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A wonderful article about Globalization

128shot

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THE MUCH MOURNED MANUFACTURING SECTOR

But what about the alarming hits in the manufacturing sector? First, I have to take the heartless economist approach and state that there is nothing intrinsically special about manufacturing jobs. Surely we wouldn't expect hundreds of thousands of Americans to be involved in the assembly of automobiles in, say, the year 2050. By the same token, countries that are currently dependent on a few cash crops will — if they experience healthy growth and development — see their agricultural employment shrink over time. This is evidence of progress, not depression, as it takes fewer workers to do the old jobs thus freeing up workers for the new tasks that could not have been fulfilled in decades past.

Second, even if one dismisses the above as naïve Panglossian fiction, there is little evidence that the manufacturing slump is due to cheap imports or outsourced jobs. (Ironically, to the extent that "trade" accounts for some of the job losses, it is primarily because of a drop in US manufactured exports, not because of cheap imports destroying the domestic market.) According to the McKinsey Quarterly:

After 2000, as the economy fell into recession, US exports fell. We estimate that more than 3.4 million manufacturing workers were producing goods for export in 2000; by 2003, this number had fallen below 2.7 million. All told, the export slump destroyed 742,000 US manufacturing jobs.

On the import side, though, the picture was very different. It isn't true that manufactured goods flooded into the U.S. after 2000. In fact, growth in manufactured imports was quite sluggish from 2000 to 2003. And as we will explain, this weakness in imports actually boosted manufacturing employment in 2003 by some 428,000 jobs.

Overall, then, trade accounted for a net loss of no more than 314,000 jobs (a reduction of 742,000 because of weak exports and an increase of 428,000 owing to weak imports), representing only 11% of the total manufacturing job loss of 2.85 million. The other 2.54 million jobs disappeared because of the economy's cyclical downturn, which dampened domestic demand for manufactured goods.
http://www.mises.org/story/2052


So who wants to attack globalization now...
 

oldreliable67

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Interesting article. Thanks for the post. Mises can always be counted on for some good food for thought.
 
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