As we keep saying; Jobs are a cost

Good to see that some are grasping this simple concept:

Wes Streeting has ordered a “high-stakes” reorganisation of the NHS that will scrap 10,000 jobs in an attempt to free up cash for frontline care.

Experts warned that the move to abolish NHS England and fold it into the Department of Health and Social Care (DHSC) could distract ministers from the urgent job of ending long waits for treatment, while trade unions expressed concern about the “shambolic” announcement of job cuts for public servants.

However, the health secretary said the move to abolish the “world’s largest quango” would put ministers back in charge of the health service while saving hundreds of millions of pounds that could be better spent on doctors, nurses and improving frontline care.

Those 10,000 people currently employed are 10,000 costs in the National Health Service. Jobs are a cost, not a benefit. We can tell this because the claim is that if the jobs aren’t there then there’s more money to do something else.

The benefit, if there is one, is that the NHS is better run, more efficient, if those 10k people are employed to administer it. Or not, as the case may be.

Our point here is not about the details of NHS administration. We want, instead, to get across that very basic point once again. Jobs are a cost of getting something done, the benefit is the thing done by bearing the costs of the jobs.

If the benefit is less than the cost of the jobs then that employment of those people makes us all poorer. If the benefit is greater then richer, obviously. Therefore when considering whether to do a thing, or not, it’s not the jobs created that are the benefit - those are the costs which need to be compared to that benefit.

Basic accounting always goes wrong if you confuse debit and credit. Basic economics similarly when confusing costs and benefits.

Tim Worstall