With the recent unemployment numbers in, with roughly 120,000 new jobs last month, and the unemployment down to 5.6% it's time to discuss an unpopular argument. That sending tech jobs overseas is actually good.
To understand this argument you have to concede three points.
1. The United States is the driving force for economics in the world. We have one of the highest standards of living, and produce most of what the world uses.
2. The United States is the primary engine for technological innovation for the world.
3. We have the hardest working and best trained workforce in the world.
A common double standard by economic liberals is that that we should not send jobs overseas, but on the same hand, it's unfortunate that we as Americans have the lion’s share of jobs, money, and prosperity in the world. We should share the wealth so to speak. Well, we do. And we should.
Jobs like computer programming and tech support, which cost a lot to do here, are sent to places like India where labor is cheaper. That frees up capital for investments in new technology and industries here. In turn the economies of second and third world countries benefit from support jobs. They have more money to spend on products and services our streamlined industries have to offer.
We all benefit. They have more money, prosperity, and wealth. And we have more money for new technologies, which in turn, will create more jobs here, It's a continually rising cycle.
The arguments going on against job exportation now also went on in the 1980's when steel and auto jobs left the United States for places like Japan. It would be feared we would lose our place as economic leader. People feared Japan taking over the world. (so to speak) But for every job we lost to that exportation of jobs, more were gained in new fields like high technology, financial, communication, and service industries.
Article comments
— go to most recent comments1 - Mark Saleski
and then there are other problems, like the loss of technological innovation.
we've had these arguments before, usually devolving into yes/no shouting matches.
sure, companies will have more money to spending new technologies which theoreticaly will create new jobs..though i doubt they'll be created here.
2 - Phillip Winn
"We all benefit" - well, society as a whole benefits, sure, but the people who lose their jobs don't.
Take the popular example of buggy whip manufacturers. Sure, we are all better off now that their jobs are gone. But those guys weren't too happy about it.
Churn sucks. The benefits of churn rock. Too bad we can't have one without the other.
3 - Hal Pawluk
Thirty years ago I believed it, too. Then, you could say "That frees up capital for investments in new technology and industries here." and it was true.
That's not happening today.
The problem is that most capital investments are being made in China (manufacturing), Ireland and Singapore (pharmaceuticals) and other offshore locations. There are exceptions, and this country isn't about to imminently implode, but the big growth is offshore.
On the job front, high paying jobs are being exported and lower paying jobs are being created. In a recent study, it was found that nationally, the average salary of the new jobs was 21% lower than the jobs that were lost.
I did a piece on this as The Myth of Job Recovery with more details.
It's not the pretty picture you paint.
4 - Tom
These arguments were made in teh 1980s when steel jobs and auto jobs left.
But we are better now. I am sick of the doom and gloom economists of the Democrats.
Jobs are being created, industries are producing more, and we are experience growth not experienced since the 1982-3 Reagan tax cuts.
5 - Mark Saleski
Jobs are being created, industries are producing more, and we are experience growth not experienced since the 1982-3 Reagan tax cuts.
i see you been to ReligionOfCapitalism meetings.
do you have to repeat that refrain before or after you kneel?
6 - Hal Pawluk
Jobs are being created, industries are producing more
In China, in India, in Ireland, in ...
Note that this has gotten serious enough to be recognized as a problem at Davos, as noted in this piece from the Wall Street Journal:
The old rules don't apply because the profits are being exported as well.
7 - Hal Pawluk
Economists writing to the Wall Street Journal this morning put a far different interpretation on the job numbers than you do (they appear to never have heard of Pollyanna):
8 - Craig Lyndall
Did you people not read what Phillip wrote? The churn sucks. The churn is historically a short-term cycle of pain where people lose their jobs. Re-allocation of labor is the next step and despite the gloomy outlook, savvy people are not going to take jobs bartending at Applebee's. It takes some time. All your knee-jerk statistics as it is happening don't mean a whole lot. Like someone else said, there will be new things that didn't exist before.
9 - Mark Saleski
i read what phillip wrote, but i'm not buying it.
i've read similar articles and they are cheerfully lacking in specifics.
sure, something new will come along...that's easy to say in hindsight about things like the loss of manufacturing jobs. though in that particular case the thing that came along was service-oriented jobs...which are also going away.
the current phenomenon is a fundamental shift that's going to have nasty consequences as the middle class first shrinks and then disappears.
10 - Hal Pawluk
All your knee-jerk statistics as it happens don't mean a lot
Actually they're not mine, they're not knee-jerk and they do matter.
The stats are from the Bureau of Labor Statistics.
The evaluations of their meaning are from economists and business, government and academic leaders at the World Economic Forum.
I'll take their expert knowledge over someone's unfounded jerk-water beliefs.
11 - Eric Olsen
As has been said, we have gone over this numerous times: no, this time isn't different, this time - like every other time - involved REAL PAIN for REAL PEOPLE and this isn't funny or to be minimized. We have all either suffered directly, indirectly or know someone who has.
