In his column today David Brooks provided a brief discussion that purports to show that the growing inequality is attributable to a mix of globalization and technology and the moral failings of the working class. A little reflection would lead people to reject both parts of this explanation.
The first claim ignores the way in which deliberate policy shaped globalization. The reason that wages are much lower and the skills expected are much higher for manufacturing workers than in the past is because it has been government policy to place U.S. manufacturing workers in direct competition with their much lower paid counterparts in Mexico, China and elsewhere. The predicted and actual result of this policy is to reduce the pay of manufacturing workers.
The government could have adopted the same approach to doctors, lawyers, economists and other highly paid professionals. There are many millions of smart hard-working people in the developing world who would be delighted to fill these jobs at much lower wages than their counterparts in the U.S. receive. However, the barriers that make it difficult for these people to work in the United States have not been lowered by recent "free trade" agreements and some have even been increased.
In other words, it was not globalization and technology that led to the upward redistribution of income, it was conscious policy. The vast majority of people in the United States who hold high-paying jobs are able to maintain their income because they enjoy far more protection than manufacturing workers.
Moral turpitude side of this story also has an important economic policy aspect. Parents who work long and erratic hours are likely to find it much more difficult to watch over their children than parents with decent paying jobs with predictable hours. Given the large number of workers, especially younger workers who are likely to be parents of young children, who have irregular employment and irregular hours, it would be surprising if many children were not having serious problems staying focused on their education.
Folks in Washington policy circles are go really wild for silly fads: hula hoops, streaking, lava lamps, etc. Okay, I don't know if the policy wonks really got into any of these, but they do fall for silly intellectual fads.
The Washington Post showed this sort of infatuation by printing a column from Steve Case telling us that new businesses were responsible for all the new jobs created in the last three decades. Case concludes from this that we should have policies that foster the growth of new businesses.
This is classic silly logic. New businesses both gain and lose jobs, just as do existing businesses. There is no obvious reason to prefer jobs in new businesses than existing businesses. If we adjust the balance so that we favor new businesses to the detriment of existing businesses, there is no reason to assume that the additional job growth in new businesses will exceed the additional job loss in existing businesses. The fact the new job growth happened to all be in new businesses is irrelevant.
To see this, imagine that all the job growth in the United States over the last three decades had occurred in the South, with the rest of the country just holding its own. It does not follow that if we had tax incentives for businesses to locate in the South, which were paid for with tax increases on the rest of the country, that we would see more overall job growth.
This is the essence of the argument put forward by Case. It makes no sense on its face. Policies toward new business should not be affected by the fact that they are net job creators just as it doesn't make sense to favor a specific region because it is a net job creator.
Robert Samuelson tried to explain the Fed's failure to recognize that the collapse of the housing bubble, which had been driving the economy in the last cycle, would lead to a serious downturn. He blamed it on complacency that resulted from the relatively stable growth of the prior quarter century. He compared this to the complacency following the 60s boom that led to the 70s inflation.
The comparison is more than a bit off. In the four years since this downturn began, GDP growth has averaged less than 0.2 percent. (This assumes 3.0 percent growth for the fourth quarter of 2011.) By contrast, growth averaged 3.5 percent from the business cycle peak in 1970 to the peak in 1980. Even if the timing is adjusted to have the 70s end with the trough of the 1982 recession, average growth over this period would still average 2.6 percent. Growth would have to far exceed projections in order to produce a comparable record following the 2008 crash.
It is also important to note that the financial crisis has little direct relevance to the current weakness of the economy. The problem is simply that there is nothing to replace the demand generated by the housing bubble. Consumption is actually unusually high relative to income and investment in equipment and software is back to its pre-recession share of GDP.
The NYT has a lengthy piece on how Apple has outsourced all of its manufacturing operations over the last two decades. This is seen as telling a larger story about the loss of U.S. manufacturing jobs.
Remarkably, the piece never once mentions exchange rates. This is a major determinant of relative prices. If the dollar rises by 30 percent against other currencies, as it did in the late 90s, then it becomes 30 percent more expensive to produce goods in the United States relative to other countries. This rise in the value of the dollar was the major factor behind the explosion in the trade deficit at the end of the 90s and at the beginning of the last decade.
