Posted on 05/13/2007 6:19:03 AM PDT by mom4kittys
Alan Blinder's glittering career Ben Bernanke: another Princeton prof The turbocharged Indian economy
'You're on my list, you journalists," says Alan Blinder, eyeballing me. Oh dear. Barely 10 minutes with the economic sage and he's already warning me that I might be out of a job. The list in question is sitting ominously on the table between us like a silent exclamation mark. On it are ranged hundreds of occupations which he thinks could be obsolete in developed countries over the next generation - and, before you get too smug about a journalist getting his just deserts, be warned, you're highly likely to feature on the list, too.
Prof Blinder's message, in short, is that the fears we are currently feeling about offshoring are only the tip of the iceberg.
advertisementFrom the best accountants and lawyers to the smartest derivatives traders to teachers and lecturers, many of today's most prestigious jobs could, thanks to globalisation and improved communications technology, just as easily be done more cheaply in places such as India and China.
The result, he predicts, is that between 30 million and 40 million US jobs could go within the next generation. Bear in mind that this is around a quarter of the US workforce, and that on that basis the comparable number over here could be as much as eight million (all major Anglo-Saxon economies will be affected). It is more than a little perturbing.
"They are scary numbers," says Prof Blinder. "It's substantially higher than most other estimates."
We are sitting in his rather pokey study at Princeton, where he teaches economics and conducts research. He has had to avoid a barrage of criticism in the US press following the publication of the 40 million figure. Many leading economists reacted almost as if they had been betrayed - Prof Blinder is, after all, an American economic institution, a former deputy chairman of the Federal Reserve once touted as a potential successor to Alan Greenspan. He has now been roundly lambasted and decried as a protectionist and an opponent of free trade.
Laughing wistfully, he says: "I should have a T-shirt which says 'I love free trade'. Of course I feared this [research] might be used by the protectionists. I would not like to be thought of as an opponent of free trade. It's easy to say what you don't do about it: protectionism. It's not going to work. How do you protect yourself against foreign electrons? You can keep out tomatoes from Mexico but you can't do that."
But what is even more worrying than the stark figure of 40 million is the message this sends to parents and families. Despite what we have always assumed, having a higher-skilled, higher-paid job is not enough to protect you from being offshored. It is a notion that throws on its head many of the present assumptions about the place of the UK in the next few decades.
Gordon Brown drones on interminably about equipping future generations with the right skill sets but Prof Blinder says: "It's not enough - that's the whole point. I believe that on education the correct answer for the past 25 years was, 'give them more education'. That was good advice. For the next 25 years I'm not so sure.
"We have to think more subtly about the types of education and it's not so obvious that there's a great future in America for computer programmers, accountants and for some types of lawyers - just to take three highly-educated people.
"Lawyers involved in family disputes, and criminal lawyers - they've got to stay around. But lawyers that write contracts, and lots of accountants, maybe that kind of education is not such a fabulous idea. Educating people to go into what I call the personal services is a good idea - some of which don't require all that much education - so electricians, carpenters, plumbers, roofers - skilled trades.
"This is a very new thought for the highly-educated, white-collar class to think that they may have to compete with low-wage foreign workers. Manufacturers have been doing that for generations. But accountants, lawyers, intellectuals?
"The story's not about high and low skill, it's about high and low touch," he concludes, a trace of his native Brooklyn in his accent. "You gotta do it face to face."
Prof Blinder's mission is to reshape the way developed economies are preparing themselves for the future, and he is in a hurry. "We've got about a generation until this happens," he says. "That's why there's a kind of urgency because, if you put a five-year-old into school now, they will come out with a college degree 17 years from now. Those starting their careers today could find themselves obsolete well before the end of their career - some of them, it depends what type. To say, 'raise your sons and daughters to be lawyers', is not subtle enough advice. The question is, 'what kind of lawyer?'."
Already many of those who oppose free trade and globalisation have latched on to Prof Blinder's research, screeching that it suggests the present course of the world economy will leave many millions worse off.
The professor begs to differ, claiming that most of the lost jobs will be replaced as people retrain.
"The idea of jobs going offshore is, in the long run, a good thing. Both the countries doing the offshoring, say the US or England, and the countries to whom the offshoring goes, say India, will benefit. I don't doubt that, and that's why my T-shirt should say, 'I support free trade'. But, if there are all these jobs going, that creates a lot of turmoil.
Some occupations are safe, of course. Investment bankers, who have to take out their clients and sweet-talk them are more likely to survive than derivatives traders, who could as easily be elsewhere. Clearly, for example, most of the health profession will still have to remain in situ.
Economists are looking very vulnerable, Prof Blinder says. And as for journalists - "You're on the margins, like college professors."
I know many people who got outsourced. A few of them managed to find jobs at a comparable income level. Others—the women, mostly, as they were married and were not the sole supplier of funds for a mortgage payment—tried some little business, which never brought them the same level of income as they had previously enjoyed and indeed usually went belly-up within the year.
