The Job Fallacy and the Job Hyperbole

The idea that there is a fixed and limited number of jobs to go around, that when someone else gets a job there is one less opening for me, must be one of the biggest economic fallacies. Jobs are not like land, there is no fixed supply of it. Unlike what the Luddites believed, not even improving technology could destroy jobs. Even as technology makes some jobs redundant (such as the effects of computerisation), it creates jobs elsewhere (to write the software), jobs that are better paying and brainier to improve the standard of living. The same also applies to immigration - a job going to the foreigner would be one less to the local. Not only is it an economic fallacy, it sometimes breeds grievous xenophobia.

Equally, there is also a job hyperbole - that if there are more jobs created than there are workers, every one must be fine. Indeed, the economy may be booming with many new jobs created. But if you are stuck with the wrong skill set, your predicament is like "water water everywhere but not a drop to drink." While others feast, you are facing a famine. Even in an economic boom, different sectors adjust differently, structural unemployment is still possible. If you had taken the wise decision to read law five years ago, prospects are really bright as you start out in your career. If you had studied life sciences, you would be lucky to wash test-tubes.

I often give this advice to students - apply the theory of comparative advantage in making career choices. This is the king of kings when it comes to economic theories, the unchallenged and undisputed piece of economic wisdom for the last 200 years. Though it is used to explain international trade, it applies to career choices as well. The idea is that to maximise welfare, a country should produce what it is relatively good at, not necessarily what it is best at. The same applies to career choice - do not what you are best at, but do what you are relatively good at, compared to your peers.

So identify areas of Singapore's comparative advantage, and also your own relative strengths (take a long hard look at yourself), before making any decision on skill specialisation, a decision that is most likely irreversible. This will help prevent you from falling into the job fallacy, or be caught by the job hyperbole.

[Endnote: Also, seek to understand whether the sector has 'deep' comparative advantage (hard to dislodge), or only fleeting advantage (other countries can catch up easily). Furthermore, if one enters a sector with high wages due to protection, one also has to prepare for the day it is liberalised.]