So True
This 2 Million Minutes blog post is right on the money. It contains a clip of the middle-class protest song “Mad in America,” and explains why the ideas embodied in the song are false. (I didn’t know there even was such a thing as a middle-class protest song. If you want to learn more, the lyrics, as well as commentary from activists, are here.)
“Mad in America” tells the story of a hardworking baker who moved to the United States for employment opportunities several decades ago. Now, his grandchildren are losing their jobs because businesses are hiring Asians who will work for less.
Bob Compton of 2 Million Minutes reacts:
Lacking an understanding of how competitive advantages must be upgraded over time with more education, constant innovation and personal creativity, the song simply laments reality – that ideas, jobs and capital are mobile.
And while that mobility is more pronounced now because of computers, cell phones, and the Internet, it has always been there. After all, the baker in the song didn’t stay in his native Finland — he came to America, where he competed with Americans and earned a low wage! The opening of the song undermines its message. “Mad in America” implies that it’s bad for jobs to go offshore, while immigration to the United States is fine. The website with the lyrics further emphasizes that its campaign is not about U.S. immigration policy. But what does it matter whether the competition comes to your job or your job goes to the competition? Either way, if someone is willing to do your work for less money, you’re in trouble.
It should be noted that workers can avoid this problem to some extent if they do a better job than anyone else. I realize this may not be quite so inspirational as A Message to Garcia, but for example, Delta decided to bring its customer service back to the United States because customers had trouble communicating with Indians. Businesses look at more than dollar amounts when they make decisions; they also care about quality. Of course, in a bad recession, even the best workers suffer. To quote General Electric CEO Jeff Immelt, “We are living through history, and I don’t mean that in a positive sense.”
I love Compton’s post, but I’m confused by one of his comments. He contrasts the U.S. economy of a century ago with the economy today:
We were the cheap laborers with the strong work ethic, the desire for a better life for our children, the commitment to building schools for compulsory education.
We still have compulsory education, and it hasn’t prevented the outsourcing problem. In fact, 2 Million Minutes is constantly pointing out our education system’s failures.
That quibble aside, it’s a great post and I highly recommend reading it.
I think it’s a great song. I also think this is not the 19th century and people aren’t moving here from Finland to find work. I also think that when people were moving here from Finland to find work, they became American citizens and contributed to American society. Last time I checked India and China were NOT in America.
Comment by Bassbob — May 18, 2009 @ 6:38 p.m.
What a clueless article. It’s a great song and it’s talking about the loss of opportunity in this country. Now that we have a president who is anti-business and pro-taxes we will lose many more jobs in the US that we could ever imagine.
I wish more people would hear this song and make up their own minds
Comment by Epidrake — May 18, 2009 @ 10:31 p.m.
Whoever wrote that song simply doesn’t understand economics. Market efficiency creates new wealth by reducing wasteful expenditure, and this is just as true for labor markets as it is for goods.
If cheaper labor is available, hiring that cheaper labor saves money. That money is invested in new enterprise, which creates new jobs and expands the economy.
Outsourcing is beneficial. So is immigration. Policies that promote freedom of contract create new wealth not only for low-cost laborers, but for Americans as well. If you want a better world for your children, support free trade.
Read more:
http://econlog.econlib.org/archives/2004/09/economic_illite.html
http://www.cato.org/pubs/letters/palmer-catoletters.pdf
http://www.cato.org/pub_display.php?pub_id=5354
http://www.reason.com/news/show/35674.html
http://www.reason.org/news/show/1003011.html
http://www.reason.com/news/show/123509.html
http://www.cato.org/pub_display.php?pub_id=2546
http://econlog.econlib.org/archives/2004/09/outsourcing_eco.html
Comment by Eric D. Dixon — May 18, 2009 @ 11:37 p.m.
Eric, you don’t understand outsourcing based on the legal discrimination of US citizens and green card holders. Luckily, Senator Durbin does. His new bill won’t allow outsourcing or labor contracting using visa staff. And his new bill will give us a chance to compete for job openings in our own country.
The song addresses the collateral damage that American society reaps when protections are given to corporations as they bypass qualified lawyers, accountants, marketers, teachers and techies.
