Economists Mock Facebook’s Claim That It Created 4.5 Million Jobs

AP Photo
AP Photo

A new study commissioned by Facebook claims the social media giant created 4.5 million jobs and added $227 billion in global economic impact.

However, the study, which was prepared by Deloitte, has been dismissed by leading economists. “The results are meaningless,” Stanford economist Roger Noll told the The Wall Street Journal. “Facebook is an effect, not a cause, of the growth of Internet access and use.”

Others, like George Mason University economist Tyler Cowen, agree. He said the Facebook report’s methodology relied on “bad reasoning,” and he questioned the study’s jobs figures.

Facebook COO Sheryl Sandberg, however, says Facebook’s ubiquity now has some people confusing Facebook and the Internet. “We know Facebook is one of the main drivers of why people buy phones, particularly in the developing world,” said Sandberg. “People will walk into phone stores and say, ‘I want Facebook.’ People actually confuse Facebook and the Internet in some places.”

However, far from creating jobs and wealth for the poor, some leading economists say that high-tech companies are the core driver of “income inequality.”

“My reading of the data is that technology is the main driver of the recent increases in inequality. It’s the biggest factor,” says Erik Brynjolfsson, MIT Professor of Management at MIT’s Sloan School.

As Brynjolfsson and his MIT colleague and co-author Andrew McAfee argue in their book The Second Machine Age, technology’s warp speed ability to lower entry costs, dramatically lower labor costs, and automate highly complex tasks has created an economic ecosystem wherein young tech wizards can generate billions of dollars of profit in record time, using only relatively tiny teams of highly intelligent individuals. The result: ceiling-smashing wealth achieved by young tech geniuses–like Facebook’s own billionaire Mark Zuckerberg–even as wages and job growth stagnate for those at the bottom.

Recently, income inequality protestors have begun taking out their class warfare rage on Silicon Valley companies and executives whom they believe are to blame for widening the gap between the rich and poor–a problem that President Barack Obama has crowned “the defining challenge of our time.” Ironically, many of those same tech companies were among Obama’s biggest campaign donors.