Wednesday, February 16, 2005

The Sky is Not Falling, it is Expanding

On its opinion page Tuesday, Feb. 15th, the Pioneer Press printed, on their opinion page, the story, U.S. is trading away our jobs, written by Mr. John J. Sweeney, President of the AFL-CIO. Some things he said :

" Minnesota’s economic landscape has been eroded by trade. Nationally, we are losing jobs in every sector that is open to trade competition."

And this:

" In Minnesota, working men and women have lost more that 10,200 jobs to trade with China alone-and that was just from 2001 to 2003. Minnesotans...found themselves without jobs and without much hope for the future. "
And :
"Free trade boosters promised that deals like...(NAFTA) and the World Trade Organization would open markets for American goods and services, creating high-paying jobs at home and prosperity abroad. Instead, America’s working families are stuck in a spiral of deteriorating jobs and wages.."
Let's take a peak at China. Here, from a Conference Board report are a few words:
"China is losing more manufacturing jobs than the United States. For the entire economy between 1995 and 2002, China lost 15 million manufacturing jobs,compared with 2 million in the U.S., The Conference Board reports in a study released today." (Study date is July 2004)
And this:
"As its manufacturing productivity accelerates, China is losing jobs in manufacturing – many more than the United States is – and gaining them in services, a pattern that has been playing out in the developed world for many years," concludes The Conference Board study. And : "According toRobert H. McGuckin, Director of Economic Research at The Conference Board and co_author of the study: 'Increased unemployment has also accompanied the restructuring of the industrial sector, but per capita income has risen over the period.' "

A few longer paragraphs:
"The new report from The Conference Board, the global research and business membership network, is the result of a joint research project with The National Bureau of Statistics of China. The study is based on data for the 51,000 large and medium sized firms in China’s manufacturing, mining and the utilities industries. While the study focuses on the larger firms, according to McGuckin, 'the same patterns are observed among smaller firms.' China is rapidly losing manufacturing jobs in the same industries where the U.S. and other major countries have seen jobs disappear, such as textiles. Matthew Spiegelman, Economist at The Conference Board and co_author of the study, notes: "The U.S. lost 202,000 textile jobs between 1995 and 2002, a tremendous decline by any measure. But China lost far more jobs in this sector –1.8million. All told, 26 of China’s 38 major industries registered job losses between 1995 and 2002. The study points out that while developed countries’ jobs are being offshored to China, exports are only one piece of China’s industrial expansion. China’s industrial labor productivity growth exploded at a 17% annual rate between 1995 and 2002. As in the more developed countries, this rise in productivity comes from improved technologies and the reallocation of resources from lower to higher value activities.... The advances in productivity are broad-based across the industrial sector, with 36 of the 38 major industries experiencing increases between 1995 and 2002. In fact, 27 of the 38 saw annual average productivity growth of over 10%(compared to just 4% in U.S. manufacturing over the same period)....The pace of downsizing has been extremely fast at state-owned enterprises, in particular, with over 12 million jobs lost between 1995 and 2002 in the industrial sector alone. While the upsizing of private sector enterprises was substantial – almost 9 million new jobs – the net loss in jobs in China’s industrial sector was still over 4 million jobs. While
there has been much discussion
about offshoring high-wage jobs from the U.S. to low-wage countries like China, the loss of large numbers of manufacturing jobs is actually occurring in both countries simultaneously. "
Whew! A lot to read. What to make of this? Mr. Sweeney sounds awfully like he is arguing for trade control policies in the name of job preservation. Is this a good idea? What is the effect of such policies? As I am not an economist or trade policy expert, I must rely onmy experience and common sense. But I reject his assertions of doom, failure and hopelessness. (Yes, being out of work one is not made happier to know that several millions of Chinese are sharing your difficulty.) But to suggest that jobs can and must be protected, and that without such protections or controls, "...families are stuck in a spiral of deteriorating jobs and wages" is peddling in despair. Those same conditions bringing about huge shifts of jobs and industries are doing so in the United States, and in China. And we learn that one of those conditions is, boom, productivity! Why is this so? What is productivity but greater effeciency. One way to increase effeciency, better tools. Why do we buy better tools, with what expectations? That we will make more money, proving that it was indeed a good idea to spend $25,000 on new software to coordinate the drawings with the CNC machines which cut out those parts. (Exactly what happened where I work.) We are faster now. We can do the same work in less time; what we are doing, is more work in the same amount of time. Productivity. Get a lot of that and what do you need? More help. Restrict it, protect the 5 inch floppy disk industry, (remember those), and what do you get? Beached whales on life support. Impermanence surrounds us. The tectonic changes in industries in this country, and worldwide are not the "U.S trading away our jobs." The world is changing. It will not stop. Mr. Sweeny says we need "...fair rules for the global economy." No, not rules;what we need is vision.

Some editorial disclosures. Please do not assume I am a Union basher. (I am an idea basher.) I belong to and work in a union shop. Many rights and benefits for which the Unions struggled are now proscribed by law. How to maintain those benefits, higher wages for Union workers, for example, requires some creativity. If I ran a Union training program, and employers said to themselves, "Those Union guys cost more, but they are the most well trained and skillful people around, and worth every penny," I would know I had a great product, something that could out compete any other. Focusing on the adversarial tactics of the past, agitating for "rules", is a mistake, and is leading to irrelevance. The world shifts around us; I know we can shift with it.


Hello M.A.W.B. readers. Thanks for the email head's up Douglas.

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