Ignore P.C. Roberts' Name-Calling

by Don Boudreaux on February 28, 2006

in Myths and Fallacies, The Hollow Middle, Trade

Paul Craig Roberts continues to insist that the U.S. economy is on the fast track to disaster.  He asserts that “Another five years like the last, and little will be left” of American prosperity.

Why?  Because free trade in today’s world means that American wages must fall in order for Americans to remain employed in any industry save ones that require its workers to be in close physical proximity to U.S. consumers.  So the wages of motel maids and bartenders might not fall, but those of any workers whose jobs can be ‘outsourced’ will plummet.  Here’s P.C. Roberts again:

Globalization is wiping out the American middle class and terminating jobs for university graduates, who now serve as temps, waitresses and bartenders. But the whores among economists and the evil men and women in the Bush administration still sing globalization’s praises.

Today’s Wall Street Journal ($$) presents evidence that is at odds with P.C. Roberts’s fantastical image of impoverished America.  Here are the opening paragraphs:

Five years after the dot-com bubble burst, job growth has returned to Silicon Valley. But it’s a different kind of growth than in past recoveries, favoring higher-skilled workers.

Netflix Inc.’s hiring shifts are typical. During the tech boom, the online movie-rental service created 100 customer-service jobs near its Los Gatos, Calif., headquarters in the heart of Silicon Valley. After the tech bust in 2000, Netflix eliminated half of those positions. But the total headcount at Netflix’s Silicon Valley offices has grown 20%, to nearly 200 staffers in the last few years.

That’s because Netflix, while shedding some lower-end jobs, has aggressively created new, higher-level jobs. It’s adding jobs in departments such as Web engineering and product development: That groups’ hiring of engineers jumped 20% to more than 50 people in 2005 alone. “Our new engineers have an average of seven to 15 years experience,” says Patty McCord, Netflix’s chief talent officer. “Five years ago, we hired people with three to five years of experience.”

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{ 22 comments }

save_the_rustbelt February 28, 2006 at 1:27 pm

Sorry to say, but I don't believe much of anything I see on the editorial page of the WSJ. They all seem to be employed by the Bush administration.

Silicon Valley is not representative of most of the country, and anecdotes are not really evidence.

Come to Ohio, I will gladly show you what "more trade at all costs" is costing American workers.

Bruce Bartlett and PCR are a few of the sane conservatives reflecting what many of us are thinking.

Timothy February 28, 2006 at 1:30 pm

Nice of PCR to tell me that my wages are falling, I guess the raise that was larger than inflation and the increased benefits I'm getting this year are an illusion.

Don Boudreaux February 28, 2006 at 1:39 pm

For the record, the Wall Street Journal report cited in my post does not appear on the WSJ's editorial page.

And I agree that anecdotes are not evidence — which is precisely why a snapshot picture of Ohio reveals little about the effects of trade.

Noah Yetter February 28, 2006 at 2:01 pm

In the past year my salary has increased by 47%, not including the enormous 2005 bonus I just received. Am I lucky? Perhaps, but I think my success has more to do with having the good sense to work in technology instead of manufacturing. The proper response to losing your job due to foreign competition (or domestic, for that matter) is to adapt and improve yourself, not to get the government to force your fellow citizens at gunpoint to continue employing you in a capacity that does not produce value.

Success in the market comes from giving consumers what they want. If you can't do that, don't expect sympathy.

Max Born February 28, 2006 at 2:51 pm

The only issue is that most software companies in Bay Area are looking for 7 to 15 years of experience. They don't have any use for most recent graduates (except a few stars from MIT and like). All the entry level programming jobs are being created or moved to India. Works for people with experience as they get to manage them but does not work so well for thousands of kids who could have made it but now cannot.

That is the reality.

I choose to accept that reality as inevitable though. There is nothing we can do that will prevent this. Any legislative remedies will hurt more than it will help.

Sad for some of us but true and probably good for many in other developing countries.

Francois Tremblay February 28, 2006 at 3:01 pm

I have to side with Max Born on this one. People like "save_the_rustbelt" are basically cloaking racist rhetoric in a taco shell of economic beliefs. They think they deserve the jobs more than some poor guy in the third-world does.

liberty February 28, 2006 at 4:29 pm

>Works for people with experience as they get to manage them but does not work so well for thousands of kids who could have made it but now cannot.

But you can. You simply have to do a year or two of interning/entry level that won't pay well and then you can get those experience-based jobs.

The jobs you do get will be better and so your long-term prospects are better.

Any company that outsources software development can hope for a bleak future, I must say. I have never known a decent software company that could use code-monkey programmers and succeed – its not that I am saying anything bad about Indian programmers, I'm sure they are great, its just that off-shore programmers tapping out code wth no knowledge of the business model and thousands of miles away are never going to be worth the measley pay.

You are better off paying more and getting more – and many companies are learning that the hard way.

Swimmy February 28, 2006 at 7:05 pm

"But the whores among economists and the evil men and women in the Bush administration still sing globalization’s praises."

It's funny, I found a sentence arguing that globalization has killed 90 million in an article defending Mao's Great Leap Forward the other day. The author went on to say that the scientific evidence for this was great.

He's wrong, of course. The scientific evidence shows the exact opposite trend. Lower death rates, infant mortality rates, and other general positive health trends are associated with open trade:

http://www.nber.org/~confer/2002/iasef02/wei.pdf

If we consider this data in the public debate, as well we should, the anti-globalization argument actually becomes, "It is better for people in developing countries to die, or at least suffer horrible standards of health, than for out-of-college Americans to work a lower-paying job than s/he would otherwise have to in a country with an enormously high standard of living and broad, reliable social safety nets."

