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 here. Part 9 can be found here]

Luis, I, the Canadian farmer, Hans, and Pierre have all improved our productivity. We all earn more. We have increased our ability to buy anything at all, stuff, leisure, occupational training, or anything we want. We did this without working more than we used to. We have helped the world become richer. None of us, except maybe Pierre, has achieved any stupendous success. Even Pierre’s bold killing on the Chinese wine market ranks far below other successes we read about in the newspaper everyday. His success barely rates the local newspaper. It’s not Google, or Apple, or Craig’s List or even Fred’s List. It’s pretty conventional stuff.

We have all done this without cheating, without despoiling anyone, without doing any damage to anybody. Now think of what we have not done: I have not improved my technical ability; it’s doubtful whether Luis has done anything of the sort. In fact, it would not be absurd to argue that blowing leaves is more skillful than washing dishes. Same for the Quebec farmer. Hans may have augmented his training; he did it on the job if he did it at all, at the expense of his manufacturing employer. Pierre knows more than he did when he was still at his hum-drum government job. He learned what he learned under his own power, on his own dime, at no perceptible cost to anyone else. Here is the main factor that accounts for our joint improved production: Continue reading →

Next step coming soon. I have been unusually busy. It’s all in my head. Stay with me. Don’t forsake me yet. [Part Four; Part Six]

This is the fourth installment of a continuing series of very small essays on protectionism and free trade. Those are daunting subjects neither the media nor schools explain well, I think. I am taking small steps on purpose. The first two installments were posted on the same day. All installments will comprise the word “protectionism” in their title for the sake of recognition.

Part Four

Of course, next door to Hans, in France, there is a guy named Pierre. He is in his mid-forties. He has been working in a government-owned industry for fifteen years. He is comfortable, with a good pension awaiting him, but he is tired of his job because it gives him no chance of ever making it big. Also he is bored with it. Pierre and his brother-in-law, Jean (of course) share an interest in wine; both their grandfathers made wine. Of course, they know there is no shortage of wine in France although there is a chronic shortage of good wines. They consult with me and I point out to them the immense, fast-growing, under-served, and uncritical market of urban China. Continue reading →

This is Part 3 of a slow long essay on the reasons free trade exists. Parts 1 and 2 were posted all at once few days ago,

Now, forget about Luis and me for the time being.

Just imagine a word where people everywhere are allowed to do what they want with respect to how they spend their resources. The first resource is their time, of course. Some people, not everyone by all means, will try to earn more. Note that I am not saying that everyone will act rationally. Some are too lazy; some are too stupid; some simply like what they are doing at low earnings. That’s fine. It does not undermine the explanation of free trade I am stretching out for you in small steps.

A farmer in Quebec thinks he is not earning enough herding and milking cows. He is thinking he would do better growing bananas. His friends point out that Quebec is not a good place to grow bananas because it’s cold much of the time and winter days are short there. If he is smart, he will follow their advice and look for some other improvement. If he is too dumb or obstinate and he goes on, reality will soon hit him on the head. He will find that he has no income from Canadian bananas most months, or even most years. Or his electricity bills will drown any profit. Either way, the unhappy cow farmer will have to try something else. He may discover that growing big pink organic-certified raspberries for the Montreal market, or for the New York City market, pays better than either cows or bananas. Or he may fail and return to cows. Or, he may become unemployed. The process is messy. Continue reading →

Here are the first two installments of a series of eight explaining something important that few people understand. The subject of protectionism is important because the concept is intuitively appealing and its implementation a recipe for poverty.