The wages of outsourcing

In the latter day argument for protectionism (neo-mercantilism), theoretical defenses of free trade are often waved aside with a dismissive "Move down from the theoretical and into events in the news ? reality."

This reminded me of an excellent point made over at Truck and Barter back in February, in the course of noting Prof. Russell Roberts' essay on outsourcing. Kevin Brancato laid out a thought experiment for the mercantilists protectionists:

Let's look at some of the best jobs that have been lost to robots or foreigners. In 1913, Henry Ford instituted the $5 day for a 9 hour shift. These jobs were hard assembly line positions, but were extremely desirable work. With changes in technology, these jobs were lost.

But just how good were they? For their day, these jobs earned double the average manufacturing wage. But they are nothing special to speak of in today's terms. Deflating the $5 a day wage by the CPI-U (which is not really appropriate, but this is a blog post, not a dissertation) Ford's $5 a day is a wage of 5*(184/9.9)=$93 per day in 2003 dollars, or $10.35 per hour. The average Wal-Mart supercenter employee working in the grocery section--by opponents' accounts, some of the WORST JOBS EVER--makes about $10 an hour (page 25), not including benefits.

So some of the lowest-skilled service industry workers today are making as much or more than the best technically-skilled assembly line workers of Henry Ford's day. And that's because of outsourcing.

Which of course is a real-world example of the benefits of outsourcing. We're not a poorer nation today because we've gone from having 90% of our population work in agriculture to 2%- we produce more food on less land, and people moved on to different jobs (such as manufacturing, for example). The US in 2004 is several orders of magnitude wealthier than the US in 1789, and the biggest problem of the poor is too much food, rather than the old constant and real battle with hunger and starvation when 90% of the population worked the land.

There's no particular reason why our situation won't be the same for basic industry as well, being that we produce more and more for less and less inputs.

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So I'm thinking about

So I'm thinking about haiti, and about the city i live in. Darwin studied island ecologies to understand ecologies in general (borrowing his basic ideas from adam smith.) Inexact simile: an american city is like the carribean, with less water. you've got your haiti, your cuba, your tourist traps, your tax havens, mixed together, interacting. Knowing why the liberals can't fix haiti says a lot about the prospects for the liberals fixing the city. (or conservatives for that matter.)