Walter E. Williams has an interesting thought experiment on how the government can end the loss of American jobs to foreign countries:
Recent advocacy of free trade in this column has caused considerable reader apoplexy and anxiety, not to mention accusations of unconcern with worker plight. Readers have protested loss of good paying jobs to low-wage countries such as India, China and other Asian countries. I’d like to propose a way to completely eliminate this angst, and I’m wondering just how many of my fellow Americans would support it.
Let’s call it the Level Playing Field Act, where Congress decrees that: Neither a corporation nor an individual shall be permitted to employ a cheaper method of producing a good or service.
The Level Playing Field Act would be a blessing for all those highly paid workers in the high-tech, auto, steel and other industries who see their jobs going to overseas workers earning far less than half their wages. To produce the most successful outcome, Congress would have to complement this law with a similar decree on the consumer side of things, namely: Neither a corporation nor an individual shall be permitted to purchase a cheaper good or service.
Not only would this end corporations sending jobs overseas, but it would also prevent the real reason why manufacturing jobs are being lost in this country: technology.
This job-saving measure wouldn’t only apply to jobs lost to low-wage countries, but it would also apply to automation caused by job-destroying machines. England’s 19th century Luddites understood this very well, but they took matters into their own hands and went about destroying job-destroying machinery.
I can sympathize with the Luddites. After all, it’s no less painful to a worker who loses his job because the corporation has moved his job overseas than to a worker who loses his job to a cost-saving machine. Either way, he’s out of a job.
Under William’s new law, such a devastating effect would be a thing of the past. All those robotic arms that weld cars would be torn down and hard-working Americans would take their place. How many thousands of manufacturing jobs would that move alone save?
Also, computers would be banned. Computers have taken away hundreds of thousands of jobs from hard-working American manual calculators, slide-rule manufacturers, and switchboard operators. After all, every time you send an e-mail you’re helping to take away the livelihood of your local postal worker. (And believe me, you don’t want to make those guys disgruntled!) Things like online bill paying, e-mail, and the web take away the jobs of American workers like newsboys and mailing clerks. Technology simply must be stopped.
Of course, we cannot ignore the threat of jobs going overseas. Therefore the United States will officially close its borders to all imports and exports. That means that all those unemployed IT workers will have good farm jobs waiting for them. (Did I mention that combines and tractors that take jobs away from hardworking American farmers and oxen will also be banned?)
There will be no more Sony televisions that take away jobs from hardworking Americans. Also, forget Taiwanese motherboards, America will see the devastated slide-rule industry once again become vibrant, saving thousands of jobs lost to overseas firms. Since Linux takes jobs from hardworking American programmers, it will be against the law to use Linux. I’ll have to go without my Debian box, but then again it will ensure that only software that employs hardworking Americans is legal.
Under such an act, no American will lose their job to foreign countries. They will likely lose a few limbs and eyes doing jobs that were done by machines, but that’s the price of maintaining full employment. Under this system, unemployment will be a thing of the past.
America needs to look out for American jobs, and build a bridge to the 18th Century!
Hyperbole? Hell yes. However, the theories apply even to the kind of protectionism that’s being advocated in the real world.
The fact is that a dynamic capitalist economy is always changing. Change means that jobs are lost. We enjoy the benefits of "lost jobs" every day – we no longer have to dial a human operator to place a call. That’s a job lost to technology. I no longer write checks to pay my bills, there’s another lost job. I no longer send physical letters to communicate with people – there are more lost jobs.
Outsourcing isn’t nearly the threat that it’s made to be. If it was so cheap to outsource jobs overseas, there’s nothing preventing companies from packing up and moving right now. Yet they have not done so, because the United States has a very expensive labor poor, but you get what you pay for.
Foreign labor is simply less efficient – especially for high-tech jobs like programming. You can hire an Indian programmer on the cheap, but you end up having to hire an American programmer at premium contractor rates to fix the problems that come out from faulty code. This is why the United States still does far more business with the developed world where labor costs are higher than the US than with the Third World.
The reasoning for this is simple. Labor costs are only one small part of the overall economic equation. India may have cheap labor, but the other costs make it less attractive to business. Mexico is both cheap and nearby, but the quality of labor is nowhere near as good, which is why every car in the country isn’t made in Mexico despite NAFTA.
Indeed, if trade costs jobs, then there should be a direct statistical correlation between an increase in trade and a loss of economic growth and jobs. Yet the figures show exactly the opposite. Since 1945 world trade has been an increasingly important part of the US economy, yet the US economy has obviously grown considerably since then. It is clear that there is no statistically significant link between trade and a loss in jobs besides all the bluster over free trade.
Instead free trade helps the poor by providing for cheaper consumer goods and services. Obviously the poor are effected more by changes in prices. If the costs of bread goes up $.50 a loaf, its the people on a limited income that suffer the most.
