CDZ The Jobs Ain't Coming Back

[GaryDog]

Sanders promote infrastructure development projects, financed by the rich, to create jobs. This is a proven technique, and would work.

Trump on the other hand, offer absolutely nothing, other than utter bs...

What projects. Name one.

Bernie hasn't been vetted, something Trump would take care of in short order.

None of it would be true, of course, but hey, he'd vet Sanders!

 

[initforme]

How can we compete with the slave wages that China pays? We can't. And I would not expect any american to even think about working for that pittance. Corporations used to be part of a community, they were a positive force. Now they ate all about the profit and would rather see the community fold up. Globalization and corporate greed will ensure no jobs come back. And some of those workers will be dumb enough to believe other workers ate the problem...while the corporate leaders sit back, relax, do little work, and watch the money roll in.

 

[Staidhup]

Jobs will return to America once corporate tax rates and cumbersome anti business regulations are reduced to the level of Europe and the rest of the industrialized world. Will America manufacture low tech parts, no, will and could it assemble high quality goods, yes, provided the mind set of Americans change to understand jobs originate from the private sector not public works programs. Globalization simply demonstrates the world is flat, the inter dependency between the parts that create the whole or in the case of jobs production of goods and services. So evil is globalization in the vocabulary of one who espouses nonsense.

 

[Indeependent]

Our current non-Ricardian version of Free Trade would be a total disaster if the Middle Class were not being taxed HEAVILY to keep the over 98% of poor Americans from starving and not having heat in the winter.
No excuses whatsoever.

 

[initforme]

We only want those jobs back if they pay a decent wage. $10 per hour does not qualify.

 

[320 Years of History]

ow can we compete with the slave wages that China pays?

To the extent that we are talking about low skill, physical labor jobs/production, any "we" that have any sense wouldn't bother to try because that'd be a losing proposition. The place to compete is the area in which we have a comparative advantage. It's not hard to figure out in what areas those are: they are industry segments where the principal contributor to productivity is intellectual capital (brain work) not physical capital (handiwork).

Here's some info that will give one a sense of what fields are clamoring for workers:

• TheWorkerShortageParadox
  
• Employers Can't Find Enough Workers Who Can Pass Drug Tests | VICE | United States
  
• America's persistent problem: Not enough skilled workers
  
• It says a lot about the US economy that employers can't find workers 'not carrying some form of personal baggage'
  
• Employers Ready to Hire Can’t Find Workers Among 9.1% Unemployed
  
• Q-C employers can't find enough skilled labor to fill jobs
  
• Why regional employers can't find the workers they need
  
• It doesn't add up -- Read this along with the above. This essay presents both sides of the issue.
  
• Small businesses still can't find enough workers
  
• Harvard business Review article: Employers Aren’t Just Whining – the “Skills Gap” Is Real -- "Although it is difficult for workers and employers to develop these new skills, this difficulty creates opportunity. Those workers who acquire the latest skills earn good pay."

Of course, there is as always the ultimate in conforming to and pursuing the American Dream: leave the ranks of labor sellers and join the ranks of labor buyers -- go into business and grow your business.

 

[320 Years of History]

... in order to win elections, pols avail themselves of the general public's lack of econ savviness.

The current "hot button" topic in that regard is free trade. The central questions folks must ask about free trade are these, "Do the overall gains from lower prices exceed the losses from the transference of jobs that results in free trade markets? Or is it the other way around...that is, do the losses from job transference exceed the gains from price reductions?"

People who understand economics understand that, economically speaking, those are really the only two questions that matter. And here's the thing, economists have studied the matter often enough and long enough that they know the answer. Most politicians know the answer too, but they also know that the answer isn't the one a person who is unemployed or underemployed wants to hear. No surprise there either. Economics (macro) doesn't' care if you have food on your individual table; it cares whether as a nation

This post's purpose is to finish the second paragraph of the quoted passage above, a paragraph I left incomplete.

The paragraph should have concluded as follows:

Economics (macro) doesn't' care if you have food on your individual table; it cares whether as a nation we marshal our resources in the most efficient manner possible. If the most efficient use of resources requires that some people exit the labor market in which they once "sold themselves," economics accepts that as the reality of the situation, and it expects them to exit their "old" market, revise their labor skills and enter a new labor market. (Assuming one prefers to remain a seller of labor rather than become a buyer of labor.)

Therein lies what I think is a significant driver behind why we have so much hoopla about free trade. Most folks can wrap their minds around the supply and demand of, say, coffee cups, yet those very same folks don't, as economics does, view labor as just one more thing that is supplied and demanded in a marketplace. Economics doesn't quibble over who or what performs the task(s) of labor -- that is, whether a machine or a person assembles a widget. Economics predicts, and accurately so, that the producer of the widget will consistently choose the most efficient (for the producer in question) way of procuring the labor it needs to get the widget produced.

