There are 50,000 coal miners in the United States. There are 520,000 fast food cooks. Coal miners seem to loom a lot larger in our politics. Wonder why.
If Mr. Nussbaum had read pages 36 and 37 of The Armchair Economist, he’d know the answer. Coal mines are in pretty much fixed supply; new fast food joints are created all the time. Therefore new coal mining jobs are far harder to create than new fast food jobs.
So if conditions get better for coal miners, that’s good for existing coal miners. By contrast, if conditions get better for fast food cooks, more people will become fast food cooks, driving down the wages of existing fast food cooks and negating the improved conditions.
That makes it worthwhile for coal miners to lobby for better conditions, but not for fast food cooks. What’s relevant is not so much the current population of coal miners, but the ease with which that population can expand.
Here’s the relevant passage from The Armchair Economist:
Throughout the world, farmers have managed to appropriate disproportionate shares of government largesse. In the United States, farmers are routinely paid to leave land uncultivated, whereas nobody would think of paying motel operators to leave rooms vacant. That’s a riddle: Why the asymmetry? Some say that farmers have successfully capitalized on the romance of the family farm. But is the family farm inherently so much more romantic than the mom-and-pop grocery store? Why do we subsidize the vanishing life- style of the small farmer while allowing the corner grocery to fade into the mists of nostalgia?
The Indifference Principle suggests an answer: Motel owners and grocers don’t bother mounting the kind of lobbying effort that farmers do because they are well aware that they stand to gain very little from government subsidies. If motels were paid to keep rooms vacant, room rates might rise initially but new motels would soon appear in response. Before long, the motel industry would be no more profitable than it ever was. Motels are not a fixed resource, so nothing can make motels more profitable than, say, gas stations. But if there is a fixed quantity of farmland, then farmers are at least partially exempt from the Indifference Principle. New farms can’t arise to take advantage of farm subsidies. Therefore farmers can gain from a change in economic conditions, and it is worth their while to work toward the changes they prefer.
This is a nice little reminder that economists actually do understand a lot of things that most people don’t. Even a pretty sophisticated observer like Michael Nussbaum found the asymmetry between coal miners and fast food cooks mysterious, though pretty much any economist could have explained it to him in an instant.