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Jobs Come and Go (One of the smartest economists in the world hits the nail on the head)
www.townhall.com ^ | 11/26/2003 | Walter E. Williams

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.


TOPICS: Business/Economy
KEYWORDS: trade; walterwilliams
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To: William Terrell
The problem is that the self-reliant type in Sri Lanka doesn't pay US taxes. He doesn't:

A lot of the problem too is that employing that self-reliant guy who can live off 5c a day and still manage to save 3c a day is that he won't have to pay our high income taxes, no Social Security tax, no FICA, Medicare tax --- including that free drugs for elderly and free health care for the citizens of Mexico that has been added. No expensive workman's comp, no OSHA regulations.

The welfare queen whose only skill is producing babies of men she doesn't know will have to have extensive job training, she'll likely demand free day care and of course her living expenses are much higher than 5c a day even without the cable televisions, cell phones, etc.

221 posted on 12/20/2003 9:39:51 AM PST by FITZ
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To: LoneRangerMassachusetts
On the contrary, thereis a ton of work that can be done with only an AS degree. I know

Also, up here in Ct, we have a glut of Engineers, me being one of them, only an AS, but 7 years experience as project engineer/designer.

The issue is not lack of engineers, it is lack of jobs.
222 posted on 12/20/2003 9:41:44 AM PST by RaceBannon
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To: Mick2000
GREAT FIND!!!
223 posted on 12/20/2003 9:43:14 AM PST by RaceBannon
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To: MonroeDNA
I am an engineer who never made more than 44K a year, I would lie to see just how I got laid off for being over paid...
224 posted on 12/20/2003 9:46:24 AM PST by RaceBannon
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To: A. Pole
You hit the nail on the head. The problem was that Nehru shared the same economic views that held the ENGLISH back until the 1980s and which have retarded the growth of western Europe.
225 posted on 12/20/2003 9:47:26 AM PST by RobbyS (XP)
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To: sly671
bump
226 posted on 12/20/2003 9:51:06 AM PST by paul51
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To: syriacus
Reading all posts with interest.
227 posted on 12/20/2003 9:53:15 AM PST by Ciexyz
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To: optimistically_conservative
Those smart unemployed or underemployed techies will need to innovate the next technology or use their skills to innovate a new product.

But the problem is -- when a programmer gets laid off he still has a family to feed, a mortgage to pay. He might make ends meet by working two jobs --- maybe a $6 an hour job at Walmart and a $5.15 an hour job at McDonalds --- but that isn't going to leave him much time to innovate new products. Anyhow the new products would be sent to India because the labor is much cheaper there.

228 posted on 12/20/2003 9:58:23 AM PST by FITZ
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To: On the Road to Serfdom
http://bastiat.org/en/petition.html

Good one!
229 posted on 12/20/2003 10:07:23 AM PST by Ciexyz
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Comment #230 Removed by Moderator

To: E. Pluribus Unum
The one thing that all of the "various institutions" have done consistently, with increasing cooperation and effectiveness, is to block the development of breakthrough technology embodying actual solutions to problems whenever they can. Perhaps they are looking back to the "Celebrated Montesquieu," who bewailed the widespread adoption of the water driven grist mill, so new in his time, that was enabling the grinding of so much grain and displacing the employment of so many who had been grinding it by hand.
231 posted on 12/20/2003 10:27:13 AM PST by AmericanVictory (Should we be more like them, or they like us?)
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To: FITZ
He might make ends meet by working two jobs --- maybe a $6 an hour job at Walmart and a $5.15 an hour job at McDonalds --- but that isn't going to leave him much time to innovate new products.

Our society values secular politics and secular capitalism. This has not changed significantly over time and are components of carburetor that feeds our social engine. What has changed is that the engine works best when the same people that value this secularism in these societal components also value their own individualism and hold dear a compassionate, charitable, humanist belief system.

