India preserves small shops, like these in Dehli, in part by restricting foreign investment in retail grocers. Photo: Villie Miettinen (Flickr)

Killing jobs: underrated.

Amid warnings that megaretailers drive small shops and farms out of business, India is backing off from a plan to let WalMart, Tesco and other foreign firms open domestic grocery stores.

Today, American economist Alex Tabarrok mounts a simple, fearless response: Yes, the plan would replace many poorly-paid jobs with fewer poorly-paid jobs. And that, he says, is exactly what India needs.

What India needs is fewer jobs; fewer jobs in retail, fewer jobs in apparel and, most of all, fewer jobs in farming. India cannot become even a middle income country if most of its workers, for example, are farmers. To improve its standard of living, India must use fewer people to produce more agricultural output.

Fewer workers in farming (or retail) means more workers producing more goods in other industries. The same basic lesson holds throughout an economy, it is the declining sectors that allow other sectors to advance.

Tabarrok's case is deeply optimistic: Idle humans don't stay idle. If megaretailers drive out their competition by helping hundreds of millions of Indians save a little money on groceries, the economy will have that much more to create the middle-class jobs of tomorrow: fixing computers, building bicycles, assisting childbirths.

In the long run, Tabarrok suggests, killing an inefficient job only frees a worker to find a better one.

It's probably no surprise that for big-time soccer fans, watching the world cup is more enjoyable than working. But breaks taken to check the latest score and watch part or all of the game collectively add up to big dips in productivity, according to a recent Atlantic Monthly article on the economics of the World Cup.

As the tournament gets closer to the finals there are even bigger slides in productivity. The Center for Economics and Business Research estimates that the price tag for a month of sports-induced distraction amounts to $2.8 billion.

For soccer fans, going to the World Cup is a dream come true. Watching the games on TV or online is the next best thing. Photo: Axel Bührmann (flickr)

Despite rising unemployment, average hourly wages went up 4 percent in the past year. Photo: James Yu (flickr)

It's tough finding a job in this economy. There have already been 3.6 million job losses since the start of the recession. So would you believe that hourly wages have risen almost 4 percent in the past year?

How can this be? According to an economic theory called "adverse selection," employers are better off increasing wages rather than cutting them. Cutting pay often prompts the most productive workers to look for employment elsewhere, leaving the company with the laziest, most unproductive workers. Higher wages are also good for employee morale. This same wage phenomenon occurred during the Great Depression.

Not all companies are subscribing to "adverse selection" theory — Hewlett-Packard and FedEx are planning to cut worker pay. But as the saying goes, a happy worker is a productive worker, and as the New Yorker notes, productivity is key to a healthy economy.