So IBM is sending many of its white-collar jobs overseas, and economists are shocked.I've long felt that a "successful economist" is one who can rationalize today why the predictions he made last year failed to come true. In this case, the prediction that white-collar jobs would soon follow the millions of manufacturing jobs wasn't that tough. It's happened before.
Not to us, so much, as our trading partner across the Pacific. Back in the 70s, Japan's auto exports to the U.S. exploded, due partly to the Arab oil embargo, but mostly to Detroit's stubbornness and shortsightedness. The Japanese economy boomed. Then, Japan began exporting the manufacturing processes overseas, to America. The Japanese economy continued strong. Finally, white-collar jobs followed the blue-collar ones, and the Japanese economy has been in the tank ever since.
While this scenario is somewhat oversimplified, it points out that anyone who bothered to look into the near future could see a similar crisis happening to us. We live in an age where telecommuting is fast becoming the rule, globalization is now an old term, and it's as easy to talk with someone in Asia as it is to talk with your next-door neighbor. Add to this the standard business need to improve the bottom line, and the result is obvious.
Over the past three years, literally millions of jobs have been exported. Now we see a near-term future where millions more jobs will follow. With nine million Americans officially out of work, and millions more actually, if unofficially, unemployed as well, this is a frightening thought. Furthermore, while protectionist legislation is a tempting idea, the ghost of Smoot-Hawley haunts us.
So what's the solution? In the long term, the problem will solve itself. The countries receiving all these white-collar jobs will raise their standard of living, costs there will rise, and the jobs will return. Additionally, new markets for American goods will open up. This long-term solution is no help, however, to the millions of Americans who will join the unemployment lines in the next few years. Besides, in this case, "long-term" means a couple of generations at least.
In the short term, we need to find a way either to stem the tide of jobs flowing overseas, or create new jobs to replace them. Of the two, the latter is the better choice. King Canute is reputed to have ordered his throne placed at the seashore in order to demonstrate that even a king cannot hold back the tide. The only real answer is to create new jobs.
This cannot be done directly with legislation. Government cannot create the jobs, as it did during the Great Depression. But government can create a climate in which new technologies are developed; new jobs will be the natural result. This climate must be created through a two-pronged approach.
The first prong is to repeal the Republican tax cuts of the past three years. These tax cuts have unfairly burdened the middle class and created a structural deficit. With the federal government borrowing half a trillion dollars a year, the money just isn't there for new business investment. Only by having the government pay its bills can we make it possible for new industries and new technologies to open up.
There are those who say that that's not entirely accurate. And they're right ... sort of. We could vastly increase the money supply. This would make money available for business investment, but at an enormous cost -- runaway inflation. Besides, we tried this approach in the 1970s, and it failed. The only option is to have the government pay its bills.
The second prong is to institute tougher environmental standards. We need to increase gas mileage requirements for cars and light trucks. We need to reduce emissions from factories. We need to require more recycling.
Before shortsighted right-wingers start groaning "there you liberals go again", consider the consequences of these actions. By forcing companies to be more environmentally friendly, we will open up new industries as the technology to meet these standards is developed. Then, once we have taken the lead in this area, we'll be able to export, not jobs, but the new environmentally friendly, high-tech gizmos themselves.
Developing countries, who want to expand their economy but don't want to be straitjacketed by environmental standards the developed world didn't have when we were starting out, will rush to buy our stuff. We'll be able to open new markets for American goods, restore our trade balance, and create jobs.
Of course, eventually those jobs will be ripe for export, but by then the new markets will be sending back the jobs we sent them during this crisis. We'll have sped up the long-term result. Additionally, by helping other countries develop without destroying their land, water and air, we'll be making new friends around the world. And right now we need all the friends we can get.
Copyright 2003, Dan Jacoby
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