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.
Paul Ross, thank you for an explanation of your position.
If I understand your position, outsourcing of the manufacturing of the product is a leading indicator to the movement of all functions of the business to the same location. Effectively American businesses and businessmen picking up and moving to China instead of just a foreign direct investment (FDI). You also then make the case that FDI (assumably not limited to niche outsourcing across labor markets) leads to indigenous foreign labor becoming more competitive than the firm that outsourced there.
There have been studies of outsourcing and it's impact on the skilled and unskilled or low-skilled work force, trade and competition. Would you like to discuss them?
Expansion Strategies of U.S. Multinational Firms
The Impacts of Technology, Trade and Outsourcing on Employment
Outsourcing at Will: Unjust Dismissal Doctrine and the Growth of Temporary Help Employment
While not willing to protect your nation's citizens...
Protect them from liberty? Methinks the commie you've outed is you.
I'd be happy to discuss whether government spending on unemployment and underemployment has been rising or falling over the last decade and comparing the business cycle trends and spending with those from the 60s, 70s, 80s, etc. I do think that is an important metric for verifying unemployment rates.
Hey, that's a *GREAT* reference - bookmark set here!
-Thanks!
It appears, however, that you are wrong. You don't know my life's history. I have taken plenty of risks and planted lots of wheat, but perhaps haven't bought into as much as others here on FR the greedy, rapacious, out-of-control, grub-for-every-last-almighty-dollar-and-to-hell-with-everyone-else version of capitalism. Sure, I've gone out into the world and staked my claim, and in the process have helped others to do likewise, but I have been able to do so without destroying them in the process. And I've seen first-hand the benefits of a reasonable distribution of the rewards, in terms of a stable and profitable business, employment for my friends and colleagues, all to the benefit of them and their families. All done without sending a single job overseas or throwing a worker out on the street so I can line my pockets a little more. You're free to call it "socialist sophistry" if you want, but it's more correctly classified as a less greedy, less voracious form of capitalism, and, in the end, it's been a successful model and I don't see anything wrong with it.
That's all I'm saying. Sure, operate your business and make a decent profit, but try to do so without destroying the people who work for you in the process. If that means you take home $800,000 that week as the CEO instead of $800,100, then, well, be content with that, because by doing so maybe you've helped saved the career of some $800/week working stiff with kids in school and a mortgage to pay. Don't ruin him by sending his job overseas just to put a few more of those lousy almighty dollars in your own pocket. And, who knows, one day, you may find that the life you save may be your own.
Bulloney.
Slink back under your rock, tpaine, and wallow in your own bizarro interpretations of the Constitution.
At least when you do that, it's not quite so obvious that you're an idiot.
Maybe I should have limited my post to my first line of response, which was "Fewer people could afford to buy things back then".
From another FR thread:
Myths of the Smoot-Hawley Tariff
In consistency with today, free traders historically look at tariffs (indirect taxes) on imports as causing consumers to pay more while ignoring direct taxes on American consumers. There are few that will mention or acknowledge that President Hoover raised the top income tax rate from 25 percent to 65 percent in 1932. FDR continued this atrocious policy by further raising the rate to 79 percent!This insurmountable climb in the income tax rate reaped far more damage on the American consumer than any modest tariff increase on a select amount of import sensitive items. Keep in mind that tariffs are a discretionary, indirect tax. The consumer can choose to buy the import or the domestic good, and therefore refuse to pay the tariff, but no consumer escapes direct income taxes. Everyone must pay. It's no wonder it took World War II to drag us out of the bottom of the economic barrel.
What problem?
Do you mean your absurd contention that "it becomes cheaper to automate technology than to feed, clothe, & house the slaves."???
No tpaine, I will NOT address that "problem".
As usual, you've merely formulated an extremist fringe scenario that isn't gonna happen in the real world.
I'm not gonna waste my time with you by "debating" such silliness.
Whatever technology becomes so cheap to put slaves out of work merely increases the portion of the workforce that's in unemployed poverty, further dragging down the ones who are still managing to eek out a living. (Unless, of course, they starve to death first.)
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