How should the public, economists, politicians and workers measure the relative success and failure of a particular industry? By its profits? Its stock price? By its total employment? This may seem a rather elementary question, yet a proper and clear answer would go a long way in silencing what has been the loudest protectionist cry in recent memory. I am, of course, speaking of the manufacturing sector and its so called “crisis.” [Full article]
Source link: http://blog.mises.org/1855/fewer-workers-more-production/
Fewer Workers, More Production
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If we expand the increased productivity induced less workforce, we can also reason that the world’s #1 consuming market, US, is also losing its consuming power because of loss of jobs. Since it will take time for manufacturing workers to join the services functions, as training and competition for job openings increases within the sector, more and more consuming power is removed from the marketplace. Thus, inventory build up and cost of carrying goods increases, resulting in lost of profit and deep into debts across the board. Sure, this is far down the line, but it is inevitable. The number of service job increase is not higher than the number of manufacturing job decrease. And while jobs in China and India are booming, I don’t see anyone moving out of US to fill those job openings.
Increase productivity is a good thing, but at the expense of consumer power is a double whammy. While ppl can argue that consumer power has been stablized in the past years, but they are through cheap debts (refi, tax cuts…), not through salary increases. When cheap money drys up, and it evantually well (we are starting to see that as presure building for Fed to raise short term rate), luxury goods will stop selling and essentials will be cut back. People need to pay off those debts with or without a job.
MM
If we expand the increased productivity induced less workforce, we can also reason that the world’s #1 consuming market, US, is also losing its consuming power because of loss of jobs. Since it will take time for manufacturing workers to join the services functions, as training and competition for job openings increases within the sector, more and more consuming power is removed from the marketplace. Thus, inventory build up and cost of carrying goods increases, resulting in lost of profit and deep into debts across the board. Sure, this is far down the line, but it is inevitable. The number of service job increase is not higher than the number of manufacturing job decrease. And while jobs in China and India are booming, I don’t see anyone moving out of US to fill those job openings.
Increase productivity is a good thing, but at the expense of consumer power is a double whammy. While ppl can argue that consumer power has been stablized in the past years, but they are through cheap debts (refi, tax cuts…), not through salary increases. When cheap money drys up, and it evantually well (we are starting to see that as presure building for Fed to raise short term rate), luxury goods will stop selling and essentials will be cut back. People need to pay off those debts with or without a job.
MM
I believe the author made a misstatement when he discussed percentages of the workforce in agriculture. He said about half of the workforce declined to 2%, and that “Free trade, innovation and capital creation had obviated the need for 98% of the total work force.” Shouldn’t that be 96%?
quote:
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“Public policy should not be made based upon the personal circumstances of those who lose their jobs due to trade for the same reason that we don’t let the victims of crime sentence their attackers.”
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I agree with this piece in general, but I have to criticize that particular statement.
1. Losing your job due to obsolescence is in no way similar to being the victim of a crime. No-one has the right to work in their current job, or keep their current job, unless said right is contractually created.
2. The victims of a crime should be the ones sentencing their attackers, and any punishment and restitution up to the point of proportionality is acceptable. If the criminal objects, having been proven guilty, the burden should fall on him to show why his punishment is over-bearing, for he placed the victim in said situation to begin with.
This is not a major point, but it does foster the wrongful conception that you have the “right” to your current job.
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