When I lived in Philadelphia briefly in the late 90s, the city had gone through a dramatic drop in population.
Everywhere you went in North Philly, you’d see vacant lots; some places you could stand in the middle of one of America’s biggest cities and feel like you were standing in a field in the Great Plains.
Some friends lived in 10,000 feet of warehouse space for which they paid a couple hundred bucks (it seemed like a fire trap, but it was, I suppose, artsy and cool.) The community service program I worked for took over an enormous abandoned middle school, one floor out of which we used for a school book redistribution program, but the other three floors were just empty, unused auditoriums and classrooms, gradually growing dustier and danker over time but not clearly something that should be condemned or torn down, at least at that time- it’s had a couple more decades to disintegrate since then:
Most of the United States continues to grow in population, of course; even Philly has had something of a rebound in recent years, and you won’t find an unused school building in New York, for example, for blood nor money, which has made the charter/district school battles much more cutthroat.
But places like Philadelphia in the late 90s (or Detroit up through today) are a reminder that underutilized resources create their own problems. One day, when I was working for the community service program, SEPTA assigned us to clean up a vacant lot near a North Philadelphia transit station; the fairly small lot was filled not only with garbage and drug vials but, somewhat more enigmatically, with over a dozen dead cats.
The concept of “human capital” has its flaws, of course, but it’s not the case, I don’t believe, that underutilized human capital is less a problem than underutilized physical capital. As the old teachers’ aphorism goes, if you don’t have a plan for your students, they most definitely have a plan for you. If the society doesn’t take a care- beyond merely keeping them fed and minimally housed but unemployed and unwanted as more than consumers- for its less educated citizenry, it seems likely that that citizenry will force that care upon the society at large. You may not be interested in the dialectic, in Trotsky’s phrase, but the dialectic is interested in you.
Joe Wiesenthal argued recently that the big problem with Trump building a wall along the Mexican border is not that it will “waste money” but that it will waste real resources, especially human resources:
Are we in a state of overutilizing our real human resources? To me, this doesn’t look like that’s the case:
Some of that is due to students and retirees, but if you zoom in only on 25-54 year olds, it looks like there’s still a big problem, especially among less educated men.
There are composition effects happening there, no doubt- as more and more men pursue college, those left in the the “high school or less category” are negatively selected. But note on the other hand that these civilian labor force participation rates don’t even account for the huge growth in the incarcerated population over the same time:
Or for divergence between citizen and noncitizen workforce participation rates.
Just zooming onto the population that supported Trump most vociferously, non-college educated white men, there has been an even more striking decline in employment rates, and a growing gap with the population at large:
There has been a similarly marked decline in labor force participation among black men- who obviously have been particularly affected by the rise in incarceration, which again is omitted here:
And a spike since 1994 in the proportion of young men who are NEETs– not in any kind of employment, education, or training:
Along with the expected decline in very young men’s employment rates relative to young women’s, even as more women pursue education:
There are undoubtedly good arguments against building an enormous border wall, but the idea that we are using too many low-education workers currently- that our human capital, particularly among native-born men with less education, is presently overused- is probably not one of them.
There is a longer version of Wiesenthal’s argument made in Frederic Bastiat’s classic 1848 essay on political economy, What is Seen and What is Not Seen, where the proto-libertarian Bastiat argues that any government expenditure on behalf of “employment” must weigh its goals against the much more sensibly and productively allocated employment that the same men would be engaged in elsewhere. A question is whether these matters have changed substantially since 1848:
A nation is in the same case as a man. When a man wishes to give himself a satisfaction, he has to see whether it is worth what it costs. For a nation, security is the greatest of blessings. If, to acquire it, a hundred thousand men must be mobilized, and a hundred million francs spent, I have nothing to say. It is an enjoyment bought at the price of a sacrifice.
Let there be no misunderstanding, then, about the point I wish to make in what I have to say on this subject.
A legislator proposes to discharge a hundred thousand men, which will relieve the taxpayers of a hundred million francs in taxes.
