Tuesday, November 13, 2007

The Zero-Sum Myth

With so many manufacturing jobs being offshored to China, many blue-collar Americans fear for their jobs. Likewise, outsourcing to India has brought many white-collar Americans to realize how easily they can be replaced. At first glance, it looks perniciously selfish of companies to take jobs away from Americans just because foreigners can do them for less. It would seem that U.S. unemployment would skyrocket...but it doesn't. As Thomas L. Friedman points out in Chapter 3 of The World is Flat, the layoffs of hundreds in the U.S. due to outsourcing are offset by companies hiring increasing numbers of Americans, few by few. Jobs are leaving America, and yet America hasn't suffered a net loss of jobs.

Let's remember that this isn't the first time we've seen the economy give us a nonzero sum. The very rise of civilization is a powerful argument for a positive sum being possible. Recent decades have shown us tragic examples of self-inflicted negative sums. Mao's and Castro's regimes, though located amid adequate natural resources, imposed an inefficient command economy that had citizens waiting in breadlines for equal pieces of a distressingly small pie.

So how are the U.S. and its business partner countries turning up a positive sum? Efficiency and invention. Friedman argues that there are always marketable ideas waiting to be conceived, so the number of "idea-person" jobs in the world is limitless. I would add that, due to the innovator's need to mass-produce, the unskilled job market is also expandable. Simply put, innovators create jobs.

And they're creating jobs in China, where wages are a minute fraction of the U.S. minimum wage. This is a shrewd move, but is it ethical? They're getting a relatively small piece of the pie, but with increased efficiency, that pie is getting bigger. Furthermore, as more companies turn to China for labor, they will compete for workers by offering better wages and benefits. Before globalization, China was poor; with it, China is poor but it's being pulled up by more developed nations.

The U.S., as a prosperous nation, holds a position of responsibility in the global market. Since we have high wages, we'll need to start earning them or lose our jobs to lower-paid work. Since we have opportunities for education, we have not only a need but a duty to use them. Then we can set our minds to invent ideas that will lead the world to greater prosperity.

Consider the vast numbers of poor and illiterate people in the world, people who desperately need help to rise above their condition. Is there any shortage of work that ought to be done? With the economic merits of capitalism, the spark of innovation, and a healthy dose of altruism, much can be done. The world has risen this far; let's not limit ourselves now.

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