Posted on 12/18/2003 3:32:00 PM PST by sly671
Jobs come and go Walter E. Williams
In 1970, the telecommunications industry employed 421,000 switchboard operators. In the same year, Americans made 9.8 billion long distance calls. Today, the telecommunications industry employs only 78,000 operators. That's a tremendous 80 percent job loss.
What should Congress have done to save those jobs? Congress could have taken a page from India's history. In 1924, Mahatma Gandhi attacked machinery, saying it "helps a few to ride on the backs of millions" and warned, "The machine should not make atrophies the limbs of man." With that kind of support, Indian textile workers were able to politically block the introduction of labor-saving textile machines. As a result, in 1970 India's textile industry had the level of productivity of ours in the 1920s.
Michael Cox, chief economist at the Federal Reserve Bank of Dallas, and author Richard Alms tell the rest of the telecommunications story in their Nov. 17 New York Times article, "The Great Job Machine." Spectacular technological advances made it possible for the telecommunications industry to cut its manpower needs down to 78,000 to handle not the annual 9.8 billion long distance calls in 1970, but today's over 98 billion calls.
One forgotten beneficiary in today's job loss demagoguery is the consumer. Long distance calls are a tiny fraction of their cost in 1970. Just since 1984, long distance costs have fallen by 60 percent. Using 1970s technology, to make today's 98 billion calls would require 4.2 million operators. That's 3 percent of our labor force. Moreover, a long distance call would cost 40 times more than it does today.
Finding cheaper ways to produce goods and services frees up labor to produce other things. If productivity gains aren't made, where in the world would we find workers to produce all those goods that weren't even around in the 1970s?
It's my guess that the average anti-free-trade person wouldn't protest, much less argue that Congress should have done something about the job loss in the telecommunications industry. He'd reveal himself an idiot. But there's no significant economic difference between an industry using technology to reduce production costs and using cheaper labor to do the same. In either case, there's no question that the worker who finds himself out of a job because of the use of technology or cheaper labor might encounter hardships. The political difference is that it's easier to organize resentment against India and China than against technology.
Both Republican and Democratic interventionist like to focus on job losses as they call for trade restrictions, but let us look at what was happening in the 1990s. Cox and Alm report that recent Bureau of Labor Statistics show an annual job loss from a low of 27 million in 1993 to a high of 35.4 million in 2001. In 2000, when unemployment reached its lowest level, 33 million jobs were lost. That's the loss side. However, annual jobs created ranged from 29.6 million in 1993 to a high of 35.6 million in 1999.
These are signs of a healthy economy, where businesses start up, fail, downsize and upsize, and workers are fired and workers are hired all in the process of adapting to changing technological, economic and global conditions. Societies become richer when this process is allowed to occur. Indeed, because our nation has a history of allowing this process to occur goes a long way toward explaining why we are richer than the rest of the world.
Those Americans calling for government restrictions that would deny companies and ultimately consumers to benefit from cheaper methods of production are asking us to accept lower wealth in order to protect special interests. Of course, they don't cloak their agenda that way. It's always "national security," "level playing fields" and "protecting jobs". Don't fall for it -- we'll all become losers.
©2003 Creators Syndicate, Inc.
It's simple ignorance of how economies actually grow that allows these two to be viewed as exclusive alternatives.
In reality, they are steps in a cycle. The American worker is replaced in order to make money. The money that is made from replacing the worker will be invested where it make the most money. The most money is made from a new technology.
The new technology is invented in order to make money. New technology always replaces American workers.
The American worker will be replaced. Without exception. The only question is whether an individual will die or retire before his job is replaced, or after.
The cycle ysed to be longer, so fewer individuals were interrupted by it in their life course, so it was easier to accept or ignore.
The cycle is quicker now (and will only get quicker, no matter what anybody does or doesn't do) and so it throws more individuals out of work before they retire. So there are more jobs lost now, more created, and the same number of lost jobs "lost" as there always were, which is zero.
The only real choices for an economy are:
1. do you want the cycle of displaced workers to be slow or fast?
2. What kind, if any, relief for individuals who lose jobs can you afford or are willing to offer?
There are none. This is a chimera for consumption by the ignorant, and for ideologues who got bad religion mixed into their politics while in the crib.
The only thing that elevates aggregate incomes is increased production.
By definition, you cannot improve an economy by an "institution", unless that institution exists to keep the marketplace free.
All institutions that seem to "keep incomes up" actually just redistribute the incomes artificially and drag the aggregate economy down.