Protectionism raises prices on goods and services by closing avenues for cheaper goods and services to get to the people. This means that the poor get hurt by having to pay more out of their limited incomes for goods and services that could be cheaper through trade.
In the end, advocates of economic protectionism base their arguments on the idea that a certain class of workers deserve protection above others. They argue that we should take actions that would raise prices for all people to preserve the jobs of a certain class. By that logic, why not do the same for any kind of trade or technology that takes away jobs? The fact is that change is part of the economy, and the best way of increasing the number of jobs is to grow the economy. Protectionism raises prices for the poor and hurts the economy, taking away even more jobs than would be saved.
Protectionism has always been bad policy from the horrible Smoot-Hawley Tariffs of the 1920’s to the opposition to NAFTA in the 1990’s, and it will always be bad policy. Even moderate Democrats like Bill Clinton and John Kerry realized that protectionism harms American workers. It is unbelievable to see that some in the Democratic Party and even some Republicans have failed to learn such an obvious lesson.
Telling people that job defection overseas is not happening can only get you guys so far as it continues happening to more people whose shirt-collars cover every color of the rainbow.
Also missing in the all-or-nothing argument you and Williams would like us to believe is that the range of goods and services that are produced at home is irrelevant. Lower prices for consumers (~winks~and companies)is more important than anything else, even the proliferation of a steel industry destined for elimination if current trends continue. All the lecturing by conservatives about national security being the nation’s top priority is completely meaningless if they don’t acknowledge that maintaining a production-based economy is vital to that security.
Of course, I could just as well be talking to a brick wall when addressing a crowd who honestly believes that unemployment is the greatest thing since sliced bread, as Milton Friedman said last week and as Jay Reding readily agreed with. Anybody who can make an argument that “mass layoffs + rising unemployment = progress for society” is a crowd that’s incapable of carrying a reasoned discussion.
Yes, the national steel industry is just going to up and dry out, and everyone’s going to ship millions of tons of steel halfway across the globe negating what little advantage there is to getting it elsewhere.
I’ve already explained, the actual figures show there’s no justification for such an argument. The US steel industry is not going to be "priced out of the market" because it is always going to be cheaper to buy steel locally than it is going to be to ship it via the Pacific from China.
If you’re building a high-rise in Manhattan, and you need another 15,000 tons of steel, are you going to wait two weeks for a ship from China to arrive to get Chinese steel, or are you going to order steel beams from Bethlehem, PA that will arrive via rail in days? The answer is forehead-slappingly obvious.
Evidently your school doesn’t have a program in logic, or you’d stop bringing up the same tired old argument that’s already been proven completely wrong.
Clearly outsourcing only makes sense when there’s a major disparity between the economy where you’re making the thing and the economy where you’re selling the thing.
Eventually, all global economies will even out and it won’t be a problem. So ultimately open trade is it’s own solution. But how long will that take? And what are people in America supposed to do? Jay, you can say that “free trade isn’t a problem”, but people are being laid off! What are the unemployed supposed to do in an economy that doesn’t have enough jobs for them?
People are being laid off, but it has little to do with trade. People are being laid off because our economy isn’t growing fast enough to provide sufficient employment. Getting into trade wars with other countries doesn’t grow the economy, it makes things worse.
So in the end playing the protectionism game means that the US is now involved in trade disputes with the rest of the world, the prices for consumer goods have just shot through the roof, and even more jobs are lost.
One sixth of our manufacturing output goes overseas. 54% of our aircraft industry serves overseas clients. Cutting off trade links means that we just lost one of the biggest and most critical industries that our national security depends on.
We’ve already been down this road before with the Smoot-Hawley Tariff of 1921. What were the effects of this measure?: not only did it make the Great Depression worse, but it spread the Depression worldwide. It was one of the most singularly idiotic policies ever enacted by the United States, and it took decades for the US to undo the damage it caused.
The only way to increase unemployment is to grow the economy. You grow the economy by doing things like fostering new avenues for trade, cutting taxes on investments, and encouraging economic activity. However, in this political climate we have major political figures defying all logic and common sense by arguing that the way to fix our economic problems is to do exactly what the Smoot-Hawley Tariffs did 82 years ago.
Jay, the nature of the market economy ensures that there will be times where the economy “will not be growing fast enough to provide sufficient employment.” It’s during these times that outsourcing will be most enticing to struggling companies. Do you seriously believe that these jobs will move back to America when times become flush again?
I used to be of the mind that free trade would produce a net surplus of jobs, yet still be a massive liability since we’d lose the industries necessary to ensure a moderately self-sufficient economy and the division of labor necessary to accomodate the disparities of human nature (another issue where free trade ideologues have alot to answer for). Given that technology is now making even skilled cheap labor easier to tap into in the third world, along with the suffocating cost increases of America’s employer-based health care system which is likely to become a much bigger obstacle for business than European tax rates, I’m no longer convinced that America can expect any job growth at all in the coming years. The allure of cheaper labor elsewhere will become all the more enticing for a growing number of industries given these conditions.