Friday, June 21st, 2024

Has the USA Fallen Permanently Behind?

In today’s Wallstreet Journal Opinion, The Folly of Subsidizing Unemployment, Harvard economics professor, Robert Barro, argued that the ranks of unemployed workers would be lowered by 4,000,000 if the unemployment benefits of the 14,000,000 unemployed workers had been eliminated, rather than extended.

Professor Barro said, “Suppose…the share of long-term unemployment had equaled the peak value of 24.5% observed in July, 1983…then, the total number of unemployed would have been 10.4 million, rather than 14.6 million.” Wow! That’s a powerful supposition. Unfortunately professor Barro didn’t also put forth a supposition about what those jobs would be. Wouldn’t it be nice if we could all wave a magical multiplier and say, “Ta Da! Look, 4M more jobs!” or, “Ta Da! Look, I just doubled my business!”

Hopefully, everyone can acknowledge there are so many variables in the global economy that it is impossible to predict with certainty the impact of each. Therefore, possible causes and solutions can be argued ad infinitum.

Global(?) Competition

Global(?) Competition

However, unless one is suffering from a severe case of denial, regular readers of the Wall Street Journal might take notice of a much more important economic phenomenon—perpetual trade deficits. Perhaps I am more sensitive to it after having seen my own profession, designing and manufacturing semiconductor “chips”, become dominated by Asian companies. Or, perhaps it’s because I have lived on the West Coast for the last 2 decades and I see a constant flow of freighters arrive at docks with full containers and leave with empty containers. Or, maybe it’s because I see that nearly 100% of the accelerated students in my local school district are Asian. The question is not, “To dole or not to dole.” The question is, “Has the USA permanently fallen behind in the global economic race?”

A front page article in today’s WSJ, In Toledo, the ‘Glass City,’ New Label: Made in China, talked about how Toledo, Ohio used to be a world leader in glass manufacturing. The town is erecting a museum as a tribute to the old days—with glass that was so high-tech that it had to be imported—from China. On the site of the old glass factories, the town is building a casino.

Rather than arguing about the length of unemployment benefits, the conversation should be about how a casino contributes to economic production, where the money comes from that is spent in the casino, and where the money that is used to buy glass (and an increasing percentage of other goods and services) from China comes from. If Professor Barro can explain where the former glass workers in Toledo are now supposed to be working, I’ll start to understand where his other 4M jobs came from.

This touches the underlying premise of my book, Selling Change: workers and companies need to step up to the demands of global competition or someone else, likely in or from another country or from another generation, is going to be eating their lunch at the Milton Friedman Cafe.

Change is not easy. Learning new skills is not easy. Taking a financial hit during the transition is not easy. But, it’s a lot easier than watching your competitor eat your lunch.


2 Responses to “Has the USA Fallen Permanently Behind?”
  1. Brett: Once again, thanks for this insightful analysis of a critically important topic that we’re facing as a society. Specifically, I love the down-to-earth “clues” you’ve shared regarding how our economy might be going through a fundamental metamorphosis. Cargo ships leaving empty — glass factories replaced by casinos — that sort of thing. While I (like many people, I’d imagine) tend to get “lost” in all the numbers and statistics that the experts throw around related to the economy, it’s not hard to just look around and see evidence of the changes taking place. And as you said, if we don’t learn to adapt to these changes, we’ve got some tough sledding ahead, as a country!

  2. Linda Keith says:

    Brett, the statement you made in your blog post that I agree with 100% is: “There are so many variables in the global economy that it is impossible to predict with certainty the impact of each.” I am always leery when anyone sites the ONE thing that got us into this mess or will get us out. It is many things and most of us can only get a handle on one or two. You help in the area of understanding change and channeling it so the business moves forward. I focus on understanding your lender’s environment as it relates to getting the funding your business needs. I do not disagree with Professor Barro, although I’d need more information and time to think. There is a point at which the cost of extending unemployment longer outweighs the benefits of letting people be pickier about the job they get. The inflationary impact of every dollar the government spends on this recovery is a real danger and someone needs to be the expert on where best to spend those dollars…more unemployment, higher guarantees and availability of SBA loans, tax cuts? As always, interesting and complicated conversation.