How Different is Now?

"Is today's increased competition from foreign workers really that different from the massive post-World War II entry of women into the work force?"

No, not really.

Neither have added much to overall productivity -

http://www.cepr.net/index.php?option=com_content&task=view&id=1123&Itemid=8

I can cite some powerful, if anecdotal, evidence to the contrary. My employer had been testing a large high-tech product in a controlled environment in-plant for decades, because internal studies had convinced management this was the most cost-effective process.

But when a surge in demand forced outsourcing the test to an outdoor site 80 miles away, with attendant shipping costs, severe weather constraints, etc. management held their breath and hoped for the best.

The surprise was that productivity was higher, and total cost was lower, at the new site. This had never been anticipated by the plan management, who were essentially in the pocket of the factory workers' union.

Gee, I didn't know Don was a clinical psychologist.

Blinder had a well reasoned discussion of the issues.

Don takes the amateur practice of psychology to a new level.

Atta boy Don.

A shift in labor demand due to technologogical advance means that at least the workers using the new technology will be realizing greater productivity and an improvement in their standard of living.

In theory this should spread throughout the economy and generate an improvement in the overall standard of living.

A shift in labor demand due to outsourcing could possibly mean that some workers might be shifted into higher value employment that allows their standard of living to improve.

However, there is nothing in economic theory, or in practice that says this has to happen.

Binder did not actually take a position in his recent paper for or against outsourcing.

All he did is state that if outsourcing continues a consequence should be that certain types of employment would grow faster then others.

If you are going to write about Blinder,you might actually write about what he says rather then put words into his mouth to create a strawman you can attack.

Ugh. True Liberal, you (inadvertently?) make the point. Outsourcing is a mixed bag. Sometimes it will work, sometimes it won't. Sometimes, the reason for the failure or success will be obvious, sometimes they won't. In 10 years, looking back, we'll probably be able to divine a definite trend and learn some definitive lessons (which will likely be tactical rather than strategic). But now, in the thick of it, all we have is fear, uncertainty, and doubt (FUD). We can look back at similar competitive forces in recent history, see that the FUD was totally unjustified, and apply to this situation. That's what Professor Boudreaux is doing here.

And to take Blinder's concerns seriously here for a moment... Experimentation has, over the past decade, made managers much more cautious about outsourcing as a panacea than a decade ago. That has to be a lot better in the long run for "workers" that experience be in management's institutional memory than just being told not to consider it by someone in charge. No?

As a worker-bee, I wouldn't be so concerned about outsourcing if I knew there would be alternatives. I was one of the lucky ones at my extremely large former employer to have found employment again as a programmer even though I had to move and take a 33% pay cut. I have to say that it concerns me that businesses seem to have forgotten in their desire to please stockholders that the economy exists to make it possible for people to take care of themselves and their families if they're willing to work and contribute.

Most of these comments reminds me of friends who suffer break-ups and whine, "Why? Why? Oh God, why?"

Grow up. You're not entitle to a job you didn't create any more than you're entitled to someone else's affections. The implied remedy by the socialists trolling here: force them to keep you; eliminate their choices; give me security at the expense of their freedom (I never hear a quid pro quo--i.e., that a worker shouldn't be allowed to abandon their employer without their permission).

If you want job security, make yourself indispensible, or go to France.

M Hodak,

The immediately preceding commentator has said that being outsourced forced him to move house and take a 33% wage cut. Your retort is 'move to France' - not perhaps the most adult reply one could think of, but it's helpfully illustrative of the credo of absolute selfishness, bordering on nihilism, taught both by Hayek and the Virginia School.

Nobody is to stand in the way of you doing anything you want, when you want; a posture which is fine in theory but absolutely absurd when applied to the discipline of living as a citizen in a nation of citizens.

I only hope that you have not, and never will, suffer an experience similar to that narrated by David Graf.

Martin,

I missed the part where M Hodak said "Nobody is to stand in the way of you doing anything you want, when you want".


I also missed the part where there was any refutation of Hodak's assessment of the Left's solutions.

Martin, I did suffer a similar experience. My employer got into trouble and ended up letting go over a third of their staff. Since then, my income has varied wildly (being self employed) with a couple of years where it was much worse than 33% below what I had been making before.

Bad situation? Certainly, at the time. Complaints? None. As far as I was concerned, I had a good run at that past employer, and it wasn't their problem about what I had to do next. It wasn't the government's problem. And, my fellow citizen, it wasn't your problem, after the unemployment ran out.

To Mr. Hodak:

Why is it so hard for you to agree with me that the basic purpose of an economy is to make it possible for people to take care of themselves and their families? You note in your reply that you are self-employed, but where would you be without others like myself who purchase your services with the money we earn from our jobs? We can't all be entrepreneurs.

Let's not forget as well that the isms like capitalism or communism or socialism are man-made sets of rules. When things aren't working, then you need to revisit the rules and adjust them where necessary to correspond with reality. We are only fooling ourselves if we put blind faith in the economic principles of any of the isms.

