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

[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.

[XBob]

266-"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."

so true SC

[XBob]

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

starve them to death?

[XBob]

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

starve them to death!

Yes, that's it - it's every man for himself, and they should have known better than to be born into a high tech world.

[ninenot]

Yup. It's no secret to Willie, Fitz, APole & others that taxes and regs are killing industry.

But only the larger firms ($50MM+ sales or so) are able to finance an escape to other countries without too much trouble.

It's the small businesses we worry about most.

BTW, managed to open the PDF study on temps. Most interesting finding they had was that the use of temps artificially enhances "productivity" numbers. I shoulda thunka that...

AND--the use of 'temps' has grown immensely since 1992. A little research will tell us which major reg package was shoved through around 1990-1992 that caused THAT problem.

[XBob]

273-"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?"

we have too many lawyers here.

[FITZ]

I would love to be so 'rich'.

Me too. It's interesting how people define poverty and wealth today. If someone has a Lexus, 3 color televisions with cable, and all that --- everyone wants to call them wealthy --- but I think you have to compare your assets (real assets --- not things you bought) with your debts and of course if you have anything left of your income after you've met your needs. It seems like a lot of people ---- and our country is living way too much in the red. I know of people who had very high incomes who ended up declaring bankrupcy and yet many people with low incomes manage to always stay in the black.

[XBob]

277 - "To its credit, GE still maintains an excellent training program for its entry-level white-collar employees"

Yes, they are pretty good, if you speak Chinese, which is where all the GE products are now made.

[ninenot]

Property rights are a subset of human rights.

Those "other countries" do not recognize human rights--how could they possibly recognize property rights?

You may think I'm nuts--my wife does--this is a religious thing. Only the Judaeo-Christian tradition supports human rights and their subsets.

Religions which believe in 'reincarnation' or 'when you're dead you're dead' are simply not conditions which support our concepts.

[ninenot]

Not all. Most of the appliances are made in Mexico.

[texastoo]

This man is a genius. Every article he writes just explains the topic of interest so well and so truly.

I wish he would just explain my phone bill to me as it is alot higher than in the 1970s. Even with low long distance charges, the bill is much higher. If all of you were to be honest, you would have to agree our bills went up with the lower long distance rates.

Pardon me as I am not impressed with this article.

[XBob]

348 - "Property rights are a subset of human rights."

Read it again. I was referring to the concept of 'intellectual property'.

Property rights are pretty well, commonly understood, though not totally.

Like, as I found, if I had a 7 shirts hanging out on a wash line, drying, one could be 'honorably' stolen, while if I had only one hanging out on the line it would not be stolen. You see, with 7, I had more than I needed, so it wasn't really stealing.

But the concept of 'intelectual property' was univerally not understood.

[XBob]

All my GE appliances, my fan, my coffee maker, my toaster, and my crock pot are made in China. My non-GE keyboard and non-GE tevlevision are made in Mexico.

My west-bend frying pan is made in the US. (Wow- how did that happen - OH, it's 10 years old).

[XBob]

CEO's Marital Duties Outsourced To Mexican Groundskeeper
the onion


GROSSE POINTE, MI—As part of the ongoing trend toward replacing U.S. workers with foreign labor, the marital duties of United Carborundum CEO Howard Reinhardt have been outsourced to his Mexican groundskeeper, industry sources revealed Monday.

"It was time for a change," said Reinhardt's wife Melanie, who has been married to the CEO for 17 years and has conducted her sexual business almost exclusively with him since 1984. "While I was generally satisfied with the level of servicing that I received under Howard, it was my feeling that a younger, more aggressive hand on the tiller might bring some new ideas into play. No matter how mutually satisfying the old deal was, its time had passed."

Although specific terms of the arrangement have not been made public, Melanie allowed that she has been "very pleased" by the new supplier—Jorge Escobedo, a 26-year-old gardener from Sierra Mojada who has been working in the U.S. since February.

"The switchover was seamless, considering how rapidly the deal was closed," said Melanie, who initiated the informal arrangement with Escobedo on Nov. 20, while he was cleaning the equipment shed. "Well, in truth, I was considering a move in this direction for some time, and looking into possibilities. Then Jorge offered me a very attractive package, and I decided it was in my interest to act. I've been very pleased with his initial performance."

