Skip to comments.Thomas Sowell: Manufacturing confusion
Posted on 01/15/2004 6:50:24 AM PST by xsysmgr
"Manufacturing jobs" has become a battle cry of those who oppose free trade and are sounding an alarm about American jobs being exported to lower-wage countries overseas. However, manufacturing jobs are much less of a problem than manufacturing confusion.
Much of what is being said confuses what is true of one sector of the economy with what is true of the economy as a whole. Every modern economy is constantly changing in technology and organization. This means that resources -- human resources as well as natural resources and other inputs -- are constantly being sent off in new directions as things are being produced in new ways.
This happens whether there is or is not free international trade. At the beginning of the 20th century, 10 million American farmers and farm laborers produced the food to feed a population of 76 million people. By the end of the century, fewer than 2 million people on the farms were feeding a population of more than 250 million. In other words, more than 8 million agricultural jobs were "lost."
Between 1990 and 1995, more than 17 million American workers lost their jobs. But there were never 17 million workers unemployed during this period, any more than the 8 million agricultural workers were unemployed before.
People moved on to other jobs. Unemployment rates in fact hit new lows in the 1990s. None of this is rocket science. But when the very same things happen in the international economy, it is much easier to spread alarm and manufacture confusion.
There is no question that many computer programming jobs have moved from the United States to India. But this is just a half-truth, which can be worse than a lie. As management consultant Peter Drucker points out in the current issue of Fortune magazine, there are also foreign jobs moving to the United States.
In Drucker's words, "Nobody seems to realize that we import twice or three times as many jobs as we export. I'm talking about the jobs created by foreign companies coming into the U.S.," such as Japanese automobile plants making Toyotas and Hondas on American soil.
"Siemens alone has 60,000 employees in the United States," Drucker points out. "We are exporting low-skill, low-paying jobs but are importing high-skill, high-paying jobs."
None of this is much consolation if you are one of the people being displaced from a job that you thought would last indefinitely. But few jobs last indefinitely. You cannot advance the standard of living by continuing to do the same things in the same ways.
Progress means change, whether those changes originate domestically or internationally. Even when a given job carries the same title, often you cannot hold that job while continuing to do things the way they were done 20 years ago -- or, in the case of computers, 5 years ago.
The grand fallacy of those who oppose free trade is that low-wage countries take jobs away from high-wage countries. While that is true for some particular jobs in some particular cases, it is another half-truth that is more misleading than an outright lie.
While American companies can hire computer programmers in India to replace higher paid American programmers, that is because of India's outstanding education in computer engineering. By and large, however, the average productivity of Indian workers is about 15 percent of that of American workers.
In other words, if you hired Indian workers and paid them one-fifth of what you paid American workers, it would cost you more to get a given job done in India. That is the rule and computer programming is the exception.
Facts are blithely ignored by those who simply assume that low-wage countries have an advantage in international trade. But high-wage countries have been exporting to low-wage countries for centuries. The vast majority of foreign investments by American companies are in high-wage countries, despite great outcries about how multinational corporations are "exploiting" Third World workers.
Apparently facts do not matter to those who are manufacturing confusion about manufacturing jobs.
Sowell food--for thought.
Let me get in one comment before the usual fists start flying...
I think the real new thing here is the increasing velocity of job dislocation as technology marches on.
So the effect is a compression of what used to happen over 100 years into 5 years' time.
Which means that a generation ago, you held one job for 40 years -- not because the process we are observing now was not happening then, but because it was happening at a glacial pace. So most people wouldn't be touched by it in their working life.
It's not that anything new is happening in the American economy. It's just happening much quicker, so we feel it now. And the velocity will only increase.
You can't have a $500 billion trade deficit am tell us we are gaining jobs - not gonna drink that Kool-aid.
Thomas Sowell vs you.
The high level intellectual discussions one finds on FR simply amaze me.
I saw this happen in my first career. The phototypesetting industry gave way to the PC/Mac revolution, and the one-man business I had nurtured with such care went bust almost literally overnight. I was able to jockey the few computer skills I had as a typesetter into a position in the IT business (networking). A generation before, hot-metal typesetters had seen their careers lost to the cold type process. Before that, hand-set type lost out to hot metal. It's a never-ending process, and there's little sense in railing about the injustices of life.
So, just as prairies
get strip-mined, populations
get cut up and used...
No offense intended, but I think the difference between you and Sowell is that while Sowell is a fool, he understands that he's a fool. You're analyzing the situation as if you truly believed you are capable of understanding every element of free market dynamism and forming a reasoned opinion based on that understanding. Sowell knows that this is impossible, because market forces are too complex and varied for the human understanding to account for them all at one time. Therefore, he predicates his analyses on broad principles that have been observed over time in the real world.
Milton Friedman used to illustrate this by asking his readership whether, solely on their own initiative, they could produce a common pencil. It seems simple, of course, but once Friedman is finished, you're inclined think otherwise.
NOUN: 1. One who is deficient in judgment, sense, or understanding.
I don't think Sowell is a fool.
Those who are railing about sending our jobs overseas simply do not understand the revolution we are in the middle of. "Globalization" has many shades of meaning, depending on who is ranting at the moment. But the root phenomenon is technological; technology (computer and broadband) is driving everything we are seeing. The debate at the political level is a reflection of the anguish at the grassroots level which is, in turn, a simple effect of the ongoing information revolution, which will not peak.
"Globalization" is inevitable. It cannot be stopped. It is, at the root, science in the service of wealth, which is itself just a symbol for comfort. This is not a moral position, nor a political position. It is simply an observation. Technological advance can be paused, but it cannot be arrested.
I do note that the picture of the world system at the end of time in the Revelation of St. John is of a single system, based on trade and commerce, which has subsumed all other values, including all political divisions. This one world system traffics in every thing, including "men's souls".
You don't have to be an evangelical prophecy loon to observe the teleological force of the information revolution is to subsume EVERYTHING under the power of technology-seeking-wealth.
It will happen. It is happening. It is Man, imposing the condition of his heart onto his external world, inexorably, over the course of 5,000 years, and it was observable in seed form in Palestine in 30 A.D.
End of sermon. Resume your tired perennial debates.
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