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Jobs Report

>> Tuesday, September 14, 2004

One of my favorite opinion gurus is Thomas Sowell.

Dr. Sowell recently started a discussion on Jobs Hysteria:

Nothing is discussed more irrationally than "outsourcing." It is obviously completely misleading to discuss how many jobs American companies are sending to other countries without even mentioning how many jobs foreign countries are outsourcing to Americans.

Yet those who are making the most noise about outsourcing seldom say a word about the in-sourcing of jobs from other countries. But it is the net balance that matters.

Maybe those statistics are hard to get. But you certainly won't get them if you are not even looking for them and avoid even mentioning them.

Official statistics published last March in the Survey of Current Business showed an increase of 2.8 million jobs outsourced by American-owned multinational corporations during a quarter of a century ending in 2001. Over that same span of time, there was an increase of 4.7 million jobs outsourced to Americans by foreign-owned multinational corporations.

As Paul Harvey would say, now you've heard the rest of the story. The main point is that there has been a 1.9 million job gain due to outsourcing. Doing something to "stop outsourcing" sounds as silly as saying the economy is doing poorly when almost 70% own their homes, new car sales are going up and obesity is the most prevalent illness.

Point number 2 is that the 2.8 million jobs lost represent less than 1% of all jobs lost in the past 25 years. Of course there aren't 300 million jobless people out there. This number represents the fact that America led the way in restructuring society from the industrial age to the information age. It's called job churning. People move into positions that did not even exist before. It's a sign of a healthy economy. An economy that changes to meet new technologies and methods of doing business.

Dr. Sowell continues in part 2
Our current unemployment rate -- 5.4 percent -- is one of the lowest in the world and one of the lowest in our own history. Why then the hysteria about jobs?

Why don't Democrats recognize that we are at an unemployment level that many economists consider "full employment"? Of course we could do better. Thomas later informs us that Hong Kong had an unemployment rate around 2% when it was a British colony. Is Kerry ready to create the same environment here as existed there prior to the 1997 hand-over?

Few things have been more grossly distorted than tax cuts. Liberals in politics and the media seem to think that what matters is what happens to the money. In reality, what matters is how the cut in tax rates affects people's behavior.

Time and again, lower tax rates have led to higher tax revenues. That is because lower tax rates make it profitable to take money out of tax shelters like municipal bonds and put it into something that is more productive, now that taxes are no longer taking such a big bite.

When more money is invested in more productive economic activities, more output results -- and more jobs are created while generating that increased output. That is the whole point.

I know that I do not want my personal tax rate to increase. Why penalize people for working hard? A few years ago I changed jobs and received what I thought would be very healthy raise. It turned out that after the tax rate increase my net pay barely changed. I could have saved myself a lot of headaches by not taking that supervisor position.

Government does some useful things with our tax money. There are roads, bridges, law enforcement and emergency services, the postal service, parks and landmarks, and the big one - national defense. I am perfectly willing to pay my share for these services. I also think that government is bloated and inefficient with no incentive to do better. In fact bureaucracies usually become larger, slower and more surly as time passes. Businesses have been forced to streamline their operations in order to stay profitable. Government needs to do the same.

What can you and I do? Part of the answer starts right here, learn more and discuss the issues. More happens on election day. Know your candidates and their positions. Call, write or email your elected officials and let them know your opinion. Send a letter to the editor. The good way to make a direct influence is to volunteer for the campaign of the candidate that closely matches your stance. Of course the best way is to run for office yourself.

It is my personal belief that we have way too many professional politicians in Congress. Congress doesn't have to be complicated. Professionals make it so because "that's their job". Hogwash. Compare the Constitution to the "laws" (look Ma - scare quotes!) coming out of DC today. Except for changes in the English language through the years, the Constitution can be read and understood by a lay person with a single reading. Try reading the tax code, budget proposals or any one of the hundreds of laws produced each year. It's mostly lawyer speak and double-talk. Let's you and I do something to make the government of this country make sense.

I've discussed issues with friends and family, sent letters to the editor, called talk radio shows, sent emails to elected officials and am volunteering for the Bush/Cheney campaign. I haven't run for office yet, but I will. What have you done? Don't you think it's time you started?

UPDATE: Kerry wrote an article to the WSJ about his take on the economy

Reader responses to Kerry here
Here's mine:
I don’t know who wrote this for Kerry (who knows maybe he did it himself, but he doesn’t seem the type), but they should have researched the topic before writing. Each premise is built on partial truths or pure spin. Then he fails to follow up on how he’s going pay for anything. Soaking the richest 2% sounds Marxist utopian, but we all know that it’ll end up soaking anyone paying taxes in order to give it to those who don’t pay taxes. Hillary must be proud. Did she write this?

Ironically enough, I wrote about jobs just last night. Kerry doesn't seem to understand the free market system and only talks about a small portion of the jobs picture. If we had a net loss of jobs, the unemployment rate would be higher than the current 5.4%. Of all the jobs "lost" in the US economy in the past 25 years, less than 1% was from outsourcing. In fact, there is a 1.9 million job GAIN from companies sending jobs TO the US from other countries. Why change something that is benefiting more Americans than it’s harming? Does he want to see companies like Mitsubishi, Honda, Bridgestone/Firestone, BMW, BP, ING, Nokia and others to leave because their home countries reciprocate and make it impractical to keep their businesses in the States? The latest data I could find is here. It states that 5.7 million US employees work for foreign owned corporations. Why does he want to risk their jobs?

For the US economy to do better, we should remove the impediments to doing business. Let the American entrepreneurial spirit roam freely and high paying jobs will be created. Handouts and new regulations only stifle job creation by making it harder to start a new business.

Kerry has provided yet another reason to vote for George W. Bush.


Jody 11:11 AM  

Oooh, nice addition to your previous post.

One would think that the WSJ, being knowing of all things monetary, would have a columnist who would rebut....

JoshSN 10:02 AM  

This isn't really true, either.

In 1981, thanks to Reagan, we changed the way we report unemployment. The Europeans never did.

By the old measure, unemployment is around 8 or 9%, just like in many European countries.

Anyone who would try to make history of unemployment statistics into a single continuum is either stupid, like the good Dr, or a lying shill.

Manufacturing jobs are falling.

Service jobs are rising.

No one is "insourcing" service insdustry jobs.

If the "good" jobs are being outsourced, and crappy jobs insourced, is that a net plus?

Or, as the statisticians say, are people being re-hired at 9-10 thousand dollars less per year after being outsourced?

Anonymous 7:14 PM  

Josh, manufacturing is falling around the world. The root cause is computers and automation. The fact is that manufacturing has fallen less in the US than in many places in the world.

Service jobs are rising, which includes mine - computer consultant.

I live in Des Moines and one of our largest employer is ING Insurance a Dutch company. Many of the jobs here are in customer service.

If you would have read Dr. Sowell's article, it would be self-evident that the jobs being outsourced are the ones with a lot of repitition. The ones coming to the US need a lot of intellectual capital.

I only know of 2 people who have lost their jobs in the past 3 years. Both found employment at the same pay rate or better within a couple of months. The new home contruction companies never stopped cranking out houses here in Des Moines. Kerry's rhetoric about the economy is easy disproved merely by looking around the city.

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