Either there is a fixed amount of "work" going in an economy (lump of labour), occasionally necessitating government intervention to create more jobs, or there isn't a lump of labour, and job creation would not be necessary.
How can these be reconciled? Am I misunderstanding something?
Thanks!
How is the "Lump of Labour" understanding a fallacy, when Keynesians (and others) talk often about "Job Creation" schemes?
byu/HMS–Thunderchild inAskEconomics
Posted by HMS–Thunderchild
1 Comment
In a non-sclerotic economy over the mid to long term we typically end up at something like full employment. That is most people and other inputs are being generally utilized in order to produce “something”. In these situations trying to create jobs to produce “something else” will necessarily take people away from producing the original “something”.
What Keynes accurately noted is that in the short run there are often inputs that do go underutilized. This is what is called a recession. When there is unusually high unemployment the government can create jobs to produce some worthwhile “something else” using those people who are currently unemployed. This can also be a jolt to get us out of the recession.