Second Thoughts about Free Trade

[HS Thomas]

Second Thoughts On Free Trade
Second Thoughts on Free Trade
By CHARLES SCHUMER and PAUL CRAIG ROBERTS
Published: January 6, 2004

"I was brought up, like most Englishmen, to respect free trade not only as an economic doctrine which a rational and instructed person could not doubt but almost as a part of the moral law," wrote John Maynard Keynes in 1933. And indeed, to this day, nothing gets an economist's blood boiling more quickly than a challenge to the doctrine of free trade.
Yet in that essay of 70 years ago, Keynes himself was beginning to question some of the assumptions supporting free trade. The question today is whether the case for free trade made two centuries ago is undermined by the changes now evident in the modern global economy.
Two recent examples illustrate this concern. Over the next three years, a major New York securities firm plans to replace its team of 800 American software engineers, who each earns about $150,000 per year, with an equally competent team in India earning an average of only $20,000. Second, within five years the number of radiologists in this country is expected to decline significantly because M.R.I. data can be sent over the Internet to Asian radiologists capable of diagnosing the problem at a small fraction of the cost."

[HS Thomas]

"These anecdotes suggest a seismic shift in the world economy brought on by three major developments. First, new political stability is allowing capital and technology to flow far more freely around the world. Second, strong educational systems are producing tens of millions of intelligent, motivated workers in the developing world, particularly in India and China, who are as capable as the most highly educated workers in the developed world but available to work at a tiny fraction of the cost. Last, inexpensive, high-bandwidth communications make it feasible for large work forces to be located and effectively managed anywhere."
Today, job security comes from acquiring knowledge, not building a relationship with a single firm. This model isn't perfect, but it's still damn good.

[Tony Collins]

We are victims of our own technology.
Tony

[HS Thomas]

"One objection to this argument is ethical. As Matt Yglesias points out,
Say we changed things around and more Americans made more money, more Indians made less money, and all people everywhere had to pay somewhat more for their software. How is that really better? Because it's better for Americans?...
Come to think of it, American software consumers have interests that count as well. So do the shareholders in US software companies. Why is protecting the salary levels of American geeks so overwhelmingly important?"
"Eight of the 10 fastest-growing occupations between now and 2010 will be computer-related, according to new projections from the U.S. Bureau of Labor Statistics.
The sharpest increase is expected to occur among workers who design software programs or develop computer databases. This occupational group had 380,000 employees in 2000, a figure that is expected to double to 760,000 by 2010. That's an annual increase of 7.2 percent."
"Just because the industry is growing by leaps and bounds doesn't mean that no one will get fired and that no jobs will be outsourced. In fact, firings and outsourcing are critical to the growth process.
To be sure, being fired or outsourced or downsized isn't a pleasant experience. But if there is tremendous demand for programmers, then $150,000-a-year programmers shouldn't have a hard time finding a new job.
In contrast, if a factory worker loses his or her job, that's probably it. Economies the world over (including China) are losing manufacturing jobs because of techonological advances.
Thus, the basic message of free-trade advocates is still right on target: acquire high-tech skills and you can expect to have a good job. Can you expect $150,000 per year? I don't know.
One thing you certainly shouldn't expect is security. Critics like Schumer and Herbert seem to be mired in an old-economy model of lifetime employment. (Which still seems to apply to senators and NYT columnists.) But in the information, skills are what matter. "

Words, words and more words pieced from various blogs.
[ January 08, 2004: Message edited by: HS Thomas ]

[frank davis]

Originally posted by HS Thomas:
"Eight of the 10 fastest-growing occupations between now and 2010 will be computer-related, according to new projections from the U.S. Bureau of Labor Statistics.

The web site is poorly designed with few indications of how old that data really is. However,the latest projection was last done in 2001 http://www.bls.gov/emp/empfaq02.htm#howoften
They may have used data from 2000 or earlier, but outsourcing has really picked up steam since then every year, so I'm not sure it reflects the reality of 2004-2010...
What's really curious is that throughout the site there is reference to projections of 2000-2010. So could this mean 1999 data was used; prior to even the Dotcom bust, massive outsourcing, etc....???
The latest projeections will be released next month for 2002-2012 (2002 is a projection?) http://www.bls.gov/emp/release.htm
Outlook for computer programmers is just average even using the old data. God pity the bastards using the real data... http://www.bls.gov/oco/ocos110.htm#outlook

Thus, the basic message of free-trade advocates is still right on target: acquire high-tech skills and you can expect to have a good job.

These has been disputed by many posters in this forum and will no doubt meet with protest by thousands of unemployed skilled US IT people.

One thing you certainly shouldn't expect is security.
[ January 08, 2004: Message edited by: HS Thomas ]

OK, this makes sense.
[ January 08, 2004: Message edited by: herb slocomb ]

[HS Thomas]

They may have used data from 2000 or earlier, but outsourcing has really picked up steam since then every year, so I'm not sure it reflects the reality of 2004-2010...
What's really curious is that throughout the site there is reference to projections of 2000-2010. So could this mean 1999 data was used; prior to even the Dotcom bust, massive outsourcing, etc....???
The latest projeections will be released next month for 2002-2012 (2002 is a projection?) http://www.bls.gov/emp/release.htm
They were using past data to project future trends I think. It's not just changes ifn software technology remember. Businesses are changing too.
Accounting practice is changing - The concept of 'value' is no longer just based on natural resources, plant and machinery or other tangible assets.
[ January 09, 2004: Message edited by: HS Thomas ]