Job Losses and Productivity Gains
I came across this chart tracking U.S. manufacturing jobs and U.S. productivity over the past 38 years (posted yesterday by Mark Perry).
It’s worth considering, especially in today’s climate when free trade — particularly NAFTA — is pointed to as the chief culprit in lost manufacturing jobs. And when a lot of people have bought into that myth hammered over and over by labor unions and politicians running from their records in raising taxes and costs for businesses — from stimulus packages to new financial constraints to Obamacare.
That’s not to say that free trade doesn’t cause job losses in some sectors, while creating jobs in others. But, contrary to the current rhetoric, an export-centric approach to trade is not the answer. Imports are not just “cheap” consumption goods, stereotyped as a t-shirt from Wal-Mart. Rather, imports provide consumers with greater choices over a range of prices and quality levels — they also increase competition, which fuels the search for innovation in better value, better quality.
Check out this podcast by Russ Roberts in early 2010 on the economics of trade and specialization.