Melanie said Escobedo beats her former provider in availability, reliability, and turnaround. He also requires minimal emotional investment from Melanie, who is the sole receiver of the goods under the new arrangement.


Above: Hardworking groundskeeper Jorge Escobedo and his employers, Howard and Melanie Reinhardt.
Melanie offered few details on the ins-and-outs of the deal, but she did report that the outsourcing is limited to Reinhardt's marital duties. All previous supply arrangements with Reinhardt, including those pertaining to housing and finance, are still very much in effect.

"This isn't some sort of challenge to the American workforce as a whole," Melanie said. "I'm just sending the jobs where they're going to be done most efficiently. The acquisition of houses, automobiles, and clothing will all still be in Howard's wheelhouse, but groundskeeping and plowing are now to be managed by Jorge. It just makes sense."

Melanie said the outsourcing is a direct response to the expansion of Reinhardt's duties at United Carborundum.

"Howard is simply too busy to personally keep track of every detail of the marital union," Melanie said. "As long as he's available when he's needed—major Reinhardt-family gatherings and the United Carborundum holiday ball—I'm happy to have someone else's input day-to-day."

The Reinhardt household has been moving toward a more modular operation for years now. Laundry duties are handled by a small Chinese concern; child-rearing and education are performed by a live-in salaried Irish employee; and a loosely organized, rotating consortium of Italians, Japanese, and Greeks handles food service. The sexual-services agreement, however, marks the Reinhardts' first use of highly skilled foreign manpower.

The news of the outsourcing was met with little surprise in the greater Detroit area, where community members are used to seeing hard-won jobs go to foreign labor, and are aware of cooling relations in the Reinhardt household.

"This proposal might not be the win-win situation that Melanie is projecting," said Philip Johannsen, business writer for the Detroit Free Press. "But it's going to be tough for Howard to say he didn't see it coming. When it came time to find a groundskeeper, he delegated the crucial domestic-hiring decision to his wife. He knows she's a very proactive person, so it shouldn't surprise him that she took the initiative to shore up areas of the household where she saw standards slipping."

"If American executives are not willing to shoulder the increased personal investment of time and energy required to keep the jobs in-house, globalization is just something they're going to have to accept," Johannsen added.

Howard Reinhardt was unavailable for comment, as he was scouting locations in Oaxaca for a boron-nitride factory.

[Taliesan]

Gee, the protectionists here must have been doing something right.

You're assuming that the difference between us and the other countries you mention is due to protectionist measures of the past.

[Taliesan]

Now, just how many Florida oranges is that Bengladeshi going to buy, who has had his hourly wage doubled, from 5 cents to 10 cents per hour, when Florida Oranges cost $1.00 each in Bengladesh?

None.

[ninenot]

Intellectual Property is subject to "property rights" as is your land, car, and house.

Same concept. Socialists will not get it.

As to excessive property--in the Jud/Christian tradition, it is NOT up to those in need to, ah, re-appropriate the items. It IS an obligation of the owner to charitably utilize the property. IOW, if you have 7 shirts and someone is naked, you damn-near-automatically hand him one or two of your shirts.

[Paul Ross]

Obviously trading with the enemy is not "liberty" its treason. Communist apologist.

[Paul Ross]

Another key mistake by Hoover was his monetary retrenchment policy, which made it impossible for new activity to be financed...and which then opened the door for his successor FDR's attempt to supplant private investment with governmental.

[XBob]

356 - "Intellectual Property is subject to "property rights" as is your land, car, and house.
Same concept. Socialists will not get it. "

You missed my point. 3rd world thinkers do not get it! period. In my many years overseas, I did not find a single one who understood the value of 'intellectual property' without a great deal of explanation. And in fact, many never understood, no matter how much we talked.

And they don't understand that this is the concept which has made America 'rich'.

[XBob]

356 - "As to excessive property--in the Jud/Christian tradition, it is NOT up to those in need to, ah, re-appropriate the items. It IS an obligation of the owner to charitably utilize the property. IOW, if you have 7 shirts and someone is naked, you damn-near-automatically hand him one or two of your shirts."

Again, you mis-understand.

In our culture, if you have more than you need, and someone takes it, it is still stealing, whether they are in need or not. However, in many other countries, it is not considered stealing. The definitions are different.