Townhall: Foreign Trade Angst By Walter E. Williams
According to the Bureau of Labor Statistics, between 1996 and 2006, about 15 million jobs were lost and 17 million created each year. That’s an annual net creation of 2 million jobs. Roughly 3 percent of the jobs lost were a result of foreign competition. Most were lost because of technology, domestic competition and changes in consumer tastes.
Some of the gain in jobs is a result of “insourcing”. Foreign companies, such as Nissan, Honda, Nokia, and Novartis, set up plants, hire American workers and pay them wages higher than the national average. According to Dartmouth College professor Matthew Slaughter, “insourced” jobs paid a salary 32 percent higher than the average U.S. salary. So here’s my question to anti-traders: If “outsourcing” is harmful to the U.S., it must also be harmful to European countries and Japan; would you advise them to take their jobs back home?
Wal-Mart has become the whipping boy for political demagogues, unions and anti-traders. I suggest that they have the wrong target. The correct target is revealed by answering the question: “Why does Wal-Mart exist and prosper?” Wal-Mart exists and prospers because tens of millions of Americans find Wal-Mart to be a suitable source of goods and services. Clinton, Obama, unions and anti-traders should direct their outrage and condemnation at the tens of millions of Americans who shop at Wal-Mart and keep it in business.
There’s great angst over the loss of manufacturing jobs. The number of U.S. manufacturing jobs has fallen, and it’s mainly a result of technological innovation, and it’s a worldwide phenomenon. Daniel W. Drezner, professor of political science at the University of Chicago, in “The Outsourcing Bogeyman” (Foreign Affairs, May/June 2004), notes that U.S. manufacturing employment between 1995 and 2002 fell by 11 percent. Globally, manufacturing job loss averaged 11 percent. China lost 15 percent of its manufacturing jobs, 4.5 million manufacturing jobs compared with the loss of 3.1 million in the U.S. Job loss is the trend among the top 10 manufacturing countries who produce 75 percent of the world’s manufacturing output (the U.S., Japan, Germany, China, Britain, France, Italy, Korea, Canada and Mexico).
But guess what — globally, manufacturing output rose by 30 percent during the same period. According to research by the Federal Reserve Bank of St. Louis, U.S. manufacturing output increased by 100 percent between 1987 and today. Technological progress and innovation is the primary cause for the decrease in manufacturing jobs. Should we save manufacturing jobs by outlawing labor-saving equipment and technology?
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Filed under: Everything Else , economy, manufacturing jobs, output
