Wednesday, February 11, 2009

Feminist Economics (Belated)

There can be no denying that women play a crucial role in the functioning of the American economy. In her editorial in the New York Times “Where Are the New Jobs for Women” Linda Hirshman made the case that any forthcoming economic stimulus must recognize the crucial role women play in the nations economy, and she argues the present proposed stimulus fails to do so. However, Ms. Hirshman’s argument is inherently flawed as it is built on, at best, a juvenile understanding of macro-economics that leads her to form absurd concussions as she strives to politically-correct the future stimulus package.

Hirshman’s principal argument is that the proposed stimulus package ignores women; because, it focuses spending on areas of the economy that are comprised largely of men, namely construction and engineering. In her own word she says, “The bulk of the stimulus program will provide jobs for men, because building projects generate jobs in construction, where women make up only 9 percent of the work force.” Hirshman asserts that this focus on this sector leaves women out of the stimulus; however, she fails to understand that a sufficiently large stimulus package role is not merely to stimulate any one sector of the economy but to invigorate the economy as a whole. The principal is simple, if the federal government builds infrastructure this facilitates commerce in other sectors as it is now easier for buyers and sellers of goods and services to interact. For example, if one builds a new road that better connects two towns it is easier for businesses in these towns have just expanded their market of potential customers. This is of course a very basic example, but that principal holds true on all levels of infrastructure development, which is why all but the most fringe economists want the US to invest infrastructure. Although money directly flows to jobs that are overwhelming held by men (construction workers), they spend money on goods and services, which defuses money throughout the economy affecting all sectors, even ones dominated by women.

To say that this type of stimulus leaves women out is absurd. If a construction worker he is employed, and he then has the money to afford day-care for his pre-school aged children, which as Hirshman herself claims, “94 percent of child care workers” are female. Continuing with that hypothetical scenario, employing that construction worker potentially allows his wife to get a job given that this hypothetical family can afford day-care, and the wife doesn’t have to watch the kids. In theory, the stimulus can directly encourage more women to enter the workplace. As for engineering, it is a simple fact that stimulating this sector has the same effect as infrastructure development. How Hirshman fails to see this is beyond comprehension.

Moreover, Ms. Hirshman claims that the federal government, in addition to the aforementioned stimulus, should, for the sake of gender-equity, invest considerable sums of money in the social work and education sectors being that they are largely female sectors. There is no good reason to not spend money on these sectors. In the long run, investment in social services and education creates better adjusted more productive members of society, so there is certainly no reason not to invest in these areas. However, Hirshman’s argument treats these sectors as though they are of equal immediate value, in relieving the economy, as investment in infrastructure and engineering, which is most certainly not the case. Unlike investment in infrastructure or green technology, investment in social services and education provide no immediate boon to the economy aside from the marginal amounts of capital that is defused to the economy via teacher’s income. When one builds a road, not only does one stimulate the economy by paying construction workers and facilitating commerce once its completed, but one must buy all manor of equipment and materials from all manor of companies. By contrast, hiring more teachers does not have the same effect. On the small scale, it does stimulate the economy, but the purchase of additional textbooks does not even compare with the boost to the economy generated by the purchase of bulldozers.

Moreover, demand for social services and education is static, so once a certain number of teachers and social workers are employed there is no more demand for further employees in that sector. No doubt the country needs far more teachers and social workers then it presently has; nonetheless, the potential limit on growth in that sector means that investment there cannot produce the same effects as investment in sectors, like green technology, where demand is not so static.

Without solid economics to back up her thesis, what possible motives can Ms. Hirshman have for taking her position? It would seem her position is motivated less by concrete realities about how a given stimulus package will help the American people regardless of gender or any other factor and more by a perverse need to advance political-correctness at the expense of empirical data.

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