sterility of government trying to create jobs."

    Makework jobs are not jobs; they are welfare payments. This isn't a criticism of welfare, just a clarification.

    Wealth is resources, and inefficency produces less resources. It's mathematically true.

  3. Ah - ok! So this is within the context of the other previous Economic Reality Checks. I didn't know there was a theme or greater point to your ERC's - other than simply being true statements about economics.

  4. I came up with them on a whim. They are important little cogs that a lot of people leave out from their machinery.