barriomulas.com - The Layoffs of Trade, Outsourcing, and Technology

A February 9, 2008 article in The Economist stated that "Only 59% of Americans think international trade is benefiting the country, compared with 78% in 2002." Such data is interesting indeed considering the fact that it is generally the U.S. Government and its financial institution appendages that are pushing foreign countries to liberalize trade and open their frontiers. The free trade doctrine is often dubbed "The Washington Consensus" by its critics.

Economic liberals (in its classic sense) hail as natural phenomena such as international trade, outsourcing, and the replacement of old methods of production by newer, more efficient technology.

Such things allow for lower production costs and thus turn lower prices and finally higher purchasing power. Methods to curb international trade or to stick to traditional methods of production are deemed protectionist, anti-market, and socialistic. Economic liberals carry much reason in stating that without such advancements in production we would still be laboring as small-plot farmers and artisans.

I subscribe to the laissez-faire argument that displaced workers will eventually be integrated back into the workforce and thus I am weary of bans on imported products. Though import substitution led to amazing economic progress during Latin America's early second half of the 20th century, the quality of the products and services of such are only a step up from that of state-owned enterprise. I agree that at times protectionist measures can foment laziness and lack of innovation on behalf of local producers. Despite this, I find myself in a difficult position; feeling that entrepreneurs should have the right to trade their products over borders but at the same time having distaste for cultural globalism and transnational corporations.

As a nationalist, I note the romantic qualities of autarky. It would not only be beneficial cultural diversity, but it would theoretically dilute the need of resource-influenced wars. I am also one to believe that local lifestyles, growth patterns, and political systems should be responsive to the materials at hand and the realities of the local environment. The asphalt and urban planning patterns of the temperate regions, for example, are difficult to keep up with in Puerto Rico as our tropical and rainy weather chip away at roadways quicker than in the North. Tropical countries have had difficulties keeping up with the West's concept of industrialism as machinery quickly breaks down and degrades in face of the harsher climate. Despite this, imported standards - and not necessarily imported products - are to blame.

Though I am not for outright bans on foreign products, I am a proponent of finding more efficient and comforting ways to ease the negative effects of switching from traditional to newer methods of production. Recently I wrote an article titled "Public Layoffs and How to Go About It" with recommendations aimed towards alleviating the macroeconomic effect of public sector layoffs.

Often these private sector layoffs are strictly local and limited in area. As sad as it might be for these workers to be laid off in mass, there does exist the option of relocating to another area. We are all aware that almost always there are labor surpluses in one area, there are shortages in another. Public officials of shrinking towns and cities often panic at the oncoming economic shrinkage and make desperate attempts to either entice the corporations to stay, invite other producers, or initiate costly urban renewal programs. Private and public figures alike have ingrained in their heads the need for infinite upward growth and simply cannot fit into their skulls the idea of settling for a smaller town. I recall reading a recent article about Mayors who have come to the conclusion that their cities' shrinkage is long term, and thus initiated an interesting psychological and bureaucratic transition from medium sized city to small town. Let's bulldoze those abandoned factories and reforest, eliminate abandoned roads in order to cut down on maintenance, and put on a shoe that actually fits.

There will be instances where the practice is not limited to individual localities and causes major widespread effects. In such cases relocation is not an option, for the tendency is national. Re-education and re-incorporation into the workforce replace relocation in such cases.

Those jobs aren't coming back. The only option is to equip the workforce for the jobs of tomorrow.

Companies often carry out lengthy viability studies and impact evaluations prior to relocating or lay off a portion of their workforce. Few such decisions are carried out overnight. Thus there is a "grace period", we can suppose, that a company is willing to go through prior to the lay off moment. I think that that the most effective and economic way to mitigate wide-scale unemployment is to take advantage of this very period. It would be a lot more costly for the state to absorb these citizens after their layoff. Why don't we keep our workers on their toes and equip them for market uncertainty and re-integration? Would not corporations be at the mercy of their highly educated, versatile and dynamic workers?

Efforts can be made to educated potential layoffs during a pre-layoff grace period. (My concept of a universal education system would be quite beneficial during times like this.) Getting such a head start on the re-education of the soon-to-be-unemployed will assure that the time it takes to re-integrate the employee is shorter than the time it takes for the negative effects of such widespread unemployment to level out. In the worst case scenario, all these surplus workers would have to do is join the Army (jaja).

I am faithful that a surplus in one industry is countered by a shortage of labor in another. If every industry were to have a surplus of labor then I seriously think that we need to re-think our stance on industrialism and modern society in general. If every corporation and employer had too many employees, then we either need to cut back on our consumption or implement a utopia where we all sit on our asses and robots do all of the work.

Such layoffs have a higher impact when they occur within large corporations. A small business deducting its workforce from 5 to 4 does not have as much effect on the community as a large corporation lowering its workforce from 5,000 to 4,000. We can suppose that the vast majority of the jobs lost are monotonous and assembly-line type positions. A layoff in a sense is a blessing, allowing for the state to take advantage of the situation and re-this monotonous labor into an entrepreneur culture of small business, entrepreneurs, self-employment, and cooperatives. A small business loan and courses on basic business is a hell lot more efficient than welfare and food stamps.

Outsourcing, imports, and technology provide enormous savings for producers and service providers. Only a fraction of those savings render lower costs for consumers with the majority of such translating into higher profits. There are other ways to better distribute such economic growth with the population such as a combination of higher wages and a shorter workweek. I am a firm believer in a living wage, thus if producers can provide lower consumer costs than the living wage could be lowered to accommodate such. I don't perceive such as redistribution of wealth but as increased accessibility to profit.