The dollar is also supposed to be the mechanism through which trade is rebalanced. Large trade deficits are supposed to cause currencies to fall in value. This leads their deficits to move back toward balance. This has not happened to any significant extent with the United States in the last decade in large part because foreign governments have placed a high priority on accumulating large amounts of dollars, buying up trillions of dollars of U.S. government debt and other dollar denominated assets. If the dollar were allowed to fall to a level consistent with more balanced trade, then many manufacturing jobs would return to the United States.
The piece also treats the issue as one of being whether middle class manufacturing jobs can exist in the United States and be competitive. The United States is no more competitive with higher paying professional jobs, like doctors and lawyers. The main difference is that these are politically powerful groups who manage to maintain barriers that make it difficult for foreign professionals to come to the United States.
If the government had made the same commitment to eliminate barriers to foreigners in these professional services, it is likely that the pay of doctors, lawyers, and other highly educated professionals would be half or less of what it is today. The issue here is not one of skills, it is one of relative political power. The NYT should have presented the voice of someone who could have made this point.
The article also claims that the United States has a shortage of well-trained manufacturing workers. This assertion is contradicted by the fact that there is no large group of manufacturing workers for whom wages are rising rapidly, which would be the case if there were really a shortage.
Actually the story is that people are not moving. Adam Davidson had a piece noting the sharp decline in the percentage of the population that is moving out of state each year.
While the share of movers has fallen sharply, there are two important points about the data worth noting. First, there has been a downward trend in share of interstate movers in the population since the late 70s. There is an obvious reason for this: the aging of the population. People are most likely to pick up and move when they are in their 20s or early 30s. Interstate moves are much rarer when people have family and community roots later in life. With baby boomers now mostly in their 50s and 60s, we would expect to see a lower rate of moving than when they were in their 20s and 30s.
The other notable item in the graph is that the rate of movers appears to drop off in every downturn. It slows in the recession in the mid 70s, the early 80s and the early 90s. This suggests that there is a strong cyclical component to moving. While more people find themselves without jobs in a downturn, they need somewhere that is creating large numbers of jobs to justify a move. At the moment, there is no large geographic location that fits the bill. (North Dakota, with its labor force of 370,000 doesn't count.)
At this point, it is not clear that the reduction in movers is any more than we should expect given the aging of the workforce and the severity of the downturn, as opposed to an underlying structural problem. It is worth noting that being underwater in a mortgage does not appear to be an important factor. It seems that families may separate or rent out homes if they need to move out of state to get a job.
At least he does when it comes to restructuring our Social Security system. One of the widely ridiculed features of Greece's social welfare system was a differential retirement age for the public pension system that made the qualifying age for their Social Security system dependent on a worker's occupation. According to a widely repeated account hair dressers could retire at age 50.
The co-chairs of President Obama's deficit commission, Morgan Stanley director Erskine Bowles and former Senator Alan Simpson proposed that the U.S. adopt a similar system of occupation specific eligibility ages to go along with its proposal to raise the normal retirement age to 69. (Friedman wrongly attributes the plan to the commission as a whole, when he endorsed it in his column. The commission did not approve a plan.)
The Bowles-Simpson plan would also sharply cutback benefits for middle income workers like school teachers and firefighters in future decades. It would also immediately change the annual cost of living adjustment formula so that benefits would reduced be by 0.3 percentage points annually compared with the current formula. Their plan would reduce benefits by 3.0 percentage points after workers have been retired 10 years and 6.0 percentage points after workers have been retired 20 years. In case we don't think this is a sufficient sacrifice from retired workers, the Bowles-Simpson plan also proposes sharp cuts in Medicare that are likely to lead to much higher health care costs for the elderly.
Interestingly, in spite of his concern about competitiveness, Friedman never discusses the value of the dollar. The over-valued dollar is the main factor in the country's trade deficit. A lower valued dollar makes U.S. goods more competitive by making imports more expensive for people in the United States and our exports cheaper for people living in other countries. For some reason, he never mentions the over-valued dollar in his piece.
