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Thursday, May 10, 2007
Alan Reynolds :: Townhall.com Columnist
Blinder's Blunder
by Alan Reynolds
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Will the Dems' health care Christmas Present to America be an improvement or detriment to our health care system?


The second, less risky category includes accountants, but also several jobs that do not seem easily "zapped across international borders electronically." The group includes welders, for example, plus production worker helpers, packaging and filling machine operators, machinists, inspectors and even "first-line supervisors/managers."

In the third group, we are asked to believe that "sales managers" may soon be relocated to foreign countries. Customers may get an e-mail or phone call, but don't expect lunch or a handshake.

Employment increased between 2002 and 2005 in 18 of the 22 job categories supposedly threatened by electronic delivery of services. Employment did decline 4.5 percent among telemarketers, a loss of nearly 19,000 jobs, but that is an unpleasant low-wage job, and the job drop is largely explained by the national "do not call" registry. To put that loss of about 6,000 jobs a year in context, the United States routinely loses about 30 million jobs each year, yet gains even more. The net gain is why the unemployment rate is just 4.5 percent.

Employment among computer programmers fell by 68,000 jobs, nearly 15 percent. I am not unsympathetic, since my son John is a PHP programmer of online applications (in New York, not India). Most software professionals in India are just coders, a rote job requiring little creativity. Besides, employment in four other computer-related "offshorable" U.S. jobs, such as computer software engineers, increased by 210,570 between 2002 and 2005, far outstripping the loss of mostly low-end programming jobs.

Blinder needed a short and snappy idea designed to be "marketable in the political arena." He is trying to sell us on his public policy ideas. As the academic paper notes, "The appropriate policy responses (if any) to this problem probably depend on how many jobs might be susceptible to offshoring." He wants a large policy response, which requires a large number.

It is always prudent to be suspicious whenever wildly sensational claims are used to market any public policy.

Blinder wants more generous unemployment benefits (which discourage work) and more costly retraining programs (which almost always fail). He even expects expert central planners to redesign "our education system so that it turns out more people who are trained for the jobs that will remain in the United States and fewer for the jobs that will migrate overseas." If your children want to be computer programmers or accountants, they will simply have to adapt to the national plan.

Employment is increasing in nearly all the occupations Blinder imagines to be in imminent danger of being handled through electronic communication with some distant country. Unless the facts change, Blinder's imaginative guesstimates and policy advice need not be taken too seriously.

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©Creators Syndicate
OUTSOURCING
The outsourcing argument has been going on for a long time, in different guises. When computers first became generally powerful, in the 70's, there was much gnashing of teeth about automation. A lot of people were called Luddites. The counter argument was that productivity would go up and we would all be richer. And that time we were.

Then the first gas crunch came, and foreign cars became popular. Then it was noticed that some countries, notably Japan, seemed to have manufacturing techniques that were superior to ours. Purthermore, after the Space Race died (we won) it was noticed that Americans weren't majoring in the sciences and engineering like thay use to, possibly because they noticed that MBA's and finance types kept getting more and more money, while they got laid off because their knowledge was obsolete.

Now we have the globalists and the anti=globalists, and we are told that the larger the economy and the fewer the barriers, the richer we will all be. Something about "comparative advantage". Now I understand all that, I have an MBA in finance to go with my engineering degree.

But here's what I don't understand! Almost all research that raises productivity and/or improves lifestyle is either done by large manufacturing corporations, or paid for by them in selected research labs, some of them university based. When all the manufacturing is overseas, China say, where will all this research be done? Unlike the predictions from years ago, we will not be a service based economy, and we will have no cutting edge research to sell to the Chinese or other manufacturing countries. And we will no longer have what are still (hard to believe) the finest universities in the world.

I'd like to see Dr. Sowell, or Dr. Williams, both of whom are heroes to me, address this specific topic.

Outsourcing?
We outsource even to nations that with all cost factors, the cost is as high but, if the taxes are lower, they leave because they get to keep more of their profits.

Or, it is lower healthcare costs or lower litigation costs or lower compliance costs.

What is missing from all the "rosy economy" picture here, is that we are increasing debt in what is supposed to be a boom time. Other nations around the world are reducing debt, paying off world bank loans early, raising interest rates to slow inflation etc. We are doing nothing to prepare for the next recession.

Everybody in and out of government says we will get one sooner or later. Yet, if we can't reduce debt and government spending in a "boom" time what are we going to do in the next recession?

How will we "spend our way out of it," if the foreign nations quit loaning us as much money as we need? It isn't that they have to stop loaning money to us, just not loan us enough. Nation after nation is now moving out of dollar assets for other currencies where the interest rates are rising and higher than ours. Every dollar that goes to another nation is a dollar not being available for our deficit spending.

For those who say "good," and count on that to reduce spending, remember that we have a 50 trillion unfunded liability in Social Security and Medicare facing us we need to borrow money for. That amount if not borrowed, would total $400,000 for every full time worker according to the Government Accounting Office.

Good luck on offshoring when the next recession occurs. With the growing middle-class around the world and decline in it here, why not move and sell to the middle-class there and export back to the few remaining here?
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