Saturday, January 13, 2018

Made In Elsewhere

Offshoring of labor, for all that it aggrieves the people who lose their livelihoods, has enabled business to remain in labor-intensive enterprises while, at the same time, putting downward pressure on costs. And, perhaps more importantly, it has allowed the public to purchase the trappings of affluence at a lower cost than they would otherwise. This isn't to say that it's necessarily a good thing, or that everyone should support the practice, but it is somewhat worthwhile to understand why it happens as often as it does.

This movement of jobs to places where the same work can be done for lower wages is a product of our own desire to buy things cheaply and/or see corporate profitability (and thus, stock prices) continuously rise. In effect, we've been importing poverty in the name of increasing our overall standard of living and corporate balance sheets. This, like the paradox of thrift, is simply another manifestation of the fact that our current economy is set up in such a way that what's best for any given individual can be bad for the group. While many people might not like what is happening, there isn't a broadly-shared idea of what should be happening, and the status quo (as unappealing as it may be) tends to be everyone's second choice.

Part of the problem is the parochial way in which lawmakers tend to see the world. While we might prefer the Congress act for the long-term good of the nation as a whole, the individual states and districts that Senators and Representatives are answerable to are primarily concerned with themselves, and the "National interest over Local interests" constituency isn't yet large enough to be able to elect/defeat candidates for national office on its own. (It is also very divided, as people tend to be more interested in targeting programs that benefit someone else, while seeing those things that benefit them as beneficial for everyone.)

Additionally, large American businesses typically seem to work in what could be described as profit preservation mode, eschewing risky creative ventures in favor of creating circumstances that seek to guarantee a certain level of profitability (including importing poverty). And while a number of people talk a big game about how "small businesses will save the world," policy tends to favor large businesses, which use the clout provided by their size to hold off smaller competitors. (Think about how things might be different if the individual brands that made up General Motors and Chrysler were still independent companies [I'm not an old man, and I remember when there were four big Detroit automakers.], and if banks weren't routinely allowed to buy up their failing competitors.)

This leaves us with a situation in which a number of factors routinely conspire to move work away from the United States, with its relatively high expectations for the standard of living that work, even relatively low-skilled work, should provide, and to nations for which wages that we would consider too low to be workable are a step up the food chain. And as high-speed communications and global supply chains make the world seem ever-smaller, the number of jobs that it will make sense to move elsewhere will increase. (If Africa, as a continent, ever manages to settle things down enough that it's "safe" to move large-scale employment projects there, we're likely to see another round of large-scale offshoring, as companies move to take advantage of the large labor force of poor people that will be made available.)

To a degree, we shouldn't care that other parts of the world are willing to perform low-skilled labor more cheaply than what would be a living wage in the United States. Last I looked we were supposed to have an educational system that was the envy of every other nation on the planet - do we really have a good reason to be squabbling with China over manufacturing jobs that don't even require a high-school education? (Of course, in this respect, it would be helpful to actually consider a high-school education to be, well, education. And for the most part we don't.)

Fighting to save industries that can be sited more cheaply somewhere else is a loser's game, that only works to the degree that a national economy can more or less achieve autarky. We're better off creating new industries, and letting companies arise, live and die in a way that creates technological and labor churn that creates new engines for growth and recurring labor shortages that make it worthwhile for the labor market to stay up on the latest tech. When some poor country somewhere decides that they want to spend their time making t-shirts or ball-bearings, we should be rushing to offload that sort of busy work to them, so that we put the best-educated labor force in the world to work on things that actually require the education that we spent so much on. Of course, this may mean altering our education system. While there seems to be an emphasis on well-rounded citizenship as a goal of education, it seems to me that a certain basic skills set is also a useful component. To be sure, the goal should not be to allow companies to offload their basic training costs onto the public (although that may have to be part of it), but rather to understand what basic skills will be needed in the overall economy by the time students graduate. This is, of course, a taller order than I'm making it out to be - if predicting the future were easy, we'd live in a much different world. But if we're effectively going to mandate that everyone spend a dozen years in school, we may as well do what we can to make that investment pay off for us.

This alone won't solve the problem. It is, after all, a very deep problem. And if we can't manage to create and maintain a constant demand for local labor to supply the good and services we need, we'll simply wind up in the same position down the road. But our current responses to living in a worldwide labor market are dysfunctional. So sticking with them won't do us any good, either.

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