PROTECTIONISM IS NOT THE ANSWER

Clinging to manufacturing jobs in the age of automation and globalization is an exercise in futility equivalent to clinging to 40 acres and a mule in the wake of the industrial revolution.

We’re in the middle of an economic transformation equivalent to the first and second industrial revolutions, each of which produced massive changes in the occupational distribution of the labor force, educational requirements and places of residence of the labor force. During the Agricultural Aged (prior to the beginning of the industrial revolution around 1780), around 90 percent of the labor force was engaged in agriculture, acquired 7th grade educations and lived in rural areas. Now, thanks to the mechanization of agriculture, less than 2 percent of the population produces all the food we consume and a sizable surplus besides. (A prime example of humanity's ability to push back the Malthusian specter.) 

The first industrial revolution required training for factory work and the relocation of workers from rural areas to grimy industrial urban areas. The loss of agricultural jobs and relocation from pristine rural areas to grimy urban areas, while regrettable, was an inevitable consequence of the replacement of agricultural by mechanical technology and the replacement of wood, wind and water power by coal as the prime source of energy. 

A similar change occurred when the second industrial revolution came along after World War I, when electro-mechanical technology displaced mechanical technology and oil displaced coal as the prime source of energy,, forcing workers to move from blue-collar factory jobs into white-collar office work, requiring a minimum 12-16 years of education and, thanks to the automobile and public transport,  prompting workers to relocated from the cities to the suburbs. World War II accelerated the process considerably. 

Now we are transforming again, like the caterpillar to the butterfly. As for industrial jobs, the factory of the future will be run by a man and his dog. The man is there to feed the dog, and the dog is there to keep the man from touching anything. 

The present transformation from the second industrial revolution (in which electro-mechanical technology predominated) to the present Electronic Age requires a comparable shift from white-collar office work to no-collar/t-shirt work, with corresponding changes in educational requirements and seemingly a shift in venue from the suburbs back to antiseptic, modern urban areas (often satellites of the big cities: Walnut Creek near San Francisco, or the Galleria near downtown Houston, for example). Look at the number of people employed in producing goods and services that didn’t exist 3 decades ago. The task at hand is not to protect industrial jobs in the U.S. (which are boring and repetitive) and compete for wages with low-paid workers in the emerging economies,  but rather to prepare the labor force to participate in the jobs needed in the Electronic Age. We’re doing a piss poor job of accomplishing this — for example, biotech reportedly has 3 million job vacancies that cannot be filled because of the lack of trained personnel. When Obama asked Steve Jobs why he didn’t produce Apple products in the U.S., Jobs replied that he needed 10,000 engineers who were simply not available in the U.S.. The Chinese are churning out tech-trained people at far greater rates than the U.S. Anecdotally, I can tell you that all the statisticians in the biotech firm my wife worked in were Chinese, who barely spoke English but mastered the universal language of mathematics.

The usual objection raised to this line of thinking is that not everyone can become a techie, and that’s very true. But every cutting-edge techie producing high-value-added goods and services, needs low-tech services -- barbers, teachers, health-care providers, truck drivers, garbage collectors, entertainers, hospitality workers, etc., etc., who do not require math and science degrees and are not vulnerable to competition by overseas providers. Each of these low-tech American service providers also needs the services of the others, which combined with the services rendered by the techies make for a viable, self-sustaining economy. The task of both the public and the private sector is to train the labor force to render the full spectrum of services needed in a new age that has moved beyond the production of industrial goods and services. Unfortunately, Republicans at all levels of government — seemingly preferring a dumbed-down, easily manipulated, underpaid electorate — are undermining funding for the education and vocational training the American labor force needs to adapt and successfully compete in the Electronic Age. From a comparative advantage perspective, Sanders is right in proposing a vision of “free” advanced education for all who want it. Ditto universal health care, enhancing the productivity of the American labor force through better health. 

Protectionism advocated by both Sanders and Trump, while resonating with rust-belt workers, would simply delay the process of transforming the U.S. economy into the Electronic Age, putting the U.S. at a comparative disadvantage internationally and preventing Americans from enjoying the low cost of goods produced in less-developed, low-wage countries. The displacement of factory workers, while regrettable, is a necessary corollary to the transformation. Rather that resisting the displacement with protectionism, the more profitable policy is to let emerging economies take on the task of producing industrial goods while training the U.S. labor force to fit into the cutting edge of the modern global economy. A significant side benefit to the industrialization of the economies emerging from the agricultural age is the contraceptive effect of industrialization, converting, as it does, children from assets around the farm to liabilities (it takes 12-16 years of education before they become productive), with a demonstrable corresponding reduction in the birthrate. 

Bottom line for U.S. policy: protectionism is not the answer. The answer is enhancing U.S. productivity for the new Electronic Age through higher education/vocational training, universal health care, intelligent regulation, tax/fiscal reform, restructuring the safety net, and infrastructure modernization and maintenance — all subjects of my forthcoming book: “The Egyptian Solution — And Other Lessons of History to Get Us Out of This Mess.”