Financial Times columnist Ranar Foroohar criticizes the “shadow work” that used to be done by hired third parties but that greedy companies (as we are led to understand) have now pushed onto the consumers themselves (“The Real Cost of Shadow Work,” January 30, 2022). Examples include banking and travel booking, most of which is now done online. She quotes a former editor of Harvard magazine:
“I’m just amazed how we’ve been suckered into spending our own time straightening out things that other people used to do for us.”
Herself a victim, Ms. Foroohar asks:
Does it make sense for me, as a well-paid knowledge worker, to spend several hours a week struggling with tasks that used to be done far better by entry-level workers who needed the employment?
The basic answer is that she could hire a secretary or a computer geek to help her, if her time is really worth more than her assistant would cost. Since the Industrial Revolution, we should understand that a growing economy means more productive workers and thus higher wages. This explains why full-time domestic personnel has become so expensive and that only the very rich can afford it. Executive assistants, even at the entry level and even those who “need” the job, are expensive.
Foroohar writes:
One could argue that all of this shadow work drives consumer prices lower, by reducing human labour. Perhaps. But is it productive for the economy as a whole?
Here again, I suggest that economic reasoning would be useful. “Shadow work” has developed in areas where most consumers find it cheaper to do it themselves than to hire somebody on the market. Think about IKEA furniture. Do-it-yourself is encouraged by high marginal income tax rates. And there is no “economy as a whole”: each individual makes the choices he (or she) thinks are best according to his own preferences. If one wants to stick with the misleading expression “economy as a whole,” one should understand that it only represents the configuration of all individual choices and their consequences. In short, there is nothing over and above that except elitist thinkers and government coercion. It won’t do to invoke the “negative externality of a market system in which companies are incentivised to offload labour costs” and to drop Joseph Stiglitz’s name. What about the negative externalities of government planning, economic ignorance, or virtue signaling?
The Financial Times columnist is drowning in the zeitgeist of our time when she suggests that government intervention is (of course) the solution:
Unless states improve education to keep pace with technology, many of these workers [displaced by technology] can’t get new jobs, and productivity and growth decline.
What should the state have done to prevent domestic workers from being replaced by domestic appliances? Didn’t they need the jobs?
One may share some of the columnist’s frustrations with the customer service of some companies—many of which actually being among the most government regulated. Banks and airlines are good examples. Some of her readers may even discover business opportunities where a fortune could be made offering better service to consumers—provided the latter are willing to pay the additional cost and that the entrepreneur is willing to face government bureaucrats. It is true that we live in an epoch or rapid technological and economic change, and that many people feel lost, even not counting mounting government surveillance and interventions. It looks like the times when trains or cars started roaming the land, when the telegraph and telephone spread, or when the political fad of eugenics gripped American governments. I would argue that these are no reason for advocating public policy to assist computer-challenged individuals.
In a very mixed economy, it is often difficult to know if the main cause of a problem lies in government meddling or in imperfect markets in an imperfect word. Or is it possible that Atlas is tempted to shrug? At any rate, private failings have one big advantage over the government sorts: in the former case, you are not literally forced to patronize your tormentors.
