Thursday, February 26, 2004

Economist's Challenge Puzzles Free-Trade Believers

Outsourcing got you down?...

" if China ships cheap brassieres to the United States and 20,000 workers in U.S. bra factories lose their jobs, the lower prices for 100 million American women mean that "the gains to the multitude are greater than the loss to the displaced workers," he wrote in one of his Internet pieces. That is because the savings enable people to spend more money on other things, creating demand for other jobs, he said.

But the U.S. economy as a whole will suffer if bra manufacturers and other industries move overseas, according to Roberts, because so many workers would lose their jobs that "the loss of incomes outweighs the lower prices."

Mainstream trade experts contend that such a scenario is no more grounded in reality than past scares about mass job losses, which centered on "automation" in the 1950s and 1960s, "de-industrialization" in the 1980s, and the "giant sucking sound" of jobs moving to Mexico conjured up by Ross Perot during the debate over the North American Free Trade Agreement in the early 1990s. In each case, the limited job losses that occurred drove down costs and generated efficiencies that fueled increases in U.S. productivity -- the ultimate source of higher American living standards. Now that the big worry is outsourcing, the basic lesson of those episodes is being overlooked, said Brink Lindsey, director of trade policy studies at the Cato Institute.

http://www.washingtonpost.com/wp-dyn/articles/A7312-2004Feb25_2.html

... I agree with Cato boys but my concern here is not the change but the apparently accelerating rate of change and America's weakening resilience. My thesis is our culture is churning out hordes of what can charitably be described as second raters into an environment that increasingly needs (and rewards) the best & brightest.

It's a rotten deal compared to the relatively cushy prospects I had, but the long & short of it is you can't expect to keep getting $60K for doing something Habib & Lo Ping are willing to do for much less.



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