The agriculture minister has just given us a number which explains how we all -- places and peoples -- become richer. It's the basic definition of income and wealth increases too. This is what we want to do with everything, this is the very point of the whole economic game.
The specific is that, “Rice production in Bangladesh has increased more than four times in the last 50 years.” The minister goes on to claim that all demand is being met domestically, which doesn’t matter, also that the government has aided in this which is dubious. But it's clearly a good thing -- rice production is up.
But it's more than just that. For Bangladesh has no more land now than it did 40 years ago and while I've not checked, I doubt more of the land is put down for rice than back then. Certainly not four times more. So, we're getting more rice from the same or about-the-same amount of land. We also very definitely have a smaller proportion of all the people working as rice farmers. So we've less labour effort but more rice.
These are both called “increased productivity.” One is increased land productivity, the other is increased productivity of labour -- that's the one everyone usually means by “increasing productivity.” The reason should be obvious. If we can produce more per hour of human labour then we can consume more for each hour of work done. We're richer from each hour of work.
This is also, over the decades, the way a place becomes rich. Robert Solow, whose Nobel Prize was for his studies of growth, calculated that the market economies gained about 80% of their growth in the 20th century from this process -- using inputs more efficiently. The planned economies, using the Soviet as the example, gained none of their growth through productivity. Instead they grew their economies by using more land, more labour, more inputs.
The whole aim of economic policy is to uncover those methods by which we can destroy jobs
But that's to move off into how we gain those productivity improvements, how to organize the process. The important thing here is the process itself. Increasing productivity is what makes us all richer.
What we've actually done -- however we've organized it -- is to use fertilisers to increase yields. We've also used simple human ingenuity in designing and breeding more productive cultivars of rice along the way. We have substituted those technological additions for land and human labour.
Which is all fairly standard and of course everyone here already understands this. But we should also consider that good arguments should work either way. If it makes us richer that we produce more with less labour (or land, other resources) then it is also true that if we use less labour to produce something then we become richer. That is, getting rid of jobs -- while maintaining or increasing production -- is what makes us richer.
We can even go further than that. The aim and purpose of technological advance is to destroy jobs. So that we gain production with the use of less labour (or, of course, other economic resources).
Which then brings us to an interesting place. Sure, we've still got the arguments about which political and economic processes encourage technological advancements the best (hint: It's not planning). So there's still that fun to go through. But anyone starting to shout that we've got to preserve jobs, or his plan will create jobs, is getting the entire process wrong.
It is using less human labour that makes us richer. The whole aim of economic policy is to uncover those methods by which we can destroy jobs. So that, as with rice, we can have more of everything from the same or less human labour.
Tim Worstall is a senior fellow at the Adam Smith Institute in London.
