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.
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'.
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.
Imperial Spain had huge reserves of New World gold so she could play outsourcing game for quite long. Read about Spanish decline.
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.
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.
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!"
EXACTLY! I remember how hard Reagan fought for American jobs.
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.
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.
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.
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.
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