Archive for the ‘free trade’ Category

Protectionists argue that when “good” manufacturing jobs are lost, people are out of work.

I have three problems with this:
1. Those people lose their jobs because someone else is better at it than them.
2. A consequence of the loss of these jobs is that everyone gets richer
3. As Kling says,

the natural process of retirement and new entry into the labor force tends to
take care of the marginal adjustments in occupational choice. No, not every
manufacturing production worker can retire at once, but they do not all have to.
Many of them have to change firms or change industries, but the overall process
of adjustment among occupations is reasonably gradual.

It’s the third point that I want to focus on. When we talk about the “people” that “lose” these jobs, we’re really talking not about a large number of individuals, but a notional concept of a person that works in a job. So, what happens to this “person” in the future? Remember that this “person” is getting gradually more educated (hopefully) and that they are going to have more disposable income precisely because the economy in which she works destroys jobs that aren’t productive enough.

There’s a funny paradox, though, because consumption as a share of GDP does not drop over time. So people are getting more for their money but they still spend as much. So where does this extra money go that’s saved by “destroying” these “peoples’ ” jobs?

I am willing to bet that these people are getting jobs in industries that are immune to this kind of destruction. Industries like education and, perhaps, entertainment. I think about all the people that work in the entertainment industry and wonder what, exactly, they DO. What I think they’re DOING is actually NOT doing something they’d be bad at, like making widgets that are better made in China. They are rewarded for their idleness with cheaper goods and jobs in industries that are a bit more fun.

Hollywood should be the biggest advocate of free trade. They sell their movies overseas and have foreign manufacturers to thank for the free time and spare national income required for them to do their jobs.


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