But most of the people whose jobs are outsourced have great difficulty in replacing their income and never again have the same level of income, and thus the same spending ability, they had had in the past. Their struggles are not reflected bythe unemployment statistics because technically they do become employed again, but the high income is gone, and with it the house and the things they would buy to maintain a house.
Look at Michigan, where tens of thousands are losing their jobs. Those people dispossessed by the idiocies of Detroit auto makers cannot all start successful home businesses or get new jobs at the same income level. They canot leave to find work elsewhere because they cannot sell their houses. They cannot even obtain SBA loans for “opening chains of fast-food restaurants. . . starting up high-tech companies, inventing new ways of doing things,” even if they all had the “entrepreneurial spirit” and management and financial skills to run a business. Realistically, if a 53-year-old blue-collar worker finds his job outsourced, how the hell is he going to know how to write code for video games?
So if you think outsourcing is so wonderful, let me suggest that you try it for yourself. As an experiment, go for six months without income, and see how you like it. Our grandparents, who lived through the Great Depression, did not enjoy it at all or consider it an exciting new opportunity.
The majority of small home businesses fail within their first few years. Reasons include lack of initial market research and a poor business plan, undercapitalization, and lack of management skills on the part of the proprietor. Running a home business requires sixteen- and eighteen-hour days, seven days a week. Starting one may require substantial loans, which are only granted if the business owner puts up his own matching stake in the business. And there may be a very long lag time between the day the business commences selling and the day it shows a profit a person could live on.
So if you’re a laid-off factory worker mom and you think of a great new product for child-care, you’re going to have to find someone to make you a prototype, test it, sell a bank on the idea, and pay a manufacturing company to produce them. Considering that so many US manufacturing firms are dead, you may find yourself negotiating with China. Then you have to advertise, distribute, and actually market the product. If this is something you can do, my hat’s off to you. Not every one of the millions of people whose jobs are being outsourced can pull it off.
bump
You’re correct. But a small business is basically the only shot.
What happens when the Americans return from war duty? Hey! jobs is jobs, they can do howdy duty at Walmart.
p.s.
I also know three women — all in their 70s or early 80s — who do a booming business on eBay. They crack me up whenever I see them together, but they’re making it happen.
Is that their sole source of income? Are they supporting an entire family on their earnings? Or are they just, like most Ebayers, making a few extra hundred dollars a month?
It's true that some people and businesses make quite a bit on Ebay. On the other hand, if millions of people are out of work, unemployed or under-employed people are not going to buy non-necessary stuff on Ebay.
It could be their sole source of income == but they are on pensions. It started as something for them to do and kind of mushroomed into an actual business.
I’m not arguing with you about them — I agree with you — but I find their ingenuity at their age refreshing. That’s the reason I brought it up.
That said, those without unique or high level skill sets are pretty much up crap creek without a paddle.
I am reminded of Rush-substitute host Tom Sullivan. "Give me the statistics, not anecdotes," he demanded of callers telling of seeing shuttered factories in towns. "The manufacturing portion of the GDP has not changed in decades. There's no major off shoring going on!"
This was a couple of years back.. then he would obliviously tell his version of a three-elderly-women, everybody-can-do-it success story; to wit, an engineer laid off from Aerojet in Sacramento started a very successful business making chocolate candies -- if that ain't anecdotal "proof" then I have no idea. . . . Go figure.
You're right.
There's plenty of jobs in America since the advent of globalism.
Why, I know several people who have as many as three jobs each.
Why, I know several people who have as many as three jobs each.
Well, that just sounds downright greedy to me.
Send them to MIT?
The other thing that infuriates me is that American companies sell things at a lower price to foreign countries.
For example, pharmaceuticals.
A worker in India can work for less in part because American companies charge them less for medicine.
Textbooks:
The same textbooks that American kids pay through the nose for, are sold to foreign countries for a fraction of the price they cost here.
There was a website specializing in selling these cheaper foreign editions to American college students, until the publishers brought suit.
And I don’t know for how many other American products this is true.
Can you imagine: our kids are paying extra for textbooks so the publishers can sell them cheaper to the very people who are learning how to steal our jobs!
I think the long term effects of outsourcing are going to devastate this country.
Don’t think this is going to happen. If there is one thing that torques clients, it’s when their lawyer doesn’t call them back promptly. (That’s the biggest reason for bar complaints.) Imagine that problem compounded by a time-zone differences and heavy accents. Dell has suffered from outsourcing tech support to India. People won’t send their contracts or wills overseas just to save a few bucks. There’s just too much at stake.
Give it time, like the article says, 30 years or less.
And it may be that Asians will no longer need to learn how to better speak and relate to us.
Rather, it may be that Americans will desperately need to speak Hindi and Mandarin fluently to keep our jobs.
I used to -always- buy Dell computers.
[we’re talking 10 or 12 within a 3 year period and a business account]
The -first- time I got an Indian tech support person was the -last- time I bought a Dell.
I switched to Sony.
I -always- get an American techie and next-day delivery on parts.
I buy a lot of electronics and now I call their tech lines *first*.
If I get a foreign techie on the line, I don’t buy the product.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.