Economist’s View: Why is the American Jobs Machine Broken?.
This is an important discussion that, at it’s heart, is about “who killed the American dream”? He points to a long piece from Andy Grove (former CEO of Intel) summarized thusly:
The piece is long, detailed and worth reading in full, but the central point is this: an economy that innovates prolifically but consistently exports its jobs to lower cost overseas locations will eventually lose not only its capacity for mass production, but eventually also its capacity for innovation…
He goes on to detail long term trends in American manufacturing, trade imbalances, income inequality and employment. It comes down to one fairly simple question: Is free trade always a good thing?
The underlying assumptions is that it always produces net gains, despite the fact that some will lose income and wealth because of it. At some point we need to re-evaluate the notion that free trade is always beneficial, particularly when the benefits are concentrated among the few while many more lose good jobs permanently.
The statement in the quote is profoundly important to our future as a world power. Without an broad economic base I don’t think we can remain the superpower we believe ourselves to be. You can only export job for so long before you become incapable of understanding what it is that you need to improve. Without innovation we are doomed to stagnation.
