Efficiency Causes Job Loss

Discussion in 'Economy' started by alan1, Mar 6, 2012.

  1. alan1
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    alan1 USMB Mod Staff Member Supporting Member

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    The below is something I wrote and posted on another board a while back.

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    Efficiency Causes Job Loss

    In 1790, farmers were 90 percent of the U.S. labor force. By 1900, only about 41 percent of our labor force was employed in agriculture. By 2008, less than 3 percent of Americans were employed in agriculture.

    U.S. manufacturing employment peaked at 19.5 million jobs in 1979. Since 1979, the manufacturing workforce has shrunk by 40 percent and there's every indication that manufacturing employment will continue to shrink.

    I’m sure some of you are asking, “What the hell is your point, alan? Farming and manufacturing aren’t related.”

    The answer isn’t about farming or manufacturing, it’s about efficiency. The reason it only takes 3% of Americans to produce the food we eat is because of the gains in efficiency over the methods the farmers of the past used. The same is true for manufacturing. Today's manufacturing worker is so productive that the value of his average output is about $234,000. Output per worker is about three times as high as it was in 1980 and twice as high as it was in 1990. That’s efficiency in action.
    Despite the decline in the US workforce involved in manufacturing the US has remained the country with largest output of manufactured goods for 110 years. This year (2010) China may finally overtake the US as the world’s largest manufacturer of goods. But then, they do have 4 times the population of the US.

    I can’t find any articles about politicians of the past gnashing their teeth and bemoaning the loss of farm jobs because farms were becoming more efficient. So why is it that today’s politicians are wailing and screaming about the loss of manufacturing jobs? Do the politicians want the US worker to be less productive? Have you ever heard a politician say he wants his child to grow up and get a manufacturing job?
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    Addendum
    The Chinese have still not taken 1st spot as the worlds largest manufacturer of goods. The US still held that title through 2010 and 2011.

    We continue to hear from politicians that the US needs to increase the number of people working in manufacturing, and (not so) surprisingly enough the media (none of which work in manufacturing) continue to run with those stories about increasing manufacturing employment.
    I'm still waiting for a politician or media talking head to say they want their child to have a manufacturing job.
     
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  2. Middleoftheroad
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    Middleoftheroad Active Member

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    The reason people and politicians complain about losing manufacturing jobs, is not because of efficiency, its about shipping jobs oversees. Yes, todays manufacturers are more efficient then in the past, so less are needed in proportion to the population, but many of those jobs are still oversea's or in mexico. Truth be told, it wasn't even a big deal before the recession, because most of America was employed, so no one cared. It actually increased the GDP of America. Today it is a big deal because there are literally over a million jobs overseas that are run by American companies, while millions of American's can't find jobs.
     
  3. DSGE
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    DSGE VIP Member

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    I think you kinda missed the point there. The example demonstrates that there aren't finitely many jobs. If it took 90% of labour to produce food, now it takes 3%, that doesn't mean 87% of labour is without a job for the rest of their lives. Instead it frees up labour to go and do something else productive. Jobs get destroyed in one place, and they get created in another. The example demonstrates the fallacy of finitely many jobs. It confirms that for as long as people continue to want things, there will continue to be jobs for everybody.
     
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  4. alan1
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    alan1 USMB Mod Staff Member Supporting Member

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    Please see the post by DSGE.

    I find it hilarious when people use the term "shipping jobs overseas". Have you ever been to a port? I have, and I've never seen a container being exported that contained jobs, only ones that contained products. The term "shipping jobs overseas" is a neural linguistic term that really means nothing but seems to get people emotionally aroused.

    I have to wonder if you are also upset that 70% of Toyota cars that are sold in the US are manufactured in the US? Does it upset you that those poor Japanese people had their jobs (to use your term) "shipped overseas" to the US? What about Nissan, Mercedes Benz, Hyundai, Siemens, Tesco, BMW? Or is this a one way street for you?
    But I digress.

    In some places in the world, human labor is still cheaper than technology. That is changing, and those people will lose their assembly line jobs at some point (think cheap labor in China). This notion that manufacturing jobs (assembly line) is supposed to be a boon to an economy is an old economic model. Technology is replacing it, just as technology allows us to produce so much more food with so much fewer labor. Clinging to an extinct model is not going to make things better. Again, I ask, name a politician that want's his child to grow up and have a manufacturing job.
     
  5. syrenn
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    syrenn BANNED

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    Yes it does, and the unions know it too. Which is why they are some of the slowest slug workers out there.

     
  6. uscitizen
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    uscitizen Senior Member

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    Yep jobs get destroyed in the USA and created in low wage overseas countries.

    and yes increase efficiencies mean lower wages, less employees, etc.
    or perhaps price increases.
    Does inflation increase efficiencies?
     
    Last edited: Mar 6, 2012
  7. American Horse
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    American Horse AKA "Mustang"

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    But there is no question that US Govt. policies destroy US jobs and drive new manufacturing, products, whole new industries offshore. The passage of Sarbanes-Oxley alone has removed the US from being the premier seat of new IPOs (Initial Public Offerings) and passed that position to China. That's because the cost of each new public offering in the US now exceeds $1-million for accounting compliance costs to be listed in our stock market.

    This drives innovators/intrepreneurs into the arms of the wealthiest investors (who have a million bucks to lose) or they take them where they are welcome, and all the new jobs, even new manufacturing products and all the peripheral and related manufacturing operations that will spin off them . . . go elsewhere.

    Efficiency is good, it lower costs to the end consumer, and means there have been advancements that can be utilized everywhere else in manufacturing, creating gains in new higher end job openings, but tax and regulatory policy is nullifying those gains, and the jobs go elsewhere. If the only taxes paid on corporate earnings were taxed on the 1040 form as individual income we'd have a 20% better labor cost position than we now have, and manufacturing products in China and elsewhere wouldn't have the shine it now has.
     
  8. DSGE
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    DSGE VIP Member

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    Right. We'd all have a higher standard of living if we went back to needing 90% of the population to make food. If you're going to claim bullshit that's completely inconsistent with the most rudimentary economics, at least show how it's consistent with the example given in the OP.
     
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  9. uscitizen
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    uscitizen Senior Member

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    If corps would play honestly we would not need the regulations.
    History has proven the regs to be necessary.
    And 1 million reg complaince cost for a multi billion IPO?
    Heck, corps pay that for one commercial.
     
  10. uscitizen
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    uscitizen Senior Member

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    I was expanding on the concept of the OP.
    In a consumer spending driven economy creating lower wages and lower employment does not create more jobs.

    Now if our economy was mainly based on exports that would be a different story.
     
    Last edited: Mar 6, 2012

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