Yglesias

Shoplifting, Employment, And Keynesian Economics

Grover Norquist posits on Twitter that “If Keynesian economics worked—shoplifting would create jobs.”

It seems to me that in an economy with high unemployment and excess capacity, a temporary increase in shoplifting would in fact create jobs. Why? Well, retailers place their orders on a forward-looking basis. If you think you can sell stuff at a profit in the future, you order stuff. The shoplifting surge would reduce inventories, and cause a spike in orders. That would mean extra employment in manufacturing and transportation.

This seems to me to be similar to the alleged broken windows fallacy. Having goods vanish off store shelves would produce no additional jobs if full employment were already in effect since it wouldn’t be possible to create any extra goods. Only technological improvements to move the production frontier outward would raise living standards. But if there are unemployed people sitting around, then why shouldn’t shoplifting boost employment? Of course we need to distinguish a temporary surge in shoplifting from a permanent increase in the level of shoplifting. The latter would merely increase retailers’ costs and depress the economy.