Diminishing returns. There is a very human limit on the speed at which regular humans can acquire new skills, and the acquisition of those skills requires both time and a financial investment.
Now in a perfect randian world, everyone would have A-type personalities and simply work 24/7 inventing things and discovering better ways of doing things. But until the perfect robot is invented, the A-type NEEDS someone to carry out those tasks which he either teaches someone else to do, or which someone else who already has those skills, and so enters the B-type. They guy who will DO the task rather than argue about a better way to do the task.
If the cycle is too fast, the B-type will not be able to compete. Social Darwinism. Fine.
Except that humans, bell curve creatures that we are, don't cease to exist just because they've lost their job due to technology or corporate officer greed.
A deeper human instinct takes over. Survival. And if a human - likely to be a B-type, since the bell curve dictates that most humans cannot by nature, nor education be A-types - sees no opportunity, he or she will turn to vice, or lash out at percieved (rightly or wrongly) enemies.
Again, the rush to third world wages for the masses is a recipe for political disaster - unless as an A-type, one is willing to deny the franchise to the masses.
Either way - socialism via voter backlash, or fascism via franchise denial - it spells the end of the Republic.
We are presently on a downhill road that leads to one of those two forks with a powerful racing engine, bad brakes and a monkey interested only in more bananas at the wheel.
A fundamental economic theorem is that demand goes down as price goes up.
It's called "the law of supply and demand."
Why don't you have your store-bought congressmen repeal it?
In the latter case, it is merely an end-run around the various institutions which exist in order to elevate the incomes in this nation.
Why are you ashamed to admit you are talking about UNIONS?
LOL! You screwed up, dude!
Most of your rant is convoluted crap.
But this is the one statement where you hit the nail on the head.
It's worth repeating with added emphasis:
Automated technology NEVER is implemented unless it is cheaper then the aggregate labor it replaces.
By relocating production facilities offshore where labor is cheaper, transnational corporations AVOID the added capital investment necessary to develop and implement sophisticated, labor-saving automation. With lax environmental and safety standards, they usually also avoid the capital investment requirements that are domesticly necessary for OSHA and EPA compliance.
As I stated previously, globalization is regressive to technological development. Transnational corporatists are essentially pennypinching, technophobic luddites who prefer to profit with slave labor operating antiquated technology.
Your Toyota(Honda, Nissan, etc) was probably built in North America somewhere.
In fact Toyota is opening two more North american plants in the next couple of years.
Unionization of firms as it occurs today is usually a process that works by majority vote and thereby ignores the desires of individual dissenting workers. In the ideal Objectivist society, this forced unionization of workers who may not want to be part of the union would never be allowed as it violates the rights of those workers. In addition, there would be no governmental interference in unionization or in their formalization. Labor unions would be private and voluntary groups of workers, dealing with employers without unnecessary governmental regulations.
Oh, please. Of course there are. They range from the minimum wage to environmental regulations to consumer protection laws to the employment benefits structure. The entire fabric of modern civilization are the institutions which function to elevate the earning & purchasing power of Americans.
The only thing that elevates aggregate incomes is increased production.
Nothing more than a proxy for all the elements which serve to increase production, and thereby elevate incomes. A chimera, if you will, for consumption by those ignorant of all the factors which this elusively simple statement encompasses.
Might I add that the exportation of production reduces domestic production...
By definition, you cannot improve an economy by an "institution", unless that institution exists to keep the marketplace free.
Umm... You have already provided an example of the sort of institution which by your definition improves an economy. Thanks for the self-contradiction, but I don't have the time to ponder the substantive paradox.
All institutions that seem to "keep incomes up" actually just redistribute the incomes artificially and drag the aggregate economy down.
I am mostly neutral on the desirability of income redistribution (as opposed to the advisability). My position is that such issues are inherently little more than value-judgments. I have no great hostility to value-judgments, except to the extent that they are used as a substitute for rational inquiry. My general position on the matter is that our society has already resolved the question in favor of redistribution, even in many cases when people refuse to call it what it is.
The only real debate left is how much redistribution is appropriate and at what level redistribution becomes counterproductive.
My earlier remarks are not intended to address the valuation of the phenomenon, just to state that whatever is is whatever it is. If people feel that it's preferable to emphasize the multinational corporate bottom line over the shielding of the domestic job market, then that is their right. In whatever case, the replacement of jobs via technological advancement is not analogous to the exportation of jobs to lower income societies.
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