War Against the Machines

Why are protectionists endangering American jobs?


John Kerry seems to enjoy playing Pat Buchanan. Just as Buchanan once called on his peasant army to take up their pitchforks and rail against NAFTA, today Kerry wants those pitchforks aimed at "Benedict Arnold CEOs" who outsource jobs to foreign lands. And why wouldn't Kerry enjoy playing Pitchfork Pat? After all, he gains new credibility with blue-collar workers who might have previously seen him as an elitist with soft hands and an expensive haircut.

And the message is catching on. As angry protestors scorn outsourcing, the Senate's indignation takes bill form, and squeamish executives suggest ditching the o-word entirely. Raging against outsourcing may even bring Kerry something Buchanan never came close to—victory. Seems all he has to do is stick to the script: Foreigners are taking American jobs.

But from the save-our-jobs perspective, the new protectionists have more to fear from machines. After all, those soulless slaves to efficiency have stolen more American jobs than any foreigner. Hollywood visionaries use films like The Terminator and The Matrix to warn us of the coming war against the machines. Well, the war is here. Actually, it's been here for a long time.

The printing press swallowed human scriveners and the photocopier and personal computer destroyed countless office jobs. Machines like the tractor have overrun agriculture so much that, during the last century, farmers' share of the American workforce has fallen from 40 percent to 3. Just weeks ago a Kentucky city mourned when a machine replaced its last human elevator operator, and even the recently resolved Southern California grocery strike may turn out to be another victory for machines. Here man and machine used to work together in peace— human checkers appreciated how scanners would remember thousands of prices for them. But now some stores have begun phasing in automated checkout machines, which means human checkers work alongside machines that may eventually take their jobs. An analysis of Bureau of Labor Statistics data notes that—even without outsourcing—technology would have eliminated most of the jobs now going overseas. Sometimes it seems like our society is so mechanized that there's almost nothing left for us humans to do.

Of course, cursing machines misses the point because it tells only half of the story. Hyperventilating pundits can point to a specific sector or a narrow time frame and tell a tale of woe. And the quest for efficiency does kill jobs; but in the long run it creates more than it destroys. Sometimes an industry disappears or shrinks to a nub of its former self, and yet new life continues to sprout. It would be tough to find many scriveners today, but the printing press and the PC haven't destroyed office jobs. In fact, there are 19.5 million of them. Even high-end IT jobs go through the process of pruning and new growth. The Institute for International Economics notes that 70,000 computer programmers have lost their jobs since 1999. However, during that same period, companies created 115,000 higher paying jobs in software engineering. Taking a broader view reveals that—even with all the dips and churns—creation dwarfs destruction. At the end of World War II, there were about 138 million Americans. Today, 138 million Americans have jobs. Clearly, an efficient market is the best jobs program.

Still, can we connect the dots from efficiency gains to job growth? Some imagine that CEOs fire humans, hire machines, and then throw the extra cash on their money pile. This view may not be far off the mark in assuming ambition—perhaps even greed—motivates the CEO. However, the truly greedy won't simply stash the cash—they will reinvest it and dream of an even bigger payday. Since reinvestment spurs job growth, in order to accept the efficiency gains-job growth link you simply have to assume that corporate greed is alive and well. For most of us, this isn't a huge leap.

As the market evolves, we don't just exchange fewer jobs for more, we also trade up for better jobs. Since today's office mates squabble over a couple of clicks on the thermometer, it's a good thing few of them will have to find out how they'd survive in, say, a mineshaft. During the past 50 years we've lost over a quarter-million mining jobs, but we've gained 78 million service sector jobs. Today, 19 times as many Americans work in finance as in mining; 22 times more work in hospitality, and 54 times more work in health and education.

It's often difficult to track job growth by a particular occupation, because many of today's jobs were created recently. Today's jobseeker has more choices than ever, which means that we are more likely to get paid to do something we enjoy. Americans hold millions of jobs that did not exist a century ago. For example, our nation is home to 758,000 software engineers, 299,000 fitness workers and 128,000 aircraft mechanics. And many of the old-style jobs—far from being outsourced into oblivion—are more plentiful than ever. Our nation has 6.5 million teachers, 718,000 hairdressers, 281,000 chefs and 112,000 biologists. The chance for work to aid rather than hinder our quest for fulfillment is a truly historic development. How many miners stuck deep within the earth would rather have been video editors, web designers or car customizers?

Pointing out the market's marvels will not console the worker who lost his job to a machine or a foreign worker. To him the process remains vicious and absurd. "Why cut my job to save a few bucks?" he asks. Kerry and the new protectionists seek to engage this man, overstate the job-destroying aspect of outsourcing, and ignore its job-creating side.

However, an efficient economy can offer hope even to its victims—for victimhood itself is a temporary state. According to the Bureau of Labor Statistics, most of the unemployed find new jobs within three months, and the efficiency-seeking forces that fire a worker are the same forces that will ultimately rehire him. News accounts typically focus on how the unemployed will get along without a salary, but the cost of products also has a big impact on living standards. To hear our grandparents tell it, you'd think people used to be able to buy just about anything for a nickel. What grandma and grandpa don't usually bring up is how long they had to work to get that nickel. By that standard, the price of just about everything has fallen dramatically. More buying power helps the outsourced worker weather the lean times of unemployment. Moreover, as the market evolves, so must the worker's mindset. Job security no longer means fighting to keep the same job for 30 years, it means keeping ourselves marketable. Just as the market searches for ways to do things better, so will tomorrow's workers—by gaining new knowledge and skills—seek to better themselves.

The quest for efficiency—whether with machines or foreigners—will continue to create more than it destroys. But since destruction will always remain a part of the process, there will always be another Pat Buchanan or John Kerry. Free markets will continue to be a tough sell because the tradeoff will always be the same: exchanging some of today's jobs for more and better jobs that often don't yet exist. Protestors rarely wave angry signs at protectionist politicians who would jeopardize future jobs, but it's not fanciful to fight for jobs without knowing what they are. After all, when they were in third grade, today's 30-something web designers could not have dreamed of what they would end up doing. Likewise, today's third graders have no idea what's in store for them.