BUT that does not change the big picture - that the better off the rest of the world is, the better off we are in the long run on many levels NOT JUST ECONOMIC. Do you think we would have seen the political changes we have seen in Mexico with a non-PRI president for the first time in modern Mexican history without the benefits NAFTA has brought? The answer is no.
And new jobs are being created all the time, even if people have to create them themselves. This is capitalism - this is the way it works - this is why we have unemployment insurance - this is why we need to have training readily and cheaply available to those who lose their jobs, or who are in professions in jeopardy.
12 - Mark Saleski
yep, better get some training ready for all of the software developers (and their managers) cuz' they're gonna need it.
sorry, i'm just a knee-jerk liberal who doesn't have a much faith in capitalism in the long run.
13 - Hal Pawluk
As has been said, we have gone over this numerous times: no, this time isn't different
No, this time is different.
In the "good old days" up to about, say, thirty years ago, export profits were largely reinvested in the exporting country. Today, the opposite holds in a lot of areas, and Ricardo's theory goes up in smoke.
Exporting jobs is far different from exporting goods. When you made a profit on wine or wheat (Ricardo's examples), it made sense to reinvest more in your vineyards and wheatfields.
When you make a profit on exporting jobs, companies are finding that it makes sense to reinvest in more exported jobs, and there's the rub.
As the feedback from Davos indicates, "business, government and academic leaders ... voiced doubts over ... whether the increasingly global economy will produce as many high-wage jobs in rich countries as once was expected."
They're recognizing that we are in the middle of a sea-change in the structure of international trade and need new concepts to work with (sorry, Ricardo).
The rest of the world needs to catch on, too.
14 - Craig Lyndall
Well, that's understandable because it has failed so badly so far.
15 - Hal Pawluk
And the proof is in the few crappy jobs being substituted for the better jobs being exported.
16 - Craig Lyndall
Dude, SHORT TERM vs. LONG TERM! These are the substitutions in the short-term.
Another thing. Doesn't it seem a little hypocritical to be the biggest supporter of capitalism and free trade as Americans and then start crying for protectionism when our favorite philosophy starts benefitting, (gasp) people outside the borders of this country? It sure seems that way to me.
Nobody is stopping you from innovating except your stubborn longing for a job that has now been commoditized. Face it. It isn't value-add anymore. Just like factories and farming before it. Nothing new here. Now it's your turn to adapt and react. Not by putting up bigger walls, but by taking advantage of the greater efficiency that can be gained by programming commoditization.
17 - Mark Saleski
nothing is stopping me from innovating?
oh forget it, it's not worth it.
you'll have to excuse me while i:
-tell the kid he can't go to college next year
-sell my house
-move to oklahoma to get a cheap apartment and associated job at walmart
and for the record, i was never arguing for protectionist measures. it just pisses me off tremendously when i see things like those lovely "Pictures Of You" ads from HP...ah yes, we're here to make product to make your life better....and all the while they're having their engineers train their offshore replacements.
18 - Ms. Tek
Hey craig... I need retraining. I need to go back to school. School is going to cost me $47,000 however. So I know you are going to be the first to give it to me so that I can go ahead with my "innovating", right?
19 - Hal Pawluk
"Dude"? Cool!
But the situation is different long-term now.
The genie is out of the bottle, and it's a different world. Ricardo's time has passed (although it wasn't really ever quite here).
20 - Craig Lyndall
So, because of your short-term pain we should abandon free trade and capitalism. If that is your stance then at least we know where we disagree.
21 - Hal Pawluk
I personally don't have any short-term pain, but do have a vigilant eye, and share my observations.
Speaking of personal, why do you appear to be taking this so personally? You seem to be emotionally-vested in what I see as an impersonal issue.
It's certainly an issue where an impersonal, rational approach would bear more fruit.
22 - Hal Pawluk
And oh, yeah:
So ... we should abandon free trade and capitalism. If that is your stance then at least we know where we disagree.
I know where we disagree, but that's your straw man, not mine, so feel free to beat it severely about the head and shoulders.
23 - Craig Lyndall
I have no personal attachment to this. I just can't stand the same people who hate the way the world looks at the US hoping that we do something to protect jobs unfairly in terms of free trade. Either we believe in it or we don't. We can't have it only when it benefits us and then change it around when India starts to benefit. It's ridiculous and I wish people could see that this is potentially more harmful for US Public Relations world-wide than any "unjustified" military action in Iraq. Nobody, ultimately cares about Iraq, but if we mess with their ability to develop economically... watch out.
24 - Jim Carruthers
I don't really have a problem with free-trade and captialism, but when are you going to start practising it?
The major problem is this whole global whatever is that it is just a game of three-card monte. It isn't productive, it isn't beneficial, it isn't growth, it is just a con.
As long as business is focussed on only next quarter growth, it is only going to provide bad news everybody!
25 - Eric Olsen
Jim, your last line is absolutely right: short-sightedness is the biggest problem with the world economy and is at least part of why jobs are being lost here.
But Craig is right also, as I have agreed repeatedly. Perhaps something as mudane as a change in accounting rules, which I believe is already underway in wake of Enron, etc, is part of the answer. How do you make companies look long- or even medium-range?