Steven Rattner remains convinced that handing future generations trillions of dollars of government bonds imposes a burden on them and is very unhappy that I don't see things that way. Let's try this one more time.
Let's say that we add $10 trillion to the national debt over the next decade. We'll assume that it is owned domestically. That is of course not true, but the foreign ownership of debt is determined by our trade deficit, which in turn depends on the value of the dollar, not the budget deficit. Furthermore, no one is disputing that foreign ownership of U.S. assets (either government debt or private assets) will be a drain on the economy.
At some future point, everyone who owns this debt today will be dead. They will have no choice but to hand this debt on to members of the next generation, either their own heirs or someone else's. (Note, contrary to Mr. Rattner's assertion in his original NYT piece, the debt does not disappear, the ownership is transferred. [Sorry Mr. Rattner, you don't get the $1 million prize.]) This means that future generations will be both paying and receiving debt service on $10 trillion of debt. How is this a burden on future generations as a whole?
Again, the taxes needed to pay the debt service do imply distortions, but the distortions will not be anywhere near the size of the debt. Furthermore, there are all sorts of distortions in the economy, many of which could be much larger, that we never think of as imposing a burden on future generations.
The most obvious are patent and copyright protections. By virtue of these government-granted monopolies, we force people in the future to spend hundreds of billions more per year to buy protected products like prescription drugs and computer software than they would pay in a free market. The additional costs associated with these protections have the same impact on the economy as a tax of the same size. Why are deficit hawks like Rattner completely unconcerned about the implicit tax burden of patents and copyrights that we are imposing on our children?
There is one other logical point where Mr. Rattner needs some education. I had suggested that the Fed could just hold the $3 trillion in assets currently on its books. In this case the interest on the debt is paid to the Fed and is refunded right back to the Treasury. Where is the burden on our kids?
Rattner responds by favorably quoting a blog commentator:
"You don’t know what the Fed will do or be able to do in the next generation."
Of course I don't know what the Fed will do, but this is a matter of public policy. Congress could mandate that the Fed will hold $3 trillion in assets and refund the interest to the Treasury. The Fed can raise reserve requirements (the favored tool of China's central bank) to stem any inflationary impact from this decision. The point of raising this issue is that this is one way that we can issue debt today and impose no debt service burden on future generations. The debt service is paid from the government to the government. That's pretty straightforward, isn't it?
Ezekiel Emanuel told readers of the necessity of controlling health care costs in order to allow workers to see real wage growth and to free up spending for other areas of the budget. To make this case he comments:
"During those 30 years [1980-2010], the only sustained period when real hourly earnings increased was 1990 through 1998 — which coincided almost exactly with a period of unusually low increases in health care costs."
That is not what the data from the Bureau of Labor Statistics show. In fact, there was essentially no real wage growth from 1990 to 1996. However, wages grew at a healthy rate from 1996 to 2001. The major factors behind the stronger wage growth of the late 90s were the uptick in productivity growth beginning in the middle of 1995 and the low unemployment rate in the years 1996-2001.
Source: Bureau of Labor Statistics.
It is also worth noting that in discussing ways to control costs, Emanuel never mentions increased trade. Every other country in the world pays far less for their health care than the United States even though they have comparable outcomes. This suggests the possibility for large gains from more trade. Unfortunately, discussions of health care policy are dominated by protectionists who do not want to see the industry exposed to increased international competition.
Nicholas Kristof used his column Sunday to tell readers about how an exceptional teacher, Mildred Grady, had made a huge difference in the life of a young African American boy. According to Kristof, Ms. Grady saw the boy, a known trouble-maker, steal a book from the library. Instead of turning him in, she bought several other books by the same author, which the boy subsequently stole from the library and read. As a result he became attached to reading. He went to college and then law school and went on to become a judge.
Kristof uses the example to explain the importance of good teachers. He argues that we need regular evaluations, with the teachers who score well getting big pay increases, and those who score poorly getting fired.
