What should we do about free trade vs. America First? The logic of free trade comes from the law of comparative advantage, that everyone should concentrate on what they do best. The medical doctor may be best at every job in his medical office, but there are only 8 hours in the day. So it pays for him to hire less-able assistants who can do the grunt work for him at lower wages.
So we offshore all the low-skills jobs to East Asia and concentrate on the high-skills jobs like designing Apple computers.
But what about the low-skill people in the US? Do they just go to the wall? Or live a living hell on welfare? That's the question raised by Spencer Morrison at American Greatness. He chides Andy Kessler at The Wall Street Journal for a simplistic approach to economics: that we move up the value chain, concentrating on high margin activities while outsourcing the low margin work to Asia:
In reality, it's a messy business. In the United States, for about a century, we put the thumb on the scales to help the workers, by privileging labor unions. This was nice for workers in the unionized steel and auto industries, except that the above-market wages and salaries and general bloat made these industries vulnerable to foreign competition, and slow to update and improve their act. So what should the politicians do? Give industries an eternal subsidy? Give them a brief assistance so they can get more competitive?
This is not a new situation. The whole economic history of the last 200 hundred years has been about the decline, one after another, of one proud industries, beginning with farming. Well over half the population used to live on the land, farming. Today, in the United States, less than 3 percent of the work force works on farms. What happened? All sorts of things. Mostly, the children of farmers went to school and left the farm for the city.
But it wasn't always as easy as that. Sometimes the suffering farm workers rioted, as in 1830 and the Captain Swing riots in Britain in 1830. Or the populist revolt in the Great Plains states in the late 19th century. Or the Dust Bowl in the US in the 1930s.
Or railways. According to RailServe.com, railroad employment in the US was 1,500,000 in 1947. Today in the 2010s it is 235,000 employees. So was it just gradual attrition, or what?
In other words, on a decadal time-frame you will see huge changes in the employment of American workers. The question is not saving jobs or moving up the value chain. The question is how to get there, wherever "there" is, without major crisis and hardship. We cannot preserve the past and the incomes of the past. But we can certainly help people to transition from a declining industry to a growing industry.
Problem is that once people get to be established, they don't want to change. They hate the idea of losing wages and status, and usually look to government to help them when they get in a jam. And indeed, it is the job of government to protect people from existential peril. But obviously we cannot maintain everyone in the manner to which they have become accustomed.
On the other hand, every soldier needs to keep his powder dry; every bourgeois needs to to save against a rainy day, every family should prepare against disaster.
So you tell me what government should do to keep America healthy, wealthy, and wise in the coming years.
So we offshore all the low-skills jobs to East Asia and concentrate on the high-skills jobs like designing Apple computers.
But what about the low-skill people in the US? Do they just go to the wall? Or live a living hell on welfare? That's the question raised by Spencer Morrison at American Greatness. He chides Andy Kessler at The Wall Street Journal for a simplistic approach to economics: that we move up the value chain, concentrating on high margin activities while outsourcing the low margin work to Asia:
We’ll design (high margin), and they’ll manufacture (low margin). We think, they sweat. It’s the “Designed by Apple in California. Assembled in China” label.Problem is: not everyone has the smarts and the skills to do high margin, thinking, creative work. So what happens to them? Do we "let them eat cake?"
Or, do we protect our industries from foreign competition, and guarantee that America remains the land of opportunity for all Americans?The truth is, in my view, that this isn't an either/or question. Sure, we don't want to abandon the low skill folks to unemployment, opioids, and existential despair. On the other hand, propping up industries and protecting them from foreign competition is not necessarily going to maintain America as the land of opportunity.
In reality, it's a messy business. In the United States, for about a century, we put the thumb on the scales to help the workers, by privileging labor unions. This was nice for workers in the unionized steel and auto industries, except that the above-market wages and salaries and general bloat made these industries vulnerable to foreign competition, and slow to update and improve their act. So what should the politicians do? Give industries an eternal subsidy? Give them a brief assistance so they can get more competitive?
This is not a new situation. The whole economic history of the last 200 hundred years has been about the decline, one after another, of one proud industries, beginning with farming. Well over half the population used to live on the land, farming. Today, in the United States, less than 3 percent of the work force works on farms. What happened? All sorts of things. Mostly, the children of farmers went to school and left the farm for the city.
But it wasn't always as easy as that. Sometimes the suffering farm workers rioted, as in 1830 and the Captain Swing riots in Britain in 1830. Or the populist revolt in the Great Plains states in the late 19th century. Or the Dust Bowl in the US in the 1930s.
Or railways. According to RailServe.com, railroad employment in the US was 1,500,000 in 1947. Today in the 2010s it is 235,000 employees. So was it just gradual attrition, or what?
In other words, on a decadal time-frame you will see huge changes in the employment of American workers. The question is not saving jobs or moving up the value chain. The question is how to get there, wherever "there" is, without major crisis and hardship. We cannot preserve the past and the incomes of the past. But we can certainly help people to transition from a declining industry to a growing industry.
Problem is that once people get to be established, they don't want to change. They hate the idea of losing wages and status, and usually look to government to help them when they get in a jam. And indeed, it is the job of government to protect people from existential peril. But obviously we cannot maintain everyone in the manner to which they have become accustomed.
On the other hand, every soldier needs to keep his powder dry; every bourgeois needs to to save against a rainy day, every family should prepare against disaster.
So you tell me what government should do to keep America healthy, wealthy, and wise in the coming years.
No comments:
Post a Comment