Jobs come and go

[Dave Farber <dave () farber net>]

Delivered-To: dfarber+ () ux13 sp cs cmu edu
Date: Thu, 27 Nov 2003 05:44:59 -0800
From: Dewayne Hendricks <dewayne () warpspeed com>



Jobs come and go
by Walter E. Williams
<<http://www.townhall.com/columnists/walterwilliams/ww20031126.shtml>http://www.townhall.com/columnists/walterwilliams/ww20031126.shtml>

In 1970, the telecommunications industry employed 421,000 switchboard
operators. In the same year, Americans made 9.8 billion long distance
calls. Today, the telecommunications industry employs only 78,000
operators. That's a tremendous 80 percent job loss.


What should Congress have done to save those jobs? Congress could have
taken a page from India's history. In 1924, Mahatma Gandhi attacked
machinery, saying it "helps a few to ride on the backs of millions" and
warned, "The machine should not make atrophies the limbs of man." With
that kind of support, Indian textile workers were able to politically
block the introduction of labor-saving textile machines. As a result, in
1970 India's textile industry had the level of productivity of ours in the
1920s.

Michael Cox, chief economist at the Federal Reserve Bank of Dallas, and
author Richard Alms tell the rest of the telecommunications story in their
Nov. 17 New York Times article, "The Great Job Machine." Spectacular
technological advances made it possible for the telecommunications
industry to cut its manpower needs down to 78,000 to handle not the annual
9.8 billion long distance calls in 1970, but today's over 98 billion
calls.

One forgotten beneficiary in today's job loss demagoguery is the consumer.
Long distance calls are a tiny fraction of their cost in 1970. Just since
1984, long distance costs have fallen by 60 percent. Using 1970s
technology, to make today's 98 billion calls would require 4.2 million
operators. That's 3 percent of our labor force. Moreover, a long distance
call would cost 40 times more than it does today.

Finding cheaper ways to produce goods and services frees up labor to
produce other things. If productivity gains aren't made, where in the
world would we find workers to produce all those goods that weren't even
around in the 1970s?

It's my guess that the average anti-free-trade person wouldn't protest,
much less argue that Congress should have done something about the job
loss in the telecommunications industry. He'd reveal himself an idiot. But
there's no significant economic difference between an industry using
technology to reduce production costs and using cheaper labor to do the
same. In either case, there's no question that the worker who finds
himself out of a job because of the use of technology or cheaper labor
might encounter hardships. The political difference is that it's easier to
organize resentment against India and China than against technology.

Both Republican and Democratic interventionist like to focus on job losses
as they call for trade restrictions, but let us look at what was happening
in the 1990s. Cox and Alm report that recent Bureau of Labor Statistics
show an annual job loss from a low of 27 million in 1993 to a high of 35.4
million in 2001. In 2000, when unemployment reached its lowest level, 33
million jobs were lost. That's the loss side. However, annual jobs created
ranged from 29.6 million in 1993 to a high of 35.6 million in 1999.

These are signs of a healthy economy, where businesses start up, fail,
downsize and upsize, and workers are fired and workers are hired all in
the process of adapting to changing technological, economic and global
conditions. Societies become richer when this process is allowed to occur.
Indeed, because our nation has a history of allowing this process to occur
goes a long way toward explaining why we are richer than the rest of the
world.

Those Americans calling for government restrictions that would deny
companies and ultimately consumers to benefit from cheaper methods of
production are asking us to accept lower wealth in order to protect
special interests. Of course, they don't cloak their agenda that way. It's
always "national security," "level playing fields" and "protecting jobs".
Don't fall for it -- we'll all become losers.

Archives at: <http://Wireless.Com/Dewayne-Net>
Weblog at: <http://weblog.warpspeed.com>

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