The boomer generation ridiculed and demonized the traditional sources of that belief system, choosing instead either an "if it feels good, do it" system on one extreme or a collectivist, secularist, extortionist system "for the common good" (or "for the children") system. Both belief systems choke the air intake of the social engine.

I think that's what I find troubling in the protectionist and socialistic posts that often appear in these threads.

Anyhow the new products would be sent to India because the labor is much cheaper there.

No, the products may be manufactured there, but the entrepreneur and perhaps employer would remain here. The products would also likely be sold here as well as elsewhere.

232 posted on 12/20/2003 10:28:56 AM PST by optimistically_conservative (Clinton's Penis Endorses Dean: Beware the Dean Mujahideen)
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To: ZGuy
Walter Williams' FReeper name is sly671.

Nobody else on Earth regards Williams as all that bright.
233 posted on 12/20/2003 12:25:49 PM PST by ninenot (So many cats, so few recipes)
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To: SpaceBar
NewsFlash!!!:

Williams is tenured; he's not getting replaced, no how.

That's why he has no concerns for the rest of the world. whether manufacturing, manufacturing R&D, or IT, or CPA-type professionals, ALL of whom are getting downsized and re-emerging as greeters at ChinaWal-Mart
234 posted on 12/20/2003 12:28:52 PM PST by ninenot (So many cats, so few recipes)
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To: kimoajax
Dead-Nuts ON!!

The economists who yap about the Free Market generally ignore the 'conditions' which exist--in the USA, high regulatory and tax costs as opposed to other countries.

They also ignore the political aspects--e.g., the lobbying of Fortune 100 firms which allows them to insert language in trade, tax, and immigration bills favorable to them, and them only.

They also ignore the existence of such things as the State Department, which has its own input into which countries get MFN status, and the language of such things as NAFTA and CAFTA (coming soon to destroy YOUR job...)

Some economists ignore 'conditions' because the results will not come out the way they want them to. Others ignore them because they are ignorant. In short, they are intellectually dishonest or stupid.

Take your pick with Williams.
235 posted on 12/20/2003 12:34:52 PM PST by ninenot (So many cats, so few recipes)
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To: Cicero
You are free to move to China to get a job, I suppose, but the difference is that you would have to live in a Communist state with no freedoms, or possibly even move to a labor camp and risk having your body parts sold to the highest bidder. That's because China does not share our political system or economic system.

Close, but not quite.

The American 'system' is built on a Judaeo-Christian concept of man, which accords a fundamental dignity to man per se.

The ChiComs have a different theology--that is, they have NO theology; thus man, like animals, is another critter to be used/abused as the State sees fit.

236 posted on 12/20/2003 12:37:42 PM PST by ninenot (So many cats, so few recipes)
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To: Mick2000
Well, that was 1996, and this is now.

FDI in China has increased substantially since 1996, and continues to do so every year.

Further, China has MFN status--not enjoyed by the countries in Africa which you mention.

MFN was granted by Clinton, abetted by Newtie, another college prof, btw.
237 posted on 12/20/2003 12:41:26 PM PST by ninenot (So many cats, so few recipes)
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To: cyclotic
Just be careful when learning from Williams that you don't take too seriously his worship of Capital in the Libertarian mode.

That would put you at serious odds with your pastor, in whatever church you attend.
238 posted on 12/20/2003 12:42:59 PM PST by ninenot (So many cats, so few recipes)
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To: lelio
Since when did Consumerism become the yardstick bywhich we measure everything?

What's being advocated is Pure Capitalism, which masquerades as Consumerism.

Pure Capitalism places capital--money--where man should be. All rights accrue to capital, not to man.

Actually, it's not all that different from the Red Chinese system--except there, it's the State, not Capital.

239 posted on 12/20/2003 12:46:51 PM PST by ninenot (So many cats, so few recipes)
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To: A. Pole
You mean that "post-hoc/propter-hoc" doesn't apply the way Williams, the world's smartest economist, wants us to believe?
240 posted on 12/20/2003 12:49:09 PM PST by ninenot (So many cats, so few recipes)
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