Offshore Jobs are Not to Blame for Unemployment

American jobs have been eliminated in favor of cheaper labor overseas. To some extent this is true, but it misses the real story.

Most of the jobs which have moved overseas — and are not coming back to the United States — have minimal educational requirements. The poorly trained and uneducated are the victims of structural changes in America’s economy.

(Other victims of structural changes in the American economy are the over-educated who pursue education in fields which have very little demand, such as humanities PhDs. But there is little sympathy for naive academics who find themselves unemployable.)

These structural changes are not new. When elevators went from manual to automated, the people who lost out were elevator operators who, of course, did not need much in the way of education to do their jobs. Likewise, when textile manufacturers move their operations from the Midwest to China, it is the employees of American textile mills who lose while other Americans gain.

To a very large extent, this is blaming the victims for economic forces beyond their control. However, it is also true that if the American economy wants to continue to grow over the coming decades, there will be winners and losers.

Egalitarianism is a false ideal upon which Stalin murdered tens of millions of people. That is what social safety nets are supposed to account for (in part). It is also incumbent upon people to realize the precariousness of their current employment and pursue opportunities to develop skills that are transferable. The United States’ deplorable educational system does not help in this regard.

But we can’t conclude from any of this, as some do, that the overall number of jobs in the United States has decreased because a lot of those jobs have been moved overseas. Neither the economy nor the number of jobs is a static thing. Buggy whip manufacturers were driven out of business by the development of the internal combustion engine. But in the decades since the internal combustion engine was invented, many more jobs have been created than were ever lost by buggy whip manufacturers.

Like this blog post? Read more at Dave Friedman’s blog, On Finance and its Follies.