Suppose we confine ourselves to replying to him: “These one hundred thousand men and these one hundred million francs are indispensable to our national security. It is a sacrifice; but without this sacrifice France would be torn by internal factions or invaded from without.” I have no objection here to this argument, which may be true or false as the case may be, but which theoretically does not constitute any economic heresy. The heresy begins when the sacrifice itself is represented as an advantage, because it brings profit to someone.
Now, if I am not mistaken, no sooner will the author of the proposal have descended from the platform, than an orator will rush up and say:
“Discharge a hundred thousand men! What are you thinking of? What will become of them? What will they live on? On their earnings? But do you not know that there is unemployment everywhere? That all occupations are oversupplied? Do you wish to throw them on the market to increase the competition and to depress wage rates? Just at the moment when it is difficult to earn a meager living, is it not fortunate that the state is giving bread to a hundred thousand individuals? Consider further that the army consumes wine, clothes, and weapons, that it thus spreads business to the factories and the garrison towns, and that it is nothing less than a godsend to its innumerable suppliers. Do you not tremble at the idea of bringing this immense industrial activity to an end?”
This speech, we see, concludes in favor of maintaining a hundred thousand soldiers, not because of the nation’s need for the services rendered by the army, but for economic reasons. It is these considerations alone that I propose to refute.
A hundred thousand men, costing the taxpayers a hundred million francs, live as well and provide as good a living for their suppliers as a hundred million francs will allow: that is what is seen.
But a hundred million francs, coming from the pockets of the taxpayers, ceases to provide a living for these taxpayers and their suppliers, to the extent of a hundred million francs: that is what is not seen. Calculate, figure, and tell me where there is any profit for the mass of the people.
I will, for my part, tell you where the loss is, and to simplify things, instead of speaking of a hundred thousand men and a hundred million francs, let us talk about one man and a thousand francs.
Here we are in the village of A. The recruiters make the rounds and muster one man. The tax collectors make their rounds also and raise a thousand francs. The man and the sum are transported to Metz, the one destined to keep the other alive for a year without doing anything. If you look only at Metz, yes, you are right a hundred times; the procedure is very advantageous. But if you turn your eyes to the village of A, you will judge otherwise, for, unless you are blind, you will see that this village has lost a laborer and the thousand francs that would remunerate his labor, and the business which, through the spending of these thousand francs, he would spread about him.
At first glance it seems as if the loss is compensated. What took place at the village now takes place at Metz, and that is all there is to it. But here is where the loss is. In the village a man dug and labored: he was a worker; at Metz he goes through “Right dress!” and “Left dress!”: he is a soldier. The money involved and its circulation are the same in both cases: but in one there were three hundred days of productive labor; in the other there are three hundreds days of unproductive labor, on the supposition, of course, that a part of the army is not indispensable to public security.
Now comes demobilization. You point out to me a surplus of a hundred thousand workers, intensified competition and the pressure that it exerts on wage rates. That is what you see.
But here is what you do not see. You do not see that to send home a hundred thousand soldiers is not to do away with a hundred million francs, but to return that money to the taxpayers. You do not see that to throw a hundred thousand workers on the market in this way is to throw in at the same time the hundred million francs destined to pay for their labor; that, as a consequence, the same measure that increases the supply of workers also increases the demand; from which it follows that your lowering of wages is illusory. You do not see that before, as well as after, the demobilization there are a hundred million francs corresponding to the hundred thousand men; that the whole difference consists in this: that before, the country gives the hundred million francs to the hundred thousand men for doing nothing; afterwards, it gives them the money for working. Finally, you do not see that when a taxpayer gives his money, whether to a soldier in exchange for nothing or to a worker in exchange for something, all the more remote consequences of the circulation of this money are the same in both cases: only, in the second case the taxpayer receives something; in the first he receives nothing. Result: a dead loss for the nation.
The sophism that I am attacking here cannot withstand the test of extended application, which is the touchstone of all theoretical principles. If, all things considered, there is a national profit in increasing the size of the army, why not call the whole male population of the country to the colors?