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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: sly671; harpseal
If we didn't, all the jobs that could be lost would be gone already.

Wrong. There is obviously an element of 'friction' in the pace of economic dislocation as the capital is re-routed to the newly-discovered opportunity. I.e., the collapse of U.S. employment and capital protections (due to the subversive perversion of the NAFTA treaty, followed by the even more disastrous WTO agreement by Comrade Xlinton overriding our national trade sovereignty), simultaneous with the relatively sudden interest and ability of the great pools of drastically-underpaid labor (China and India) to seek to exploit that capital influx.

This is THE paradigm shift of our times for modern U.S. management. Hence, It is a done deal. Those jobs ARE gone already. In the words of Hollywood: You just don't know you're dead already. The body just hasn't had time to cool yet.

E.g., Another 14 million service jobs are slated to go in less than 6 years. And as the manufacturing expertise of the Chinese 'partners' equals ours then no U.S. manufacturing will be able to resist the black-hole of Chinese wages. If the U.S. dollar didn't collapse first, EVERYthing will 'have' to be made in China.

All that will remain in the U.S. will be government jobs and necessarily local employment...construction, maintenance and service fields (Grocery, Gas Station, and other stores). All manufactures and all relocatable productive activities will be relocated to China. You just continue to refuse to see the National Security elements in trade...which Adam Smith expressly made an over-riding caveat to 'the unseen-hand' in his 'Wealth of Nations'.

261 posted on 12/21/2003 5:54:50 AM PST by Paul Ross (Reform Islam Now! -- Nuke Mecca!)
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To: Taliesan
Unfortunately, you are quite mistaken about what China and India are 'converting' into. They are statist, and remain statist. They may warp from communist to fascist, but either way, that doesn't make them less of a threat. Their populations are not going to be our pals. Quite the contrary. They would gladly war against the U.S. after the degree of nationalist hatred pointed our way by their...and 'our' media.
262 posted on 12/21/2003 6:00:50 AM PST by Paul Ross (Reform Islam Now! -- Nuke Mecca!)
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To: tpaine
Uh, in idealized economic model, greater technology for production creates more jobs. Someone is needed to design, produce, and maintain the machines.

But Outsourcing to competing labor sources merely destroys the employment opportunities for domestic labor. This production diversion can have catastrophic effects on the U.S. economy in the long run. The negative multipliers for a national economy of outsourcing is non-debatable.

263 posted on 12/21/2003 6:04:41 AM PST by Paul Ross (Reform Islam Now! -- Nuke Mecca!)
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To: Paul Ross
If the U.S. dollar didn't collapse first, EVERYthing will 'have' to be made in China.

Imperial Spain had huge reserves of New World gold so she could play outsourcing game for quite long. Read about Spanish decline.

264 posted on 12/21/2003 6:16:49 AM PST by A. Pole (pay no attention to the man behind the curtain , the hand of free market must be invisible)
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To: laredo44
Colorful imagery aside, your post is an excellent example of communist sophistry.

While not willing to protect your nation's citizens...or the laws that protect the U.S....yourself, you are more than willing to see to it that your fellow taxpayer is duped into having to subsidize the Chinese out-sourcing cyclone with U.S. IMF monies.

265 posted on 12/21/2003 6:26:04 AM PST by Paul Ross (Reform Islam Now! -- Nuke Mecca!)
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To: Paul Ross
End of true capitalism, by virtue of handing the entire means of production to those who are essentially lawless and implicitly reject our system and laws.

America has now arrived at the dead end of the philosophy which preaches that brute labor is to be respected, but brainpower is worthless.

American brainpower designed all the machines and processes which make it possible for third-world countries to put us out of business.

And we gave all that knowledge away for free.

266 posted on 12/21/2003 6:29:06 AM PST by snopercod (I'm stranded all alone in the gas station of love and have to use the self-service pumps - Wierd Al)
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To: E. Pluribus Unum; harpseal
Spoken like a true union thug.

EPU: Seems like you're moniker is a misnomer. With divisive and disrespectful commentary like this, it should instead be E. Unum Pluribus. Yet another communist thug trying to divide and conquer America. "Pay no attention to those National Security issues...! It's all a filthy protectionist trick!"

