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How Job Losses are Economic Gains

Jan 13, 2004 3:03 PM
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Simon, who lives in Hong Kong, the most economically free country on the planet, has a nice explanation of what economists call "comparative advantage".

He does, however, neglect another great effect of outsourced labor — an enormous number of consumers benefit from the reduced prices that result from lower costs.


Comments: How Job Losses are Economic Gains

... while at the same time resulting in a reduced number of consumers.

Posted by: Richard Jones on January 13, 2004 4:47 PM | permalink

Yes, because God knows my family hasn't had any money to spend since our ancestors' textile jobs got shipped overseas.

Posted by: Joe Grossberg on January 13, 2004 4:57 PM | permalink

It can permanently drop the economic status of people, especially in areas with no other industries. If you do some research on those areas hit hard, you'll see people who were once making a decent amount of money (nothing spectacular, but far more than Wal-Mart pays), but now unemployment is massive or they have to work at places like Wal-Mart.

These people don't have the wealth to keep the cycle going. Yes, you can climb out, but it's march harder than say, those in the Ivy-League-Loop.

Posted by: O'dell on January 13, 2004 8:34 PM | permalink

I ignored plenty more than just cheaper prices. The idea of the post was to show the idea of comparitive advantage is not a zero sum game. But you're right - cheaper prices are another result of cheaper labour. I alluded to it in the "benefits" of outsourcing but the main point was that China and India help Western economies - they are not the enemy.

Posted by: Simon on January 14, 2004 12:41 AM | permalink

Oh, boo hoo. People have to work in a nice, air conditioned Wal-Mart or Starbucks instead of busting their ass in a lumber mill, cotton field or sweatshop.

If an area has nothing but labor, they have a resource. If they create free markets, they create wealth. It's how Hong Kong and Singapore have gotten so rich.

Posted by: Joe Grossberg on January 14, 2004 10:54 AM | permalink

They weren't quite the sweatshops of Indonesia (you know, we have some laws here)... And they were getting paid on average twice as much as Wal-Mart pays, not to mention getting health insurance.

Posted by: O'dell on January 14, 2004 4:26 PM | permalink

I can't wait for more tech jobs and more health care positions to be outsourced so that services from those two fields become "pennies on the dollar." Can you imagine the many consumers benefitting from that?

We also have too many overpriced lawyers. India has a lot of good ones, we should start importing them for cheap.

Posted by: O'dell on January 14, 2004 4:28 PM | permalink

No more comments! Either someone has violated Godwin's Law, I'm tired of the discussion or, most likely, the ten-week window has closed. You can, however, contact me through email.