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.
My argument is that it is patently bad economics to protect jobs. Obviously bad economics. Always has been, always will be.
Now there may be other reasons to do it. National security is one, stemming from the fact that the lines around political entities (nations) do not coincide with the lines around economic ones (markets) and the market may need to be distorted to protect the nation. Nothing wrong with that argument.
But that is a political argument, not an economic one. My beef is with the people who argue that it is better ECONOMICS to protect jobs. This is like arguing the world is flat. It has long since been settled.
It's the old adage, nothing is impossible for the man who doesn't have to do it himself. When you can look forward to working in your chosen profession until you retire (i.e., "guaranteed a job", as some here like to rant), it's easy to tell others to adapt or screw 'em, or quit whining and start a business, or get retraining in your late 50s, or whatever.
Give me an example of "exporting jobs."
I'm referring to an array of legal, economic, and social institutions that are much, much broader than collective bargaining.
Give me an example from your array of "legal, economic, and social institutions that are much, much broader than collective bargaining."
Workplace safety laws such as requiring fire escapes, fire suppression, etc. incurred costs to companies, but the savings in insurance and from lawsuits has more than made up for the initial pinch, not to mention creating entire new industries which put more people to work, resulting in more revenues, resulting in the very public infrastructure upon which those companies came to rely.
Morals and economics are a good mix. How many lives and dollars are saved because clean water laws and anti dumping laws prevent diptheria and cholera?
My argument is that it is patently bad economics to protect jobs. Obviously bad economics. Always has been, always will be.
Then why are American companies rushing to protect jobs in India and China, rather than investing in the new labor saving technology that would open new doors and create new industries to fill the demand domestically?
Now there may be other reasons to do it. National security is one, stemming from the fact that the lines around political entities (nations) do not coincide with the lines around economic ones (markets) and the market may need to be distorted to protect the nation. Nothing wrong with that argument.
When you underemploy a population, you lose tax revenue to fund the military. You then must either run a huge deficit or raise taxes in the short term. People with lowered wages paying more in taxes become restless and rebellious. Bad news for all the Mme Antionette's out there. Civil war is bad for national security.
But that is a political argument, not an economic one. My beef is with the people who argue that it is better ECONOMICS to protect jobs. This is like arguing the world is flat. It has long since been settled.
Rather it is the mercantilists that protect foreign jobs on the American taxpayor's dime, and then spout economic theory, wrongly and hypocritically, as "proof" to defend the indefensable.
On the other hand, neither you nor anyone else can prove they have resulted in "more" jobs or revenues than if they did not exist. That is just dimwittedness.
Morals and economics are a good mix. How many lives and dollars are saved because clean water laws and anti dumping laws prevent diptheria and cholera?
You simply don't understand my point. Morals and economics do not "mix" at all. They are simply two comonents of a good society. And of course lives are saved by these laws, and that is a moral end, and it is neither good economics nor bad to tell a firm it must pay the costs (including criminal costs) of its product. It's just economics, which, in these cases, is also moral.
American companies are indifferent to jobs in India and China. Some are rushing to employ people in those countries because they will work cheaper. They would employ Antartic penguins if they could get them for a loer hourly rate.
They will invest in new technology when the cost of that investment is less than the labor cost. When the labor is cheaper, they will spend the money on the labor. What they save by buying the labor will go to the shareholders, who will invest it in technolgy. But you might have to think deeper than the surface to follow that thread.
When you underemploy a population, you lose tax revenue to fund the military. You then must either run a huge deficit or raise taxes in the short term. People with lowered wages paying more in taxes become restless and rebellious. Bad news for all the Mme Antionette's out there. Civil war is bad for national security.
Fortunately, economic theory is converting economies all over the world to capitalism, protectionist walls to trade are falling all over the world, "foreign jobs" are becoming available to American corporations in greater and greater numbers, and all this generates more and more wealth for Americans.
Good luck with your civil war. Man the ramparts, and all that. Maybe you should invest in a pitchfork factory. Or, better yet, just buy pitchforks from China, and spend the savings on bullets.
Socialists?
It's up to the individual to figure out how to make a new living. No sugar daddy is going to offer someone a nifty new job simply because they blame their job loss on some evil entity.
You might be happy to walk through snow to get to your McDonalds job. I don't work at a McDonalds and am lucky to have 2 jobs and I'm not having to live in a car and I do have a pretty nice home.
Two people aren't what matters ---- just watch Jerry Springer someday --- both the guests and the audience ---- you'll realize that there are people who can't finish college, can't find make a whole bunch of choices --- look at the bell curve and the average IQ of 100 ---- for everyone with an IQ of 120, there is someone with an IQ of 80, for everyone with an IQ of 130, there is someone with an IQ of 70. They need jobs or they all end up being supported by the rest of us --- and with all their free time living on welfare, they will tend to out-reproduce the over 100 IQ types.
I've never been homeless ---- but I don't think the issue is even homelessness ---- most of our welfare populations aren't homeless at all. I do consider it lucky that I am in the population that can have choices and jobs --- more than I even need ---- if we head into a two-tiered society like they have in all the third world countries --- some of us could hope to make it to the elites and live nicely enough --- for a while --- but what about the masses? What happens when we're a country like Mexico and facing a Revolution? There might not be a place for us to flee like they have now. We shouldn't be so eager to give up the country our Founding Fathers had in mind.
Who's taking the x-rays?
Even in the worst of the Depression, the majority of people still had jobs --- I've read that joblessness was 20-30% ---- but I think ours is that now if you add unemployment in with welfare rates and SSDI rates ---- which were very low in those days. Welfare rates are over 35% in the region I'm in ---- and over 50% in some counties along the border now. That's worse than Great Depression statistics.
Whoop, too late.
Except that machines are cheap and cheap foreign labor isn't at all cheap. Machines don't have babies that cost the taxpayers $10,000 each every year, they don't require food stamps, free taxpayer provided health care, they aren't jamming the emergency rooms. Machines don't require any taxpayer money.
If foreign labor was a factor in productivity --- then Mexican farms would be doing very well because labor costs less than $4 a day there and is 8 to 10 times that for the same worker in the USA. Mexican farms can't compete against mechanized American farms --- in spite of very cheap labor.
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