267 posted on 12/21/2003 6:34:15 AM PST by Paul Ross (Reform Islam Now! -- Nuke Mecca!)
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To: lelio
The foreign car plants located in the USA were due to the protectionist quotas that Reagan implemented. So it is not a true example of 'jobs coming back' that the Free Traitors would have us believe.
268 posted on 12/21/2003 6:39:28 AM PST by Paul Ross (Reform Islam Now! -- Nuke Mecca!)
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To: Paul Ross; Willie Green
"Finding cheaper ways to produce goods and services frees up labor to produce other things."
-Walter Williams-





Yep. Labor saving technology is developed in response to costly, labor intensive production methods.

So what's your point, Walter?
Did you forget that globalization is a regressive force that acts against technological development?
It continually substitutes ever cheaper labor to undermine development and implementation of more sophisticated (and expensive) automated technology.
Go back to watching the Oprah Show, Walter. Quit pretending that you're a "conservative" economist. Heck, you might as well quit pretending you're an economist of any type, for that matter.
-Willy-





Willy, instead of bashing Walters logic, think about your own as regards to tech development..

Such development is a fact of life. - 'Slave labor' in manufacturing is dying out as it becomes cheaper to automate technology than to feed, clothe, & house the slaves.

Go back to watching the Oprah Show, Willie, until you formulate a rationale of your own on how we will deal with surplus workers in a high tech world. -- Can you even address the problem?
143 tpaine






Uh, in idealized economic model, greater technology for production creates more jobs. Someone is needed to design, produce, and maintain the machines.

But Outsourcing to competing labor sources merely destroys the employment opportunities for domestic labor. This production diversion can have catastrophic effects on the U.S. economy in the long run. The negative multipliers for a national economy of outsourcing is non-debatable.
263 -Paul Ross-






"in an idealized economic model"?

Seems that neither you, nor willy, can address the real world problem.

How will we deal with surplus workers in a high tech world.?

269 posted on 12/21/2003 6:41:24 AM PST by tpaine (I'm trying to be 'Mr Nice Guy', but FRs flying monkey squad brings out the Rickenbacker in me.)
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To: Paul Ross
The foreign car plants located in the USA were due to the protectionist quotas that Reagan implemented. So it is not a true example of 'jobs coming back' that the Free Traitors would have us believe.

EXACTLY! I remember how hard Reagan fought for American jobs.

270 posted on 12/21/2003 6:44:06 AM PST by A. Pole (pay no attention to the man behind the curtain , the hand of free market must be invisible)
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To: AntiGuv
BUMP! Well said.
271 posted on 12/21/2003 6:47:52 AM PST by Paul Ross (Reform Islam Now! -- Nuke Mecca!)
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To: Willie Green; A. Pole
globalization is regressive to technological development. Transnational corporatists are essentially pennypinching, technophobic luddites who prefer to profit with slave labor operating antiquated technology.

Astute observation, Mr. Green. And one that may be built on, I think For example, the financiers throw jobs to Inida claiming they can not be filled here be quality workers, when that is most assuredly not true. And where India is demonstratedly no great leading technological innovator -- its railway system shows that India has many strengths, absolutely, a wonderful, warm and smart people they are! Yet, AMERICA is where techonological innovation is incadescent -- every minute of the American History shows that.

Why throw the money to a place where its long return will be hundreds of times, thousands of times less than it would be if invested state-side? Because -- you called it -- they fear change!

One of India's strengths is its inertia, its dampening of radical changes, taking them in slowly and digesting them. Their product is fine and pretty, but slow. Silk and not rayon. Delicate tapestry and not broadloom. That slowness, that inertia, that resistance to innovation, to the dreaded *Change* is what has brought the eye of the greedy, the greedy yet fearful to the bones of change to India.

The modern King Luddites seek a Principality to Rule. Like the Victorians (same mindset they had), they have found it in India.

It is time for us to throw off those neo-Victorian Luddites, and develop rascally and novel ways of financing innovative industry, manufacture business here, outside the range of operation of those fiat money Princes and Federale Legislators.

272 posted on 12/21/2003 6:50:57 AM PST by bvw
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To: nopardons; riri
In fact, we ARE "giving away" the jobs through legerdemain: the USA subsidizes foreign direct investments through various guarantee programs and indirectly through the IRS code provisions having to do with where income is earned, etc.

