The Escalators (Part Eight of Eight so Far on Protectionism)

Ninth and probably last installment soon: Do people lose their jobs because of free trade?

In the story in seven episodes some of you had the patience to read, I kept pushing aside the question of what happens to the work done by those who move upward. If you will recall, I abandoned half of my dish-washing work, Luis stopped blowing leaves and carting away garden leavings, and Hans quit his sandwich-making job. Of course, those are bottom jobs garnering the lowest pay. So, the easiest and most general answer is that people and organizations move upward is they are allowed to do so. Both individuals and organizations become more productive. Under even moderately competitive conditions, this means that they earn more money.

The question arises toward the bottom of the pyramid of productivity, as in my story. I mentioned briefly that the answer has to do with escalators. There are four answers to this question that are not mutually exclusive. I mean by this that you can witness all four solutions being implemented in the same national society at the same time. I take them up in turn.

1 Some of the lowly jobs remain undone. This is so rare that it’s difficult to come up with examples that are not so exotic as to be distracting.

2 Within almost all national societies, a combination of unemployment and of under-employment is the rule. In poor societies, many people don’t work much because there is no work for them. (That’s one of the main sources of underdevelopment: people don’t work much.) In rich societies, there is a reliable rate of unemployment in the potential labor force. some of which is voluntary. In such societies, there is also massive under-employment of young people, of older people and of women. When dishwashers are leaf-blowers are hard to come by, wages rise and some of the unemployed and some of the under-unemployed become motivated to do them. That’s true in both rich and poor societies.

3 If the shortage of dishwashers and of leaf-blowers becomes severe enough, history tells us, the miracle of mechanization revs up. Within a short time of a labor shortage of olive pickers in the northern Mediterranean countries, someone invented and effective olive-tree shaking machine. It is driven by a single person and replaces the work of about half a dozen hand pickers. Here is another telling anecdote. Everyone knows that the French love dogs better than they love children, with the kind of results for the sidewalks you might expect. I have seen with my own eyes, within a few years, small armies of low-skill African immigrants armed with twig brooms disappear from the streets of Paris. They were replaced by extraordinary, powerful motorcycles with booms extending ten feet on each side. The booms support both powerful jets and rotary brushes. The uniformed city employees who drive them on the sidewalks have the serious mien and they show the pride of sea-captains. Incidentally, workers who control machinery usually earn more money that those who rely on primitive hand-tools.

4 There are huge reserves of able-bodied men and women in the less developed countries ready to jump at the opportunity to wash dishes in my stead and to take over Luis’ leaf blowing. (That’s how Luis came to California in the first place.) Of course, immigration is often controversial, for a variety of reasons, but in pure economic terms, the case for the free movement of labor is bullet-proof. And, yes, ideally, the reserve of third world labor is ultimately finite but I am not going to worry about this for the next hundred years.

All in all, the answer to the question of who will do the work of those who move upward, is that there are several escalators that take care of almost all of this problem.

[Editor’s note: Part 7 can be found herePart 9 can be found here]

9 thoughts on “The Escalators (Part Eight of Eight so Far on Protectionism)

  1. While I agree with all four of the escalators (and the rareness of the first) I do believe, believe because I’m not going to cite sources here, that three and four are the major drivers of improvements in living standards.

    As we look at the industrial revolution, especially in the US, we find that inventing mechanical means to do almost everything was the main driver of progress, and was in large part caused by the labor shortage of a quickly developing country. This was, of course, somewhat diverted by, say the Irish Potato Famine but, that was counteracted shortly thereafter by the Civil War.

    The cycle pretty much continues right through the 2d World War with the addition of women to the (paid) work force while supporting a 14 million member military.

    I think my summary would be is that mechanization (including data processing and all it subsequent developments) is the main driver but requires the support of an adequate workforce to produce the tools for mechanization.

    That sounds horribly simplistic but, I’ll let it go anyway.

  2. […] In order to open up the economies of Africa and Asia to their mercantile systems, the Europeans created a great legal code for the mercantile systems. These legal codes helped reduce transaction costs and protected the private property of European citizens abroad, which helped to foster more trade within the mercantile systems. Unfortunately, the legal codes of both the British and the Dutch (I can’t speak for the Latin states, but judging by the state of affairs that these regions are now in, I assume that such policies were just as bad, if not worse) created a two-tiered system of justice: Europeans and a small number of local elites were able to count on the legal system to protect their private property, but everybody else was relegated to a second-class citizenship. This two-tiered system was not good for the populations of Africa and Asia, nor were they good for European citizens. […]

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