However, we do not know how Ms. Grady would have performed on the evaluations advocated by Kristof. It's possible that she would not have done very well under this system. That is especially the case if other less conscientious teachers focused on teaching to the exam, while she spent more effort trying to make an impact on the lives of her students.
It is entirely possible that Ms. Grady would not be one of the teachers rewarded under the system advocated by Kristof. In fact, such a system of evaluation could even drive dedicated teachers like Ms Grady away from the profession.
Steve Rattner is very upset. He tells NYT readers
"Debt doesn’t matter? Really? That’s the most irresponsible fiscal notion since the tax-cutting mania brought on by the advent of supply-side economics. And it’s particularly problematic right now, as Congress resumes debating whether to extend the payroll-tax reduction or enact other stimulative measures.
Here’s the theory, in its most extreme configuration: To the extent that the government sells its debt to Americans (as opposed to foreigners), those obligations will disappear as aging folks who buy those Treasuries die off."
Wow, I really would like to find the person who believes that government bonds will disappear when the people who own them die off. I sure hope Rattner can convince readers that this is not true.
However the true statement here, that Rattner either does not understand or is trying to obscure, is that the debt itself is not an inter-generational burden. Since ownership of the debt will ultimately be passed on to future generations (ignoring the portion that is held by foreigners -- which a function of the trade deficit), the debt itself is not a generational burden.
It can raise important issues of distribution within generations and the taxes needed to pay for the debt can create economic distortions, but many other things also lead to economic distortions (like patents and copyrights).
To carry this point a step further, since deficits that stimulate the economy today are likely to increase investment (especially if they are used to finance public investment and education), they are likely to make out children richer. Furthermore, the Fed could simply hold this debt and use higher reserve requirements in future years to stem an inflationary impact from a greater volume of reserves in the banking system. In that case, interest on the debt would be paid directly back to the Treasury. Where is the burden on our kids?
[Note: the million dollar prize is a joke.]
That is the nature of the complaint in his column, that no one is talking about poverty, even if he probably doesn't realize it. Of course there are people talking about the factors behind poverty, the most important of which is the weak economy. When we had low unemployment and strong growth at the end of the 90s, even those at the bottom of the income ladder were seeing greater opportunities.
To get from here to there would require more stimulus, more aggressive action from the Fed, and a lower valued more competitive dollar which would bring millions of manufacturing jobs back to the United States. However, the Washington Post (along with most other major news outlets) almost never presents the views of those making such arguments.
While Gerson thinks the problem is that people are not talking about the factors that cause people to remain mired in poverty, the real problem is major news outlets are not anxious to promote this discussion.
Ezra Klein tells us today that candidates take campaign promises seriously. I haven't reviewed the research, but it is easy to identify some important campaign promises that President Obama made over the course of his campaign that he clearly has not taken seriously while in office.
His pledge to renegotiate NAFTA was important in gaining support from manufacturing workers in many key primary states. This pledge was clearly never taken seriously once he got in the White House.
President Obama also promised to push for legislation that would allow for judges to rewrite the terms of home mortgages in bankruptcy. Any effort in this direction has been all but invisible since he entered the White House.
Finally, the public option portion of his health care plan clearly was not a priority for his administration. While he would have signed a bill that included a public option, he made it clear that he did not view it as an essential part of the plan.
Obviously there are promises that candidates feel little qualm about abandoning once they take office.
The NYT presented as fact that the movie and entertainment industry are losing $58 billion a year due to the lack of enforcement of copyrights. This is simply a number invented by the industry. It is almost inconceivable that the industry would gain even 20 percent of this amount if all unauthorized copies could be eliminated. (Current revenue from DVD sales and downloads are around $10 billion and recorded music around $6 billion.)
Furthermore, insofar as households are forced to pay more money for watching movies or listening to music, it means that they will have less money for buying other things. The impact of greater copyright enforcement on the economy would be similar to a huge tax imposed on watching movies and listening to music. This would lead to less economic growth and fewer jobs.