As to your point about "jobs moving" all the time--it certainly is not the case that Europe has abandoned manufacturing. Look at the CIA "Factbook" numbers on manufacturing as a percentage of various national GDP's and you will find that in the First World, the USA has the LOWEST percentage (18%); the average is 27%.

Must be those Europeans are all making buggy whips.

The point is: howcomeizzit that all those Europeans RETAIN manufacturing through policy, and the Chinese are FIGHTING for all those manufacturing jobs through whatever means--and the USA doesn't seem to get it?

Maybe the multinationals have really, really good lobbyists?

Duuuhhhhhh.
273 posted on 12/21/2003 6:56:38 AM PST by ninenot (So many cats, so few recipes)
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To: Paul Ross
Health Care will remain.

Former CPA's and IT pros will become bedpan-cleaners.
274 posted on 12/21/2003 7:01:57 AM PST by ninenot (So many cats, so few recipes)
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To: syriacus
Actually, the Smoot-Hawley tariff is getting a bum-rap. Even Milton Friedman has more or less admitted it.

Other factors played a bigger part: You have already noted appropriately the negative role of the confiscatory policies of FDR discouraging investment.

And then there were other discouragements and obstacles: U.S. capitalists had gotten sucked into Russia in 1925-1930 by Lenin, under his 'New Economic Program' when he pretended that he was abandoning communism...if the West would just, pretty please, finance the start of modern capitalism in his country. When these billions of U.S. and Western capital was ultimately nationalized at the end of the sucker play, a lot of the companies...including Ford which got burned really bad, no longer had the ready capital wherewithal to reinvest and innovate in the U.S. This contributed heavily to the stagnation of the U.S. economy post-crash...

The stock market crash also did dry up a lot of venture capital. This is not a leftist or rightist fable. It's facts that both Dow and IBD would corroborate. A number of stock prices 'came back' (as monies gravitated to the safe haven of the 'blue chips') but the over all effect was a drastic contraction of overall capital available for new issues.

275 posted on 12/21/2003 7:03:40 AM PST by Paul Ross (Reform Islam Now! -- Nuke Mecca!)
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To: optimistically_conservative
You can't rely on unemployment charts at all --- especially not comparisons between years --- the Clinton administration changed the way unemployment is reported --- employment used to mean a full job but Clinton changed it to mean any job at any number of hours. You can work part time for $5.15 an hour with no job benefits at all and receive government housing, food stamps, CHIP and many other welfare programs and you are counted as employed.

Also unemployment statistics don't count the other unemployed --- those receiving welfare and who aren't working at all, or those receiving SSDI --- which include many able-bodied working age people.
276 posted on 12/21/2003 7:06:32 AM PST by FITZ
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To: bvw; Willie Green; Paul Ross
Pennypinching, yes.

Take a quick look around and show me which organizations actually invest in their WORKERS--re-training COBOL coders to C/C++/Java, for example.

It's far cheaper to throw them away...

To its credit, GE still maintains an excellent training program for its entry-level white-collar employees; but it does NOT maintain (nor do many others) re-training programs for high-salaried individuals who need 'refreshed' tech. skills...
277 posted on 12/21/2003 7:07:46 AM PST by ninenot (So many cats, so few recipes)
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To: optimistically_conservative
How many people combined --- from all the many welfare programs, the NAFTA displaced worker welfare programs, plus the officially unemployed are there? Has government social program spending (federal and state) been cut because of the high employment? That would be a better measurement.

278 posted on 12/21/2003 7:09:09 AM PST by FITZ
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To: Paul Ross
Unfortunately, you are quite mistaken about what China and India are 'converting' into.

People have become very naive about what China is. The Chinese stealing documents and computers --- Los Alamos --- was seen as a problem during the Clinton administration --- they never changed their government but now we believe they are the most trustworthy friends we as a country could ever have. Chinese labor is so cheap because it is Communist labor. China is our enemy since the day it became Communist.

279 posted on 12/21/2003 7:17:21 AM PST by FITZ
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To: tpaine
Go back to watching the Oprah Show, Willie, until you formulate a rationale of your own on how we will deal with surplus workers in a high tech world. -- Can you even address the problem?

The Jerry Springer show would be better --- what do we do with the former assembly line workers --- and don't say they can all become health care workers or inventors.

280 posted on 12/21/2003 7:21:17 AM PST by FITZ
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