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Those Heathen Foreigners and Our Jobs
Posted by: Dale Franks on Wednesday, August 09, 2006

Robert Samuelson writes that Americans seem to getting caught up in another bout of economic fear of the heathen foreigners.
We are experiencing another competitiveness panic. These occur every 15 or 20 years. There's an outpouring of worried reports and articles. After Sputnik in 1957 — the first artificial earth satellite — we were supposedly doomed to be overtaken by the Soviet Union. In the late 1970s and 1980s, it was Germany and then Japan. Lately, China and India have been the threats. Through it all, the United States has remained the dominant global economy, representing about one-fifth of the world's total output.

One problem with these debates is that competitiveness is a vague term. What does it mean?

If it means keeping the lead in every industry where we once led, we're doomed. As other countries develop, they create larger and better industries to meet their needs. Steel is an example. The United States doesn't need 350 million tons of steel. Textiles, consumer electronics and automobiles are other industries where we've lost ground to countries that have greater local needs, lower costs or better management. In many cases, U.S. multinational companies have relocated plants abroad to cut costs.

Similarly, if competitiveness requires the United States to maintain its present share of the world economy, we are also probably doomed. We have recently maintained our share only because Europe and Japan have grown more slowly than the United States. But if China and India continue to grow rapidly, the U.S. share will shrink. The U.S. economy is now about $13 trillion; China's is about $2.2 trillion, says economist Nicholas Lardy of the Institute for International Economics. China's growth is 9 percent to 10 percent annually, the United States' 3 percent to 4 percent. At those rates, China might pass the United States in 20 or 30 years, says Lardy. (However, per capita incomes in China would still be much lower.)

The point: global economic growth — something the United States encourages — erodes America's dominance. Technology, talent and wealth spread everywhere.
Two things are important to remember.

First, the American economy—any economy, for that matter—is never static. There are a plethora of jobs in fields such as information technology and telecommunications that didn't exist 20 years ago. And today, we are on the cusp of creating entirely new industries in fields such as nanotechnology. And America, because of its economy, and its engine of massive job growth, is always at the bleeding edge of new industries, services, and technologies. Creating new technologies is one of the things at which America excels.

Other countries, such as Japan, may excel at taking these new technologies and industries and further commercializing them. When they do, the wealth that these new technologies foster is spread around. Everyone gets the chance to become richer.

So, the idea that, if another nation becomes relatively richer compared to America, there is something horribly wrong, is, itself, horribly wrong. If America continues to create new jobs, if productivity continues to increase, if American per-capita wealth increases, then we're doing just fine. Economics is not a zero-sum game. Just because Indians are getting richer, that doesn't mean that Americans are getting poorer. To claim otherwise is false. It's just as false in international terms as it is in domestic terms to declare that, because I have a yacht, you can't have one.

Second, because the economy isn't static, there are definite effects on the labor market. The creation of the automobile, for example, was the death knell of the carriage and buggy-whip industries. That was pretty brutal for a generation of carriage and buggy-whip makers, who saw their jobs evaporate. But, the plain fact is that, if we always "keep American jobs in America", whether those jobs are at steel mills, Sylvania Television factories, or textile mills, we won't have enough workers available to do computer programming, cell phone network expansion, cable TV installation, etc., etc. That may be rough on people who've spent the greater portion of their lives in a now-dying industry. But, it means their children will have opportunities their parents couldn't dream of.

The net result is that both Americans and heathen foreigners get richer. In the long run, there's no need to fear that.
 
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Dale, I hope you are sitting down, because this is just shocking: I completely agree with you.
 
Written By: Mona
URL: http://
The richer countries get, the more American products they can afford to buy. In Taiwan it’s been interesting to see more and more American food products sneak onto the shelves.

 
Written By: Harun
URL: http://
Food products are from an American industry that is both subsidised and protected.
 
Written By: unaha-closp
URL: http://warisforwinning.blogspot.com/
unaha - Is subsidy not protection?
 
Written By: OrneryWP
URL: http://
The glorification of the global economy where fatcats locate the low-cost labor pool in the race to the bottom to maximize profits and wealth in a small elite.....

Well, that doesn’t sound too attractive as the New America.

Just about all the jobs created under the Bushies have been low-paying service sector jobs, home palace construction due to cheap interest rates, and Gov’t jobs from Bush’s Great Ownership Society expansion of Government.

