Reich Gets It Right

It’s a rare day when I praise former Clinton Labor Secretary Robert B. Reich. However, his most recent article on the loss of manufacturing jobs is simply dead-on accurate.

America has been losing manufacturing jobs to China, Latin America and the rest of the developing world. Right? Well, not quite. It turns out that manufacturing jobs have been disappearing all over the world. Economists at Alliance Capital Management in New York took a close look at employment trends in 20 large economies recently, and found that since 1995 more than 22 million factory jobs have disppeared.

In fact, the United States has not even been the biggest loser. Between 1995 and 2002, we lost about 11 percent of our manufacturing jobs. But over the same period, the Japanese lost 16 percent of theirs. And get this: Many developing nations are losing factory jobs. During those same years, Brazil suffered a 20 percent decline.

Here’s the real surprise. China saw a 15 percent drop. China, which is fast becoming the manufacturing capital of the world, has been losing millions of factory jobs.

What’s going on? In two words: Higher productivity.

All those on the far left side of the Democratic field who are arguing for a return to the “Fortress America” economic policies of the 1920s are ignoring the very real fact that it no longer takes hundreds of people to smelt iron ore into steel or build cars. Robots have taken far more American jobs than the Chinese have.

As Reich notices, this is a global phenomena, similar to what happened to agriculture during the Industrial Revolution. We’re transition from the Industrial Revolution to the Information Revolution in which we don’t need as much manufacturing capacity in the same way we didn’t need 30% of the American people laboring on farms in the 1950s. Technology has meant that we can do more with less.

The fact is that protectionism doesn’t work to fix these trends either. Just look at President Bush’s idiotic steel tariff decision. Rather than make US steel better it has produced losses of 20,000-40,000 manufacturing jobs and a $30 billion hit to the economy. If that weren’t enough it may well spark a major trade war between the US and the EU which will drive prices up even more.

In the end, this idea that only cutting ourselves off from the world can save jobs is as foolish as it was 80 years ago when the Smoot-Hawley tariff spread the effects of the Great Depression around the globe. The only way to save jobs is to create an economy that has room to grow and create new job opportunities. The way to do that is to open avenues for foreign investments, and fix the broken educational system to make more opportunities open for Americans in the Information Age.

Even Robert B. Reich gets it… now let’s see if the current crop of Democrats will.

6 thoughts on “Reich Gets It Right

  1. Brilliant–you admit that the President made an idiotic decision concerning tariffs and then call it a DEMOCRATIC problem.

    Absolutely brilliant. Especially since the front-runners for the Democratic nomination are free trade proponents. Just brilliant!

  2. Dean is hardly a proponent of free trade. He’s already declared that he would repeal NAFTA and make other countries meet the impossible requirement of matching our labor laws before trading with them. Gephardt has done much the same. Both have argued for increased protectionism that would severely harm the US economy.

    The only truly committed free trader in the bunch is Sen. Lieberman, who would continue the Clinton-era policies of increasing and expanding world trade. Unfortunately, Sen. Lieberman is too sensible for the Democratic Party at this time.

  3. Reich makes a noteworthy point that automation poses as much if not more of a threat towards the working class than globalization. I didn’t realize the magnitude of job losses related to automated technology, but it’s clearly alarming. The main questions now become: 1) At what point will automation eliminate more jobs than it will create, if that ever happens? 2) What will become of the tens of millions of Americans (and billions worldwide) dependent on low-to-meidum skill employment for their livelihood as automation continues to erase manufacturing jobs?

    You know your economic message is in bad shape when you’re reduced to bragging about substantial and relentless job losses being the result of technology more than globalization. What a relief! In that case, I’m gonna go out and buy a house, a new car and mountains of gold and diamond jewelry. For a minute there, I thought I was gonna lose my job to a foreign worker, but since I’m merely gonna lose it to a machine, “I’ll take the caviar, madam!” I wouldn’t recommend the GOP use this excuse as too heavily on the campaign trail when answering to the millions who are out of work.

  4. Obviously you’ve never seen The Desk Set before. (And you should, it’s a great old movie.)

    The predictions that computers would mean that everyone would be out of a job seems laughable today when computers have created an entire industy around them. The same predictions about machines taking jobs will look equally laughable 50 years from now. Considering that all of recorded history shows that innovation fuels job growth it’s somewhat ironic that people continue to make the same tired old arguments that their great-grandfathers did when they saw their first “horseless carriage”.

  5. You can’t have it both ways, Jay. You first attempt to concur with Bob Reich that it’s technology, not globalization, that’s erasing manufacturing jobs in every nook and cranny of the globe. Now you ridicule me for repeating what you and Reich said in a different context. Which is it, good buddy?

    Technology has the capacity to create jobs, but for the billions of the world who lack the skills to work in technology-driven employment, it’s one more liability to overcome in an effort to pursue a better life (in the undeveloped world) or hold on to the standard of living they have (in the industrialized world). Clearly, these people are so far below your radar screen that you can’t even recognize their presence on the globe let alone sympathize with their struggles. But we knew that before this thread began. The most interesting aspect of the corner you’ve backed yourself into here is that in your attempt to say “Told ya so!” about the woes of globalization, you’ve managed to accidentally create a new bogeyman and now must defend it after creating it. To mimic something you told me about a month ago, if you were a student in my debate class, I’d give you an F for not only failing to credibly defend your own position, but managing to empower your opponents with new ammunition.

  6. Well, let’s just go back to agrarian societies where everyone can work 14 hours a day to put food on our table. It’s the closest we’ve ever come to full employment in history.

    It takes little more than a bit of logic to figure out that your position is indefensible. Consider:

    Globalization causes a net migration of jobs to the Third World from industrialized countries.

    In order for that statement to be true, there would have to be a direct correlation between acts of globalization and net losses of jobs in the developing world and net increases in jobs in the Third World. There is no such correlation, therefore the argument cannot be true. In fact, as I pointed out several months ago, investment in the developed world by the developed world continues to dramatically outpace investment by the developed world in the Third World.

    The next statement is equally false:

    Technology causes a loss of jobs in both the developed and the Third world.

    Again, this is simply not true with even the most cursory examination of history. Technology has been proceding rapidly since the Renaissance. The Industrial Revolution had people making the same arguments – “Why those mills will ruin the livlihood of millions! We’ll all lose our jobs and never get them back!” Mind you, those were the arguments of the 1830’s. Not only did employment go up because of technology, technology has empowered millions across the globe. Considering that my income is entirely dependent on technology that did not exist in the 1970s, it’s hard to argue that technology costs jobs.

    Cars put stable boys and horsemen out of work permanently, computers meant that bookkeepers lost their jobs by the thousands, and hospitals ensured that thousands of midwives were out of a job. I guess that we should all stop driving, burn all computers, and stop going to hospitals.

    Oh wait, you say, all those things have created thousands more jobs so that stable boys no longer have to shovel horse dung, people don’t have to ruin their eyesight calculating tiny figures in ledgers, and hundreds of thousands of women don’t die in childbirth because of easily preventable diseases. Which of course proves that technology does not cost jobs, it saves lives and creates new ones.

    To mimic something you told me about a month ago, if you were a student in my debate class, I’d give you an F for not only failing to credibly defend your own position, but managing to empower your opponents with new ammunition.

    If I were a student in your debate class, I’d be petitioning for a better instructor.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.