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No Difference

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Here’s a letter to the New York Times:

Steven Rattner powerfully argues that it’s foolish to suppose that mechanization will permanently increase unemployment (“Fear Not the Coming of the Robots [2],” June 22).  But Mr. Rattner falters when, after correctly explaining that “technology is not the prime culprit behind our languid employment and income growth,” he blames these ills on “globalization, and particularly the ability of companies to substitute far less expensive and increasingly skilled labor in developing countries.”

Globalization is simply a technique for producing goods and services.  As the economist David Friedman points out, Americans can produce cars by assembling metals, rubber, plastics, glass, and other materials in Michigan or by growing corn in Iowa and then exchanging that corn for cars assembled in Japan.*  The method chosen (absent government meddling) is the one that produces for consumers the best cars at the lowest costs.  So the very reasons identified by Mr. Rattner for why technology should not be blamed for a sluggish economy are reasons why globalization should not be blamed.

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

* David D. Friedman, Hidden Order [3] (New York: HarperBusiness, 1996).​


If keeping costs as low as possible by using technology poses no threat to long-term employment, then keeping costs as low as possible by trading with foreigners poses no threat to long-term employment.