It’s the freedom to compete for US job openings that will stop this damage.
Comment by Donna Conroy — May 19, 2009 @ 11:42 a.m.
Americans do have a chance to compete for jobs in the US, but companies may decide to hire other people instead. If these businesses considered Americans to be qualified, they wouldn’t go looking other places for workers. Legislation against outsourcing makes businesses hire people who wouldn’t be their first choice if they could hire freely.
Comment by Sarah Brodsky — May 19, 2009 @ 1:51 p.m.
Sarah, if that is true why is it that in many cases US companies are replacing existing techs with H1b visa labor and coercing those about to be fired to train their replacements. Some of the companies receive tax abatements and benefits for employing locally. If these people being made redundant were not qualified they simply couldn’t have the knowledge and skill needed to train replacements. So this isn’t all about choice and employee qualifications – its more about the cost of labor. Our laws and policies make it cheaper to hire foreigners or move work offshore than to employ here – especially if the those who are in the queue to leave are getting on in years. This is all well documented stuff – its not top secret. But its hard to get a fired employee to come forward and go public especially if they want to continue on in their chosen career path. You would do well to read about Professors Matloff and Hira have documented about this issue. Or look at Paul Revere Corporations information on the competition American companies and workers face. I believe Lou Dobbs calls it pitting the average American worker against the cheapest labor in the world. Its not as cut and dried as everyone thinks and the market place is hardly free.
Comment by Madia — May 19, 2009 @ 3:43 p.m.
The economics of this are clear: hiring the cheapest qualified labor possible is the best route to a healthy economy. If that labor is in the United States, that’s great. If it’s in India, that’s also great — both for them and for the United States.
Establishing legal barriers to outsourcing is a drain on the economy, and shrinks job growth in the United States. On the other hand, if we let capital flow to its most efficient uses — which includes finding lower-cost labor, whether domestic or abroad — there’s more capital to invest, and new economic activity creates jobs that weren’t possible or even anticipated beforehand.
Outsourcing makes America richer, and provides American workers with a brighter future.
Comment by Eric D. Dixon — May 19, 2009 @ 3:49 p.m.
Tell that to the guy who just lost his job to some guy in India working for $6 an hour. Better yet, tell it to his wife and kids.
Comment by Bassbob — May 21, 2009 @ 11:38 p.m.
There’s no doubt that losing a job and trying to find another one can be a difficult and uncertain process. But that same uncertainty is what led to the United States’ high standard of living in the first place. Chances are, the guy who just lost his job has plumbing, a working vehicle, access to inexpensive groceries, maybe even air conditioning and cable TV — whereas most people in the world would consider these things to be unimaginable luxuries. The reason it’s so easy to take those things for granted in the United States is because we’ve largely had a free economy in which people can be fired from jobs that are no longer competitively productive, and both capital and labor reallocated to more efficient uses.
It is absolutely true that, regardless of how difficult a job transition is for any given family, outsourcing and downsizing are the road to widespread and ongoing prosperity:
http://cafehayek.typepad.com/hayek/2007/05/the_road_to_pro.html
Nobody has a right to any particular job, and the rest of us shouldn’t let protectionists hold the rest of the nation hostage to the terrible economics that protectionism brings. If you outlaw outsourcing, you’ll set the entire nation on a road to poverty.
Yes, I would absolutely explain this to anybody who faces the loss of their job to outsourcing. I’d explain it to their families, too. Economic illiteracy needs to be stamped out before it crushes the entire nation.
Comment by Eric D. Dixon — May 22, 2009 @ 9:17 a.m.
So you are advocating knocking the American standard down to par with the rest of the world? Why should the US government be passing policy that helps workers in other parts of the world, at the expense of US workers?
The way I see it, you are simply advocating policy that benefits people who own stock in whatever companies are outsourcing these jobs. It doesn’t help middle class America and frankly I don’t care if your company fails and I see no reason why the average guy trying to support his family should either. If your company wants to hire Indians and Chinese, take your F**king company over there and survive off THEIR market.
Comment by Bassbob — May 23, 2009 @ 7:34 a.m.