A fascinating article from the Washington Post on the "jobless recovery" (hat tip to Andrew Sullivan). I personally don't feel I have any real understanding of the implications of the offshoring of jobs to countries like India (which is happening a lot recently in my own profession, software), except that it seems very worrying because we need jobs here and they're going there.
The Democratic party is, of course, playing this up as much as they can and blaming Republicans in general and Bush in particular. This blaming has always seemed very suspect to me, because to me it's seemed obvious that it's the Internet and ongoing increases in voice communications capability that are enabling programming jobs and call centers to be moved offshore, not Bush's, or anyone's, politics. For instance, my company is very "virtual" and distributed in a way that wouldn't have been easy to do fifteen years ago. One of the three people involved in the early days of this company lived and worked in Canada all that time, because he was the person we wanted for the job, and that's where he lived. The other two founders are 120 miles apart in Maine and have needed to get together physically infrequently enough that it arguably wouldn't make a huge difference if one of us was in Mexico. We use the Internet to exchange data, email and IM's much as we probably would if we were across the hall rather than across the state. We use an Internet-based phone service with a only-slightly-nonzero flat monthly fee. It's not only possible, but very easy and inexpensive to work in this distributed way. Does this have anything whatsoever to do with Republicans or George W. Bush, or Clinton for that matter? Obviously not.
Still, of course, it's worrisome because if those jobs are outside of the country, that money is going outside of the country, and that has to hurt everyone in the U.S. (particularly those who lost their jobs!)... right?
The Washington Post story says:
This is not the first jobless recovery. In 1991-92 the economy grew steadily, but job growth was almost nil. The reason for such recoveries, as a study by the New York Fed argues, is that the structure of the economy is changing faster than previously. In the 1970s and '80s, unemployment was roughly 50 percent "cyclical": Recessions drove firms to lay off workers and recoveries drove them to hire workers back into the same jobs. Now, by contrast, the "structural" component of unemployment accounts for most job losses: Technological and organizational shifts are driving firms to close jobs down permanently, and laid-off workers are having to look for entirely new work. That takes time. Firms have to create jobs they never had before, which takes longer than re-creating old ones. As a result, the new structural nature of unemployment means that job creation lags in the early stages of a recovery.
...
the bigger question is whether jobless recoveries are a bad thing. They are, after all, the flip side of good news. There is less cyclical unemployment these days, so recessions are milder; fewer jobs are being created now because fewer jobs were destroyed during the downturn. Moreover, a jobless recovery means, by definition, that each worker is producing more. Higher productivity, in turn, is the best promise possible of higher wages and employment in the future. Just look at the past decade: The jobless recovery of 1991-92 ushered in the longest economic expansion of the postwar period, which drove unemployment down to previously unheard-of levels, and fueled improvements in poverty, crime and other social indicators.
If you're curious about this issue and what it means, it's well worth reading the entire article, which has a lot of interesting things to say.
The argument it makes is that, in effect, the U.S. has a system whereby sometimes many jobs are lost because of improvements in technology, but a little bit down the line new, better jobs tend to be created. Sort of like Adam Smith's "invisible hand". According to this view, it's a good that automatically emerges from the overall process.
Maybe it's true, maybe not. I really don't know. But historically there seems to be real evidence that there is at least a significant amount of truth in it. (Just as there is much, but not total, truth in the "invisible hand" thesis.)
One thing for sure: as a country, it would take guts to "stay the course" in the face of this offshoring, give up the jobs in the short-term, and trust that it will all work out for the best in the end.
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