Economist Jagdish Bhagwati does it again — in an FT opinion piece today, he pricks holes in the Dobbsian view that globalization has devastated U.S. jobs and wages. Bhagwati points out that technology — “labor-saving technical change” — has stressed those less skilled in the job market. And, because the process is now continuous and unrelenting, lower-skilled workers find it harder to adjust. He notes:
I suspect that the answer lies in the intensity of displacement of unskilled labour by information technology-based change and in the fact that this process is continuous now — unlike discrete changes caused by past inventions such as the steam engine. Before the workers get on to the rising part of the J-curve, they run into yet more such technical change, so that the working class gets to go from one declining segment of the J-curve to another.
That does seem like a somewhat pessimistic view for Bhagwati, however. Of course, technological change most often leads to greater efficiency with fewer workers. But, in discussions about this seemingly continuous chain of displacement, a colleague suggested that the enormous capital expenditures that introductions of new technology entail may mean that fewer jobs are created until some of those costs are amortized. Then, more capital is freed up for job creation — not necessarily, though, in those same sectors.