What's essential to the big picture is that even as one or several producers may be willing to less efficiently produce their widgets, there will invariably exist competing producers who are not so willing. After that happens, the less efficient producers (sellers of widgets) must either shift to producing something other than widgets, adopt the more efficient production methods, or exit the market. The same phenomenon happens for labor, except that the "adopt the more efficient production method" option doesn't exist in any meaningful way for humans as it does for companies. It might if we could sprout another arm and hand, or if we were willing to work 24/7 and being connected to tubes that provide nourishment were a viable solution, but we can't and it's not.

Of course, one can attest to a willingness to accept a degree of economic inefficiency, but I don't know many folks who will openly do so, even as their pleas for tariffs and quotas (constraints on free trade) are unavoidably tacit assertions of exactly that. The language of our political discourse is rife with overt and implied attestations of and exhortations for "the best." Inherent in our stances, goals and methods, especially those pertaining to economic policy such as free/international trade, taxation, the money supply, and so on, is the claim that whatever we advocate is, among other things, more economically efficient -- in common parlance, "better" -- than the competing alternatives.

It's from that understanding, combined with my unyielding demand for complete integrity in political leaders' (or would be leaders) public discourse, that issues my remarks of frustration when I hear/see folks oppose free trade, most especially when they do so under the auspices of non-free trade being better -- more economically efficient and effective -- than free trade. It simply is not and everyone who well understands economics -- conservatives and liberals alike -- knows it's not. Politically conservative economists like Rothbard and politically liberal ones like Keynes agree on the superiority of merit free trade has over constrained trade.​

 

[Wilbur Right]

320, you have spent a considerable amount of time explaining what the study of economics entails.

What would be interesting is to hear your take on what the study of economics contributes to the well being of our consumer based society.

If in fact the study of economics should or could offer benefits to the society at large.

 

[320 Years of History]

What would be interesting is to hear your take on what the study of economics contributes to the well being of our consumer based society.

The study of economics, were it widely undertaken within our society, has the potential contribute multiple benefits to our society. The overall benefit of understanding economics is that understanding economics well leads to better decision making. Some specific examples of how or why decision making is improved by understanding economics are:

• Reduces the ability of politicians to rely on economic ignorance in promoting "this or that" economic policy for selfish (or semi-selfish) gain rather than for the collective benefit of the nation overall.
• Reduce the nature and scope of topics about which voters disagree.
• Increase the quality of public discourse about economic policy -- a conversation is much better when the parties to it actually are well informed on the topic being considered.
• Provides a useful and objective tool for approaching "everyday" decisions, such as whether to pursue career X or Y, whether to invest in A or B, and so on.
• Allows one to understand accurately what are the impacts of various policy options.
• Provides a framework for decision making whenever scarcity and choice are present, including when the medium of exchange and measurement isn't money.
• Provides a framework for understanding human behavior in the presence of scarcity and choice. Watch the first 1:06 of this video (the rest is irrelevant).
  
  
  
  Economics can explain in very straightforward terms why you didn't see what you didn't see. Psychology can too, but the economics explanation is far simpler and more direct.
• Enables one to become critical consumers of statistically based arguments about numerous public and private issues rather than passive recipients unable to sift through the statistics.
  
• Teaches one to recognize the harbingers of shifts in the demand for that which one sells, which for most folks is their labor, although for capitalists, it's the product they produce.
• Provides an empirical basis and practical context for evaluating the diminishing returns applicable to the options available to oneself.
• Provides an objective basis for understanding why prices are what they are and why they increase or decrease.
• Provides the knowledge one needs to accurately discern when one's choices and motivations for them are rational vs. when they are emotional.
• Provides the knowledge one needs to discern when the "spiel" one receives is rational, sophistic, emotional, or something else, or a mix of the above.
• Enables one to cull what matters from what doesn't matter, and do so accurately.

So there are my answers, but you need not take my word for it. I'm not the only one who's offered thoughts on the benefits of understanding economics. Here are other's views on the matter. I haven't read what they wrote, but I am certain they say much the same things, albeit not boiled down to bullet points.

• Why it's Important to Understand Economics
  
• Understanding economics Priceless
  
• How Your Understanding of Economics Can Affect Your Decision Quality
  
• The Advantages of Understanding Economics | eHow

 

[Wilbur Right]

320, Thanks. Your usual excellent response and great links.
The importance of economic education was stressed in all those links. I know that for for myself, that becoming economically literate has made me tens of thousands of dollars..or kept me from losing same.