The only defense of this stance is nationalism of the most vicious kind. Don't you talk to me about evil whores, Roberts.

Brian February 28, 2006 at 8:07 pm

Roberts claims the end is near for America primarily because of the trade deficit and globalization. However, every time period he mentions in an futile attempt to make his case is since 2000 or 2001. He also specifically mentions the evil support of the Bush administration for globalization and how the Bush administration wants people to lose their jobs.

What he doesn't mention is that the trade deficit has increased in virtually every non-recession year since at least 1980 and the globalization policies of Bush are little different from his predecessors. If free trade was going to destroy us, which it is not, Bush is hardly the primary culprit.

As with many, Roberts has let an irrational Bush hatred inhibit him from an intelligent analysis. All he needs now is a New York Times column.

the Radical February 28, 2006 at 11:27 pm

Come to Ohio, I will gladly show you what "more trade at all costs" is costing American workers.

Rustbelt,

I was at my local Wal-Mart in Ohio after work the other day and I saw first hand what "more trade at all costs" was costing American workers: LESS.

Nationalistic protectionism and union greed is what caused the rustbelt to rust, free trade is what will bring it back.

Morgan March 1, 2006 at 12:48 am

Here's a surprising tidbit. Based on initial unemployment claims and total employees covered by unemployment insurance…

(data available at http://workforcesecurity.doleta.gov/unemploy/claims.asp)

…at no time since 1987 (the earliest date for which state-level data is available) has there been a 52-week period in which Ohio saw a greater percentage of covered employees file for unemployment than did the nation as a whole.

Jobs are unusually secure in Ohio.

Noah Yetter March 1, 2006 at 2:02 pm

"All the entry level programming jobs are being created or moved to India…That is the reality."

I must respectfully call BS, sir. There are plenty of jobs for recent grads in the tech sector. I know because I got one, and so did 6 other people I'd pass on my way down the hall. No, they're not flashy $70k+/yr jobs but anyone who expects that kind of salary in entry level tech anymore is foolish (it was foolish in the 90's too, just easy to finance with cheap credit).

save_the_rustbelt March 1, 2006 at 2:22 pm

"The proper response to losing your job due to foreign competition (or domestic, for that matter) is to adapt and improve yourself, not to get the government to force your fellow citizens at gunpoint to continue employing you in a capacity that does not produce value."

I presume you are not a 55 year old former manufacturing worker who gave 30+ years to a company that "accidentally" forget to fund your pension.

Someday you may not be so smug.

save_the_rustbelt March 1, 2006 at 2:26 pm

"…at no time since 1987 (the earliest date for which state-level data is available) has there been a 52-week period in which Ohio saw a greater percentage of covered employees file for unemployment than did the nation as a whole.

Jobs are unusually secure in Ohio."

Since 2000 Ohio is second in permanent job losses and ranks 47th in job creation (according to the Bush administration anyway).

Pick and choose your statistics with care.

Ohio's most conservative, free market candidate (Blackwell) this year is running a campaign based on Ohio's lousy economy. So what do you know that he doesn't?

save_the_rustbelt March 1, 2006 at 2:27 pm

"I have to side with Max Born on this one. People like "save_the_rustbelt" are basically cloaking racist rhetoric in a taco shell of economic beliefs. They think they deserve the jobs more than some poor guy in the third-world does."

You are wrong.

Try decaf.

save_the_rustbelt March 1, 2006 at 2:29 pm

"I have to side with Max Born on this one. People like "save_the_rustbelt" are basically cloaking racist rhetoric in a taco shell of economic beliefs. They think they deserve the jobs more than some poor guy in the third-world does."

You are wrong.

Try decaf.

save_the_rustbelt March 1, 2006 at 2:36 pm

By the way, I'm neither against increased trade or globalization.

It's the stampede I'm against.

Politicians and economists like to start the stampede and then let others get trampled.

the Radical March 1, 2006 at 4:14 pm

"It's the stampede I'm against."

What exactly do you call the "stampede"?

Morgan March 1, 2006 at 5:15 pm

rustbelt:

I don't think there is any incompatibility between existing jobs being relatively secure and either a) permanent job losses being high or b) job creation being low. Some more economically fluent folks can help us figure out whether high levels of unionization might contribute to all three.

As for "picking and choosing" my statistics, I merely presented the first (and only) data I put together, and only because I thought the result was surprising. My apologies if you didn't like what the data had to say.

Joe March 4, 2006 at 3:57 pm

Rusty, Which state was number one state in job loss, Michigan?

I graduated from a Michigan university in 2001, just as things went south, and I haven’t had a decent job since. I spent a couple years at Wal-Mart working midnight 60 hr. weeks (they only pay for the first 48hrs) for 30k to 35k, then I dabbled in real estate for a bit, sold office supplies door to door, and worked at a Dollar Tree. Now I'm jobless and I decided to add other states to my Monster profile. I’m not sure what I'll do if I get one though. My condo is worth less than I paid for it and I cannot afford to sell it.

It is situations like this that lead people like Rusty and the 55-year-old laid off factory worker to cling to anything to blame for their misfortune. Noah the pension thing has nothing to do with trade you were just screwed. Rusty they are right there are jobs in the rust belt. We just need to retrain. The problem with that is when someone is broken they can't afford to retrain. What we need is education relief for areas hit hard by outsourcing. I know if I had majored in nursing, accounting, or even CIS instead of management, I would have a job in Metro Detroit today. I have a year left on my GI bill but I still can't afford to go back to school. I'm not even sure where my next mortgage payment is going to come from.

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