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Trade and Worker Productivity

Posted By Don Boudreaux On March 6, 2010 @ 12:06 pm In Trade | Comments Disabled

Here’s my letter to the NYT on the op-ed by Alan Tonelson and Kevin Kearns:

Arguing for higher tariffs, Alan Tonelson and Kevin Kearns claim that the Labor Department is wrong to “deem any reduction in the work that goes into creating a specific unit of output, whatever the cause, to be a productivity gain” (“Trading Away Productivity [1],” March 6).  These authors insist that, because American firms import increasing amounts of component parts for processing into final goods in the U.S., American workers’ productivity really does not rise when more of the work required to produce final outputs is done by foreigner workers.

This argument is nonsense.  If yesterday American workers required two hours to produce an electric drill, and today those same workers require only one hour to produce an identical drill, those workers’ productivity has risen.  Whether this higher productivity is the result of importing (rather than producing in the U.S.) more component parts of the drill, or instead the result, say, of a new machine that today produces some parts that yesterday were produced by hand, the result is the same: it requires fewer hours of work by Americans to produce a given amount of output.

Sincerely,
Donald J. Boudreaux

By Tonelson’s and Kearns’s logic, American farmers are really not so much more productive today than they were in 1800, for (these authors would say, if they were consistent) much of the alleged higher productivity of American farmers is really due to the higher output made possible by tractors, fertilizers, insecticides, and other techniques of modern agriculture.

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