So my second question is WHY we as a nation have failed to become a nation of economic literates? It seems people understand the importance, yet are not being educated in economics. Why? I wrote mortgage loans for 20 years for middle class people mostly. Very rare to find someone with a good understanding of even household economics.

Our political leadership? seems to have no better an economic education or understanding than their constituents.

So.....

A different way to ask the question is; who benefits from having an economically illiterate population? Besides payday lenders and buy here, pay here car lots.

Your thoughts.

 

[320 Years of History]

So my second question is WHY we as a nation have failed to become a nation of economic literates? It seems people understand the importance, yet are not being educated in economics. Why?

That is an answer I'm not especially well equipped to answer with much credibility. Purely speculatively, I posit the following:

• People hear "as supply increases, prices decrease" and "as demand increases, prices increase" and think, "Okay. I get that. It's simple." Following from that, they erroneously conclude that all of economics is really that simple and in turn don't pursue more in depth study of the discipline. Moreover, they actually think econ is about supply and demand when it is in fact about behavior in the face of scarcity and choice, supply and demand merely being behaviors/actions, choices really, people carry out (make) in the pursuit of their goals, whatever be those goals.
• People don't like or fear math, and the study of economics requires strong math skills -- calculus, linear algebra, differential equations, and statistics. The thing is that one doesn't really have to be strong in those maths to understand what is needed to make sense of what is discussed in the realm of policy making.
• Economists often use terminology, even at the most basic levels, that is alienating to some people
  • Elasticity of demand = price sensitivity => identifies the answer to the question "how much is too much?"
  • Demand = buy
  • Supply = sell
  • Comparative advantage => identifies what makes the most sense for me to do given what you can do and the other alternatives from among which we both can choose to do?

This writer has his own answers to your question. I think you'll find his remarks insightful.

Our political leadership? seems to have no better an economic education or understanding than their constituents.

It's hard to say which of our political leaders or would be leaders do and don't understand economics at an intermediate level (intermediate macro and micro economics). I know they all have access to plenty of economists, so there's not much excuse for their not "getting it," or at least there's no legit impediments to their getting accurate information to use in policy-related decision making and stumping.

With regard to one political aspirant, Donald Trump, I know he majored in econ; however, that hasn't stopped him from advocating against free trade in strong, loud and direct contravention with the whole of the economics profession, and to make matters worse, Trump hasn't articulated why he should be believed instead of the conservative and liberal economists alike who have determined that free trade is better than the alternative. I can only assume the man was either a poor student or he forgot damn near all of what he memorized for his exams.

To the extent that politicians can be reasonably presumed (absent events like those of the last sentence above), as one would re: Trump, to be adequately well versed in econ, I can only imagine a few reasons why they are deliberately misleading about the merit of economic policy. Succinctly, however, all of the reasons I can envision come down to their not having the balls to just tell the electorate the sometimes unpleasant truth. They know just as you and I do that the truth will not make struggling folks happy, and they know it's hard to get unhappy people to vote for them...the rest is obvious...

There is too the confounding matter of pols knowing how few folks actually "get" economics.

A different way to ask the question is; who benefits from having an economically illiterate population?

The short answer to your question is everyone who's succeeding financially/economically. That they are succeeding shows that they "get it." That they are succeeding allows them to control purse strings. As long as politicians have to raise money to run for office, the folks who control the purse strings -- people who donate tidy sums (the $2700 individual maximum for a candidate is the minimum needed) to political causes -- will often get their economic way, or at least not get "royally screwed economically," no matter the party controlling things at the time. On issues that are predominantly social in nature, it's a toss up, but few of those issues matter outside of special interest businesses.

In the context of our current political situation, capitalists, and most especially multinational capitalists stand to benefit from an economically illiterate population. The reality is that on matters of macroeconomic policy, there isn't disparity among companies that will or won't benefit from a given policy direction. In other words, what's bad for IBM is bad for Microsoft, Intel, Monsanto, Beatrice Foods, Exxon, Citibank, etc. That doesn't change until one gets down to businesses that operate in a purely domestic marketplace, i.e., businesses that neither buy from nor sell to foreign suppliers/consumers, be it directly or indirectly. Even there, however, not all that's bad for the "local capitalist" is good for the "big boys." For example, the local restauranteur nonetheless benefits from generally depressed or stagnant wages.

How do capitalists benefit from economically illiterate general electorates? By being able and willing to let pols say whatever they want in order to get elected, knowing that once in office, the capitalists will exert their influence to have fiscal policy go their way anyhow. Pols are pros at wiggling/spinning their way out of their promises; they just use that skill to "spin" the fact that what they said before is consistent with what they are doing now, even though it's not, or to "spin" how what they are doing now is better than what they'd advocated before. If folks are economically illiterate, eventually they'll "buy" what the pols "sell."

