The Economics of Progress
It is difficult to say something perfectly, precisely false. But House Speaker Dennis Hastert did when participating in the bipartisan piling-on against the president’s economic adviser, who said something sensible John Kerry and John Edwards, who are not speaking under oath and who know that economic illiteracy has never been a disqualification for high office, have led the serum against the chairman of the president’s Council of Economic Advisers, N. Gregory Mankiw, who said the arguments for free trade apply to trade in services as was manufactured goods. But the prize for the pithiest nonsense went to Hastert: “An economy suffers when jobs disappear So the economy suffered when automobiles caused the disappearance of the jobs of most blacksmiths, buggy makers, operators 0.£ livery stables, etc.? The economy did not seem to be suffering in 1999, when 33 million jobs were wiped out-by an economic dynamism that created 35.7 million jobs. How many of the 4,500 U.S. jobs that IBM is planning to create this year will be made possible by sending 3,000 jobs overseas Hastert’s ideal economy, where jobs do not disappear, existed almost everywhere for almost everyone through almost all of human history. In, say, 12th-century France, the ox behind which a man plowed a field changed, but otherwise the plowman was doing what generations of his ancestors had done and what generations of his descendants were to do. Those were the good old days, before economic growth For the highly competent workforce of this wealthy nation, the loss of jobs is not a zero-sum game It is a trading up in social rewards. When the presidential candidates were recently in South Carolina, histrionically lamenting the loss of textile jobs, they surely noticed the huge BMW presence. It is the “off shoring” of German jobs because Germany’s irrational labor laws, among other things, give America a comparative advantage. Such economic calculation explains the manufacture of Mercedes-Benzes in Alabama, Hondas in Ohio, Toyotas in California. . As long as the American jobs going offshore were blue-collar jobs, the political issue did not attain the heat it has now that white-collar job losses frighten a more articulate, assertive social class Kerry says off shoring is done by “Benedict Arnold CEOs.” But if he wants to improve the health of U.S. airlines. and the security of the jobs and pensions of most airline employees, should he not applaud Delta for saving $25
million a year by sending some reservation services to India Does Kerry really want to restrain the rise of health care costs? Does he oppose having X-rays analyzed in India at fraction of the U.S. cost? In November, Indiana Gov. Joseph Kernan canceled a $15 million contract with a firm in India to process state unemployment claims. The contract was given}o a U.S. firm that will charge $23 million. Because of this 53 percent price increase, there will be 8 million fewer state dollars for schools, hospitals law enforcement, etc. And the benefit to Indiana is what? When Kernan made this gesture he probably was wearing something that was wholly or partly imported and that at one time, before off shoring, would have been entirely made here Such potential embarrassments are among the perils of making moral grandstanding into an economic policy.
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