Trade Your Crappy Job for a Better One!

Does trade result in less jobs? NO WAY!

Consider U.S. exports; amount vs value (yes, lots of corn, scrap, soy BUT $$ is in cars, medicine, industrial parts)

Jobs "leaving" are the ones that are easily mechanized.
-Recall potato chip quality checker, what a miserable position
-New jobs specialized, more intelligent and require important skills

Year 1900 we were all poor; there was no way to predict that factory jobs disappearing would be replaced with jobs today! (Imagine, folks didn't think the car would amount to much) nuclear engineers, website design, DNA mappers

Common Concerns: Outsource jobs
ex: Get rid of registrar and give job to workers in India
-People who lose jobs from trade are often the ones who benefit the most from them
--> 1/3 of econ class is international, we would need less registrars if less international appeal

Remember, self-sufficiency is the road to poverty!

What to do?

Subsidize?  Keep jobs and raise cost? Trade adjustment assistance?

--> Have done trade adjustment assistance 6 times in history...all fail

    -No evidence of long term gains in jobs

    - Few people in training program even get jobs

    -Is it sensible to have lower paid workers contribute to training of people who make more $

    - Don't these workers have choices?

 ex: Rizzo left banking for stability of education; if job at risk wages capture that risk!

-Rizzo aware of outsourcing

Let's pretend "Trade costs jobs"

-Why spend $ and time on job

-Technology actually replaces jobs

-Recall in NYC, guy's job in elevator to open the door; now it's automatic

No one avoids elevator on principle of man who lost his job! ATM replaced the bank teller, BE CONSISTENT

There is no shortage of things we want (and can obtain) from each other

-No fixed # of jobs out there!

-Job was essentially created for Rizzo; persuade others that you are useful!(Here's Rizzo's incentive to continually improve, it keeps him vital and in a position)

Trade Statistics

Stuff we sell vs. what we buy (think trade deficit, surplus, density)

Lesson: Trade Statistics are MEANINGLESS!

US Trade Balance measured in goods

--> We buy lots of stuff from China (BUT it doesn't show services)

-We buy more from abroad than they buy from us

What Can Deficits Tell Us?

Assume that less jobs because Amer. not creating product
-BUT continued increase of employed Americans
     -On the graphs, the only dips of employment were due to economic recessions

Trade may move jobs but the deficit does not affect the amount of jobs

Trade affects the type of jobs
1976-1998, not much change of manufacturing jobs size; '98-Now steady drop
-Consider, manufacturing share of total employment has been dropping for 40 years before the deficit

America Does Create Goods
Increase of manufacturing output (today 8% below peak b/c of recession)
We actually do produce more stuff than China: $3.5 trillion per year of output
-->Produce more stuff with fewer people
How: better educated, more sophisticated techniques, healthier
Globalization has actually reduced losses

What used to be considered progress is now a "problem"
Why yes, we have lost the switchboard operators, toll collectors, auto workers

Are we choosing profits over people?

Well the profits don't just go to the owners; competition and lower costs lead to lower prices and consumers benefit!
Result: higher living standards
-Cheaper to make food/clothing => $ to spend on more of what we want; more choices!
-->Rizzo saved $ on electricity, will spend it on a new iPhone, new car, new lap top. Hello new jobs!

Good economics = Sustainable

-Obama said atms cost jobs but wait...with more atms come more tellers
-Machines haven't replaced people they complement their positions
-More changes, some jobs and technology go together
-->new laser doesn't replace the surgeon, it makes him better at his job
-incre. of higher educated; tedious tasks are replaced