Are You Still Working on That?

by Fred E. Foldvary

I don’t know where waiters go to get trained, but wherever it is, they are teaching waiters bad economics. Waiters end up confusing consumption with production.

Consumption means the using up of economic value. The government cannot go into our houses and check on how much of our goods we are using up, so they just record consumption at the point of sale of household goods. Suppose you buy firewood for $10. It is recorded in national spending as $10 of consumption, but the wood is actually consumed when you put it in your fireplace and burn it. The fire consumes $10 worth of wood, since the ashes are worthless.

Production means the creation of economic value. When someone plants a seed, grows a tree, cuts it, and sells the logs for firewood, he creates something of value to others. The barber who cuts you hair produces a service with value.

Production employs the three factors of production: land, labor, and capital goods. Labor is human exertion in the production of economic value, namely goods and services with value to others. When one is engaged in labor, this work gets compensated with wages. The market wage is generally equal to the contribution of an extra worker to the economic value, what in economics is called the “marginal product of labor.”

The value of the product is often greater than the wage plus payments for capital goods. Some of this surplus might go to the profit of the firm, but if the industry is competitive, then in the long run, the owners of firms only receive what they contribute, so the surplus does not go to the company owners. This surplus is soaked up by the rent the owners pay to the landowners. What economists call the “producer surplus” is really land rent. Rent is always a surplus, because spatial land has no economic cost.

You are now wondering, what does this have to do with waiters? I’ll tell you now.

There I am eating my dinner in a restaurant, and I pause to finish a paragraph I was reading. Comes the waiter, and he asks, “Are you still working on that?”

And it is not just one waiter, but they all say that. Somebody must be training them to ask this. I usually just say, “I’m still eating,” but this is what I will say next time:

Waiter: “Are you still working on that?”

Me: “That depends. How much am I being paid for this labor?”

Waiter: “Labor? I mean, are you finished with that?”

Me: “It depends on the wage. How much will they pay me to work on this?”

Waiter: “We’re not paying you. You are paying us.”

Me: “But you said I was working on this. If I am working, I expect to get paid for my labor.”

Waiter: “It’s just an expression. I meant, are you still eating?”

Me: “Eating is consumption. You said I was working, which means I was producing something, and I don’t work unless I get paid.”

Waiter: “Eating is a type of work.”

Me: “Where did you learn that?”

Waiter: “I don’t know, it’s just a way of speaking.”

Me. “Well, I’m an economist, and economics distinguishes labor from leisure, and if I’m not getting paid for this, then I am engaged in leisure, not labor. When you’re sleeping, are you working?”

Waiter: “No.”

Me: “When you are watching TV, are you working?”

Waiter: “No.”

Me: “So when you drink coffee in the morning, is that work?”

Waiter: “I suppose not.”

Me. “So why do you call it work when I am consuming rather than producing?”

Waiter: “I said, it’s just an expression.”

Me. “It’s a mistaken expression. Work is production, not consumption.”

Waiter: “Well, excuse me! Nobody else complained before.”

Me: “Maybe they complain by not leaving a tip!”

Waiter: “Oh. Maybe that’s why I’m not getting tips. I thought it was the economy.”

Me: “No, it’s your bad economics.”

You, dear reader, are welcome to try this yourself. We need to get waiters to stop confusing consumption with production, and labor with leisure.

And if you find out where waiters go to get brainwashed, let me know.

This article first appeared in the Progress Report, www.progress.org. Reprinted with permission.

Dr. Fred Foldvary teaches economics at Santa Clara University and is the author of several books: The Soul of Liberty, Public Goods and Private Communities, and the Dictionary of Free-Market Economics.