If you export all the manufacturing jobs to China, India...there is very little reason for the jobs the manufacturing industry used to demand and nurture in science and engineering. Why should any new "high tech" job in nano production or any other "miraculous American innovation" soon to come not follow production and engineering and scientists needed for the American-invented now virtually all made overseas plasma screens, cell phones, computer programming, software, microprocessor chips, specialty metal production, medical gear?

For a future American society split into fabulously wealthy "ownership folks" their small private security forces and the rest of Americans working as low paid soldiers, China wares store clerks, nursing home attendents?

We already know where we are likely to go. Because Latin America was supposed to be a great "low cost labor pool" then China and India undercut all their manufacturing. and economies were destroyed with enormous increases in joblessness. Latin America headed Left, except Mexican workers displaced by Chinese 100s of millions headed North while the US though it makes little the world buys, is still prosperous off it’s accumulated wealth from back when we were a healthy exporting and creditor nation - and thus attractive to the Mexicans before the USA decline starts.

 
Written By: C. Ford
URL: http://
Just about all the jobs created under the Bushies have been low-paying service sector jobs, home palace construction due to cheap interest rates, and Gov’t jobs from Bush’s Great Ownership Society expansion of Government.
Yeah.

Uh, you know there’s this tiny government agency called the Department of Labor. They have a little office known as the Bureau of Labor Statistics. Every month, they put a press release about something called the Employment Situation. In it they detail exactly how many people are working where.

Really. I’m serious. They post it on the web and everything. it’s even in all the papers.

You ought to take a look at it some time. It’s chock full of interesting facts.

Unlike your comment.

For instance, do you know how many workers were on the Federal government’s payroll last year at this time? 2,743,000. You know how many there are now? 2,719,000. At the same time, the number of people working in relatively high-paying professional and technical services went from 7,006,400 to 7,282,500. On the other hand, the number of low-paid workers in repair and maintenance services went from 1,251,300 to 1,242,500. Similarly, the number of personal and laundry service workers went from 1,278,400 to 1,273,000. The number of people working in liesure and hospitality services went from 13,500,000 to 13,077,000.

Wow. Isn’t that odd? According to the BLS, over the last year, government employment, and lots of low paying service sector jobs show declines, while the number of jobs in skilled employment, natural resources and mining, and durable goods production, have all increased.

One never would’ve guessed that from reading your post.

One would’ve guessed, however, that you don’t have frickin’ clue what you’re talking about.
 
Written By: Dale Franks
URL: http://www.qando.net
unaha - Is subsidy not protection?

Yes it is, but if you don’t mention it people who read "Hey, look they are buying stuff from our farmers over there" start thinking ’our market may be protected but look at that we can still compete on the world stage’. When in actual fact an export subsidy is probably knocking 50% off the price as soon as it leaves home.

Export subsidies and tariff barriers. End result foreigners can buy subsidised goods cheaper than it took to make and locals who end up paying the price of the lowest cost import plus tariff.
 
Written By: unaha-closp
URL: http://warisforwinning.blogspot.com/
But if China and India continue to grow rapidly, the U.S. share will shrink. The U.S. economy is now about $13 trillion; China’s is about $2.2 trillion, says economist Nicholas Lardy of the Institute for International Economics. China’s growth is 9 percent to 10 percent annually, the United States’ 3 percent to 4 percent. At those rates, China might pass the United States in 20 or 30 years, says Lardy.
This stupid little extrapolation was exploded during the nineties by none other than our good friend Paul Krugman in a brilliant paper published in Foreign Affairs.

In it he argued that when we see countries like this experiencing high annual growth, it’s because they’re essentially benefitting from low hanging fruit. For example, increasing literacy does wonders for the quality, productivity, and thus prosperity of your work force. But you can only teach your working class to read once. After that, you have to find other ways to continue increasing productivity. Likewise, China can only throw off the yoke of communist totalitarianism once. After that, they’ve got to come up with something else.

Unfortunately Krugman has since let this insight go to his head.

yours/
peter.
 
Written By: Peter Jackson
URL: http://www.liberalcapitalist.com
And as those "heathen foreigners" get richer, they start wanting the best products and many of those are designed and marketed here.
 
Written By: China Law Blog
URL: http://www.chinalawblog.com
Dale Franks wrote about C. Ford:
One would’ve guessed, however, that you don’t have frickin’ clue what you’re talking about.
Which as absolutely true.

Thank you, Dale,

TDP, ml, msl, & pfpp
 
Written By: Tom Perkins
URL: http://
Say, Tom: quick off-topic post, but I’m sure others are dying to know too...

