Everybody wants to create well-paid jobs. But this is not necessarily a good thing.

To see why, imagine a simple economy comprising farmers each of whom is comfortably above subsistence, enjoying both leisure, the ability to store food, and a few luxury foods. One of our farmers then discovers a more efficient technique allowing him to produce more food with less effort. He's better off. And if he can sell this knowledge to others, he'll become even richer. In this case, economic growth and the creation of a high-wage job are indeed the same thing: our new economy comprises a well-paid farming consultant as well as more productive farmers.

But what if he cannot sell his know-how? What if other farmers can learn his techniques simply by looking over the fence? We'll then have a transition to a high-wage economy without the creation of a new job. This isn't a fanciful case. William Nordhaus famously found that innovators capture only a "minuscule fraction" of the social benefits of their discoveries in large part because they are indeed copied.

Our innovative farmer could get a high-wage job as a teacher and consultant only if he could prevent others from learning freely - by building a high fence (erecting a paywall) or by taking out patents and copyrights. Such devices would boost his pay but at the expense of lowering others' productivity relative to what it could be. Creating or preserving high-wage jobs, therefore, isn't the same as raising productivity.

Let's take a second example. One farmer then develops musical skill, so much so that the others happily trade some of their excess product to listen to his songs. In this new economy, everybody is happier than before. Farmers are getting something they value more highly than food - music - and the musician wouldn't be performing if he didn't enjoy it more than farming.

This illustrates an important point made by Eric Beinhocker in The Origin of Wealth. Economic progress, he says, doesn't consist merely in producing more of the same but in producing greater variety - a finer division of labour with a more complex economy. We are better off than we were in the 1950s, not because we have more lard and haircurlers, but because we have things people then couldn't get at any price - colour TVs, mobile phones, the internet and so on.

Note also that GDP does not necessarily capture this fact because it doesn't accurately measure some of the things we have that our grandparents didn't: think of our visits to Youtube and Wikipedia for example.

In this example the musician's job needn't be a high-wage one. If he prefers it to farming he'd accept less remuneration than he could get as a farmer. Even so, people prefer this economy to the one they had previously. Which tells us that economic progress can happen without the creation of well-paid jobs.

Now let's take a third example. Our society suffers a breakdown in social norms and rise in crime. One farmer then charges the others to protect them from theft and violence - so much that he earns more than he did as a farmer. A high-wage job has been created. But must of us would prefer the old society in which protection was unnecessary. Which shows that high-wage jobs aren't necessarily a sign of success*.

Again, this isn't a fanciful example. It describes the guard labour discussed by Samuel Bowles and Arjun Jayadev. Some lawyers, policemen, supervisory staff and middle managers exist only because of agency failures and conflict that would be diminished under different social arrangements.

Now take another example. A clever farmer finds a loophole in the contract with the protector which allows him to enjoy the benefits of protection without paying. He then sells advice to others on how they too can exploit this loophole. He has created a high-wage job for himself. But our society in aggregate is no better off. Those who don't use the loophole must either pay higher taxes to provide protection or get less of it. Our tax advisor hasn't created wealth, but merely diverted it to himself and his clients. Society would be better off if he were to direct his talents elsewhere, as the musician and more skilled farmer do.

It should be obvious that this example is also all too realistic: many tax advisors, accountants and lobbyists fit this model.

The point of all this should be clear. Creating high-wage jobs and economic progress are different things. Sometimes, we can have progress without a new well-paid job, as in my example of the musician or farmer whose innovations get copied. And sometimes high-wage jobs do not represent progress at all, as in my examples of protection workers or tax advisors. (The example of the innovator benefiting from intellectual property laws is a mixed case: if such laws are necessary to incentivize innovation the high incomes and progress go together, but if they are not the two are separate). Yes, wages are at least sometimes equal to marginal product, but it is the marginal product to the hirer not to the wider society.

All this is not to mention other cases of high-wage jobs that are inimical to progress. These include those which exploit information asymmetries such as fund managers who are, in David Blake's words, "genuinely unskilled." And they also include those who generate unpriced negative externalities such as bankers' risk pollution, carbon producers' environmental pollution or the media's intellectual pollution.

Of course, high-wage jobs would be a good thing if they are the result of genuine improvements in productivity. But not all such jobs are. Think about this statement:

If an economy is successful it has lots of high-wage jobs. We have lots of high-wage jobs. Therefore we have a successful economy.

Sounds reasonable? It shouldn't. It has the same structure as:

If an animal is a dog, then it has four legs. My cat has four legs. Therefore, my cat is a dog.

It's the fallacy of affirming the consequent. And it's the mistake that some advocates of a high-wage economy make. High-wage jobs must be the product of a thriving economy, not a cause of one.

* Of course, one could tell a story in which the protector extorts food from others whilst failing to protect them. Whilst plausible, I don't need this to illustrate my point, that even in a free society high-wage jobs aren't necessarily a sign of success.

Another thing. I've tried not to use words such as GDP, productivity and value. In my context (and many others!) these merely introduce unnecessary complications.