 

[Wilbur Right]

Comparative advantage has benefited American society in what way?

I ask because the one writer on Ricardos difficult idea seemed to spend a lot of time claiming that there were great advantages, yet those advantages weren't spelled out.

What are they?

 

[320 Years of History]

Comparative advantage has benefited American society in what way?

I ask because the one writer on Ricardos difficult idea seemed to spend a lot of time claiming that there were great advantages, yet those advantages weren't spelled out.

What are they?

The advantages of the principle of comparative advantage are:

• It give all participants in a given market something productive and profitable to produce/sell by dint of it incorporating the concept of opportunity cost
• Adhering to it contributes to creating more rather than less efficient allocations of resources

The benefits of comparative advantage (CA) are very well explained all over the WWW. Here is just one place: Comparative Advantage, Economics by Topic | Library of Economics and Liberty .

Ordinary people avail themselves of CA everyday. For example, when I take my car to have the oil changed, I'm availing myself of CA. Changing car oil isn't something I'm incapable of doing, but it's something I'd rather not do and there are things I'd rather do instead of use my time to change the oil in my car, such as, perhaps review a presentation I'm going to deliver in a day or two, which is something for which I can bill for my time.

Since my hourly billing rate exceeds the hourly rate I must pay to have someone else change my oil, economics and the principle of comparative advantage says that I should pay them to change the oil while I review/edit/prepare my presentation. On the other hand, if I have nothing productive to do with the time during which my oil will be changed, I should change the oil myself.

Like nearly everything else about economics, comparative advantage does not function in isolation. Comparative advantage, substitutes, and elasticity collaborate to inform me of whether even having nothing productive to do with the time, I may yet pay someone to change my oil. How does that happen? Well, let's take a look...

In the case of an oil change, the things in play -- what for the transaction in question I see as substitute "goods" -- for me are (1) money, (2) time, be it leisure time or productive time. If I determine that I value an hour of leisure time over the $100 I'll pay for an oil change, I'll pay the money and sit on my ass doing nothing or playing pool or reading a book, or doing whatever I consider a leisure activity.

Let's say for the sake of what's to follow, that I'm willing to pay up to $199 for an oil change. Now if the cost of the oil change were $200, I would, because the limit of my elasticity of demand is $199 -- that is, I'm insensitive to the price unless and until the price reaches or exceeds $200 -- determine that I value $200 (in my pocket) more than I value an hour's worth of leisure time. In that case, in will either change the oil myself or find a lower cost oil changer.

The above is an illustration of what's good about comparative advantage. It's why someone can make a living changing oil even though people -- people like me who bill at rates higher than the cost of an oil change and people unlike me who bill at rates lower than the cost of an oil change -- even though people in general can probably change their oil themselves and pay less money to do so than were they to have their local car "fix-it" shop do so.

Did that adequately answer your question?

An important thing worth noting is that what the consumer deems as substitutes for any given transaction depends on the consumer. Economics doesn't articulate what items/services are substitutes; it predicts how folks will choose among the goods/services they see as substitutes.

In the preceding example, I said that time and money were my substitutes. Were I committed to letting someone else change my oil, the substitutes would then have been a Jiffy Lube oil change, an oil change I perform myself, a BMW store oil change, my neighborhood gas station's oil change. To the extent that they all can be had for $199 or less, with regard to me as the consumer, the providers of the oil change will observe perfectly inelastic demand, that is to say, they'll observe that I don't care what they charge, I'm willing and able to pay what they are asking. Which oil change I ultimately demand will depend on the value I place on the service they provide, the time it takes them to do the job, etc.

In considering the variation I just presented, I think you can see that multiple factors, along with the value -- weighting the demander sets on each factor -- play into the decision to demand this or that good/service. That's what I meant by saying that nothing in economics operates in isolation. Everything is in entry level econ classes taught in isolation, but tested in collaboration. In the "real world" it all works together and effectively at the same time rather than sequentially, although some things are somewhat sequential and some are without exception sequential.

FWIW, quantitative economics is the brand of the field that deals with identifying all the factors in play and putting them into equations that describe the supply and demand curves, from those that individuals and businesses face to those that nations and blocks of nations face. Fortunately for most of us, we have no need to know the precise equations for any given market, market participant or marketed good/service, etc. We need only know how the principles and law work, and that is why when you see supply and demand curves they rarely have actual numbers on the axes of the Cartesian quadrant -- upper right -- in which they are depicted.