Frankly, I don't have the answer. Like yourself, I have no desire to live in a nanny state. And yet, I don't like seeing ordinary people become economic roadkill. I'd like to think that we could come up with a better alternative. And for the record, I am a conservative Republican.

David asked, "Why is it so hard for you to agree with me that the basic purpose of an economy is to make it possible for people to take care of themselves and their families?"

The economy doesn't have a "purpose," any more than weather patterns or the laws of physics have a purpose. Economies simply exist. They exist because different people have different wants, different abilities, and different resources.

Moreover, economics has laws no less binding than the laws of physics. Trying to devise a system contrary to the laws of economics, as someone memorably said, is like trying to walk through walls.

David G.,

I, too, don't like seeing ordinary people suffering economic hardship. The difference, I think, starts with how we characterize that hardship. Terms like "economic roadkill" or "the basic purpose of an economy" imply that the economy is something tangible, able to touch us or be touched in some direct way. I believe "the economy" exists separately from any 'ism', even capitalism, just as "nature" exists outside of environmental laws.

Instead, I find it more useful to view the economy as an emergent phenomena--like a relationship--that arises from interactions between individuals, all of them imperfect, all of them with a more or less selfish desire to be better off, even if one defines "better off" in terms of economic advantages to family, friends, or strangers.

I'm not suggesting that is the "truth" or the only way to view an economy, but I think it is much more useful when talking about policy prescriptions. This view underscores the difficulty of trying to "manage" the economy. It's no different from trying to "manage" more familiar kinds of relationships or groups of relationships (like an extended family) from the outside. I think anyone can see how difficult it would be to regulate such interactions, or to visualize the level of emotional or physical coercion required to successfully do so. This view also strips away the euphemisms of "managing" by governmental rules by showing such efforts for what they are, the imposition of rules or redistributions by threat of violence.

My preference for capitalism begins at this relational level way before it extends upward to an appreciation of how it results in the most efficient allocation of resources. I simply prefer fewer rules imposed by force upon consenting adults. I appreciate that everyone doesn't share my love of freedom, or accepts its consequences so willingly, but I think it's still instructive to understand our differences with the clarity of what is implied at the individual level.

But I also believe that a wise set of minimal rules does create the most efficient allocation of resources. I certainly don't see how the imposition of third party views on individual relationships by the threat of violence can improve the economy any more than it could religion. The inquisition did not strengthen religion. Government regulations (beyond common law proscriptions against force or fraud) rarely strengthen the economy. In the end, I have to agree with Teddy Roosevelt's assessment: "It is difficult to make our material condition better by the best law, but it is easy enough to ruin it by bad laws."

I see that jp beat me to the punch on one of my points as I was trying to compose it, no doubt too wordily.

Well, I for one, think that Blinder didn’t go far enough! I’m against any change at all, ever. All change means that somebody has to lose their job. I mean, did Ford really do us any favours by inventing the car? NO! All he did was displace millions of buggy makers around the world and cause an impending ice age in the 70’s and global warming today! And what of those buggy makers? What if the weren’t CAPABLE of adjusting to the world around them? Sure, some of them just found other jobs or didn’t’ seek other employment and decided to become entrepreneurs, started their own businesses, perhaps even meeting new demands resulting directly from this new and evil invention of cars. And maybe that even led to more overall employment and more entrepreneurial opportunities in whole new fields. But anyone who points to that is just missing the point!!!

The point, change is bad. It’s uncomfortable and we’re all born entitled to constant comfort. Economics is not a science of natural human beings making trade-offs to maximize individual utility (what half-wit would think that?!). Economics is a man-made construct and exists purely to facilitate entitlement to a certain lifestyle. Who pays for this lifestyle? Who cares? As long as it’s not me. I’m entitled, not responsible.

Well, I for one, think that Blinder didn’t go far enough! I’m against any change at all, ever. All change means that somebody has to lose their job. I mean, did Ford really do us any favours by inventing the car? NO! All he did was displace millions of buggy makers around the world and cause an impending ice age in the 70’s and global warming today! And what of those buggy makers? What if the weren’t CAPABLE of adjusting to the world around them? Sure, some of them just found other jobs or didn’t’ seek other employment and decided to become entrepreneurs, started their own businesses, perhaps even meeting new demands resulting directly from this new and evil invention of cars. And maybe that even led to more overall employment and more entrepreneurial opportunities in whole new markets. But anyone who points to that is just missing the point!!!

The point, change is bad. It’s uncomfortable and we’re all born entitled to constant comfort. Economics is not a science of natural human beings making trade-offs to maximize individual utility (what half-wit would think that?!). Economics is a man-made construct and exists purely to facilitate entitlement to a certain lifestyle. Who pays for this lifestyle? Who cares? As long as it’s not me. I’m entitled, not responsible.

why did that post twice? Sorry. I must have messed up.

Thanks to all for the thoughtful responses!