Readers don't expect much from the Washington Post when it comes to economic issues, so it is notable when an opinion column gets issues at least half right. In that vein, Fareed Zakaria's piece today noting the ways in which Germany seems to be outperforming the U.S. is worthy of attention.
First, let's note a couple of the things he gets wrong. Zakaria touts the growth in exports under President Obama, claiming that they have been growing at a 16 percent annual rate. He tells readers that this "means that U.S. exports should double earlier than 2014, the goal President Obama set in 2009."
Apparently, Zakaria is looking at the nominal value of exports. The real value of exports has increased by a total of just 12.9 percent since the fourth quarter of 2008. At this pace, we won't see exports double until around 2023. Perhaps Obama meant that he would reach his goal primarily through higher prices, but usually presidents don't want to boast about higher inflation on their watch.
The second point is that no serious person (okay, this is the Washington Post opinion page) would value exports in isolation. Net exports, exports minus imports, create jobs, not exports alone. If we export car parts to be assembled into a car in Mexico, it certainly does not create more jobs in the United States than when the car was assembled in the United States.
Because imports have exceeded exports by a huge amount over the last 15 years (i.e. we have large trade deficits) the United States has lost millions of jobs. The trade deficit has only declined by about half a percentage point of GDP during the Obama years. So in this sense, trade has contributed little to growth and jobs.
Zakaria also errs in his portrayal of the investment record on Clinton, Bush, and Obama. He tells readers:
"From 2001 to 2007, investment in equipment and software — the kinds of investments that boost productivity and create good jobs — declined 15 percent as a share of gross domestic product. ... In contrast, the current recovery, while anemic in terms of number of jobs created, is more broad-based and more durable. Business investment is rising, having boomed 18 percent since the end of 2009."
Actually, much of the investment in equipment in software at the end of the Clinton years was driven by the bubble in tech stocks. It was wasted establishing operations like Pets.com and other companies that quickly ended up in the dustbin of startup history. While this spending created jobs in the same way that paying people to dig holes and fill them up again will create jobs, it did not boost productivity.
Productivity growth over the Bush years averaged 2.2 percent annually. In the pre-recession period it averaged 2.7 percent. This compares to a 2.0 percent annual rate for the Clinton years taken as a whole and a 2.7 percent rate for the period following the beginning of the productivity speedup in 1995. In other words, there is little basis for saying that the falloff in investment in the Bush years harmed productivity growth.
On the other hand, the boom in investment during the Obama years touted by Zakaria is simply making up for the collapse of investment during the downturn. This is a normal pattern following a recession. Even with the Zakaria boom, equipment and software investment have still not risen back to its pre-recession share of GDP.
Now for the part that Zakaria gets right; Germany has done well because of its different attitude towards its workers. It is German government policy to try to persuade employers to keep workers on their payroll even during a downturn through policies like work sharing. This ensures that the workers continue to stay in the workforce and upgrade their skills. By contrast, many workers in the United States face long-term unemployment and some may never work again.
Germany has been so successful with this policy that its unemployment rate is now 1.6 percentage points lower than it was before the recession began. That is in spite of the fact that its GDP growth has been no better than GDP growth in the United States. The difference has been its labor force policy.
Zakaria notes the importance of the German experience and, citing a paper from the Brookings Institution, holds it up as a model for the United States. At CEPR we are always glad to see Brookings follow our lead so that the Post can write about a topic of importance.
The NYT reported on a Supreme Court ruling that retroactively granted copyright protection to foreign works that had previously been in the public domain. As Justice Breyer argued in dissent, this action appears to exceed the constitutional authority given to Congress, which ties copyrights to a specific public policy goal: "to promote the progress of science and useful arts."
In this case, since the copyright is explicitly being applied retroactively to work that has already been produced, it cannot possibly be viewed as providing incentive to develop the material. This means that the government is assigning a monopoly to items that were formerly in the public domain and available at no cost. It is prepared to arrest people and throw them in jail if they don't respect this government granted monopoly.
Given the large number of political groups complaining about activist judges and big government intervention into people's lives, it would have been useful to include some of their