Experts Urge Strong Education Not Trade Barriers

The New York Times technology section has an article which argues that we should not try to stop the exodus of manufacturing jobs overseas. It makes the argument that this movement makes US businesses more profitable at home. Rather, we should try to educate the labor force thus “freed up” to take advantage of America’s comparative advantage in high-tech goods and services.

The argument makes a lot of sense to me. It is embarassingly hipocritical of us to champion free trade and then turn around and slap tariffs on products to protect our own ageing, non-competitive businesses. We simply can’t compete with low-wage manufacturing environments, plus, we are trying to encourage the emergence of the stable middle classes which export-manufacturing can produce in emerging markets.

In place of these lost jobs we must develop technology and service sectors; computers, communication, interent services, tourism, education, entertainment, health care and transportation. The transition won’t be easy but the alternative is a slow losing battle to defy the priciples we say we stand for. From the article:

“By outsourcing some of these jobs overseas, you maintain profitability of the activities you’re still doing in the U.S., and in fact you enhance their profitability,” said Robert C. Feenstra, a professor of economics at the University of California at Davis. “It’s the only way that your firms and industries are going to stay competitive. It’s just got to be done.”

Instead, Professor Feenstra said, the nation should work to improve the quality of the labor force freed up as jobs move overseas. That way, Americans will be able to exploit what economists call their “comparative advantage” in producing high-technology and high-value goods and services.

from the New York Times

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