Jobs will be the central issue of this year’s elections with Governor Romney pounding on President Obama for not creating more jobs and the high unemployment rate. Obama will be criticizing Romeny for sending jobs abroad, “outsourcing.” Romney cannot accuse Obama of this since Obama has never worked in private business, so has never had to face this prospect.
There are a lot of myths surrounding the “outsourcing” issue. Basically there are two types of “outsourcing.” The first falls under the concept that a product sold in the USA should be made in the USA. There is a term in economics for this, autarky, and the leading proponent was the late Soviet Union. It produced all it needed in country with the net result that its citizens were forced to buy shabby products with limited selection. Of course this concept stands in marked contrast with the essential principal of world trade, provide the consumer with the best product at the best price.
The other concept of “outsourcing” maintains that American companies must make their products in the USA and not abroad. Before one heeds this siren call he should consider that such well known foreign owned firms as Seimens, Honda, Toyota, Nissan, Unilever, Shell, Budweiser, Miller and Bayer employ hundreds of thousands of Americans to make their products for the American market in the USA. I guess these companies “outsourced” these jobs from their home countries.
Both of these criticisms of “outsourcing” are beside the point. The real problem is that all Americans are concerned about their job. Too many have lost their jobs. Too few can find new work. And this is a problem for most other countries as well. And “outsourcing” is not the reason.
The argument about “outsourcing” usually revolves around loss of jobs in our manufacturing sector. However, the real problem here is not “outsourcing” but “mechanization and automation.” In the year 1900 over 50% of the American work force was in agriculture which by the year 2000 had fallen to less than 4% of the work force. These jobs were not “outsourced” but replaced by machines. Similarly our manufacturing sector never employed more than 28% of our work force and it now employs about 12%. Why, because the workers have been replaced by machines.
I would have thought this trend would be applauded. Take a look at early 20th Century intellectual and “literati” concern about the industrial age “dehumanizing” mankind. Just see Charlie Chaplain’s acclaimed film, “Modern Times,” to get some understanding of this wide spread opposition to modern manufacturing. Instead the same crowd is now denouncing the loss of these “high quality” manufacturing jobs.
Even more relevant, I always ask people who lament the loss of “high quality” manfucturing jobs one simple question, do they want their sons and daughters to grow up to be assembly line workers or do they want them to be doctors, lawyers and educators?
Instead of tilting at the windmill of “outsourcing” the discussion should focus on the problem of loss of jobs because of the massive reduction in consumption caused by the “Great Recession.” And the loss of jobs guarantees that consumption will go down even more. We have a dangerous downward spiral.
How to stop the d0wnward spiral? Obama calls for more Federal deficit spending. Well I have two replies for this. First, if you find yourself in a hole the first thing you do is stop digging. The second is the old saying, “fool me once shame on you, fool me twice shame on me.” Even the president admits that his plans have not had the expected results. Why continue?
Romeny offers his experience at reviving failing companies to show he can revive the American economy. Of course it is one thing to revive a company and another to revive a national economy. But it is a new approach and thus better than continuing on a path that has not worked.