What do "ml, msl, & pfpp" mean?
-=-=-=-=-
Peter Jackson: Thanks for the link.
 
Written By: OrneryWP
URL: http://
What do "ml, msl, & pfpp" mean?
What, should I spell them out once a month or something?

Since AFAIK, this site doesn’t do signatures, I abbreviate some mottos I have adopted.

ml
molon labe

msl
montani semper liberi

pfpp
para fides paternae patria

With as fast as I tend to type, the odds of mispelling them if I type them out all the time are pretty much 1 to 1.

Your, TDP, etc
 
Written By: Tom Perkins
URL: http://
Would you consider swapping to the motto -
"I got mine!" (EGO suscipio mei!???)

(just kidding....I recall that was Hagar the Horribles family motto and I’m afraid it’s stuck with me....)
 
Written By: looker
URL: http://
"For instance, do you know how many workers were on the Federal government’s payroll last year at this time? 2,743,000. You know how many there are now? 2,719,000"

Do they also give statistics on the number of consultants and contractors?

," and lots of low paying service sector jobs show declines,"

Could that be because many of them are in the underground economy, held by illegal immigrants for example?
 
Written By: timactual
URL: http://
There was a company called US Whip that was one of the largest braided buggy whip manufacturers in the country. They took their core compentency (braiding) and applied it to other products, such as sutures and later, fishing line. In the thirties they became US Line. As of two years ago, they were still around. I had done a post on them on my old blog, but the link is no longer active - sorry.

C. Ford - for someone who promotes himself as the site historian, you seem pretty ignorant of the biggest lesson learned in the Information Age as regards manufacturing: eventually, there will very likely no longer be a need for what you do.

Now I’m sorry that the slide rule belt holder factory where you worked shut down. You OBVIOUSLY know how to type - perhaps you could get a job in data entry.
...the US though it makes little the world buys, is still prosperous off it’s accumulated wealth from back when we were a healthy exporting and creditor nation...
Did you just posit that America’s economy is fueled by some type of savings account? HAHAHAHAHAHAHAHAHAHAAAAAA!!!!!!!! Lemme guess - the Jews stole it from the sweaty proles and put it in a giant vault, ala Scrooge McDuck. It is to laugh...

Tom - molon labe? That sounds nasty; is it contagious?


 
Written By: Jeff
URL: http://
Tom - molon labe? That sounds nasty; is it contagious?
I hope everybody gets it!

I’m an asymptomatic carrier myself.

;^), TDP, ml, msl, & pfpp
 
Written By: Tom Perkins
URL: http://
Glad to see this blog opposes using government coercion to prevent immigration.

I haven’t been reading this blog for long, but I was beginning to doubt its commitment to liberty.

Kudos.
 
Written By: Nicolai Brown
URL: http://www.ameswire.com
I think C. Ford is right. You could call me a crappy economist, or you could call me a dissenting one. Then again, you could say I’m just applying generally-agreed upon beliefs more carefully.

For example, This commonly accepted economic theory virtually mandates that wages, demand for labor, and therefore average income of the wage earning classes, will fall as American trades more with lower-wage-earning countries.

I’d like to see a single economist really dismiss this effect and theory - it obeys the most fundamental principles of supply, demand, and trade. I could imagine someone trying to argue that the effect could be mitigated by some way or by something else, but I doubt it.

In a nutshell, even if America’s net total wealth is increased by free trade, lacking serious redistribution, the net wealth of most of its population declines until equilibrium is reached with the rest of the globe.

This process is great for the rest of the world, and I ought to be altruistic enough to support it, but I’m not, and I don’t. I’m not content to see my country’s standard of living decline for three centuries while the relative price of labor moves to a global equilibrium.

I welcome serious dissenting arguments. Remember, GDP growth is irrelevant - I accept that free trade (probably) increases net worth of the country as a whole.
 
Written By: glasnost
URL: http://
Unahasp,

Since Taiwan still has import tarriffs and subsidizes itself, it still matters that you see Doritos go from nothing here to major snack food. Oh, but I guess they could import Australian corn and then make their own cheaper, right? LOL.

What’s really interesting is how brands compete here: Miller (made in USA) is priced much cheaper than Budweiser (made in China)

Also, here’s another subsidy for you: freight. Since America imports so much, it gets great return rates for freight since the companies don’t want to send empty containers back to Asia. The exception of course is for reefer containers.

 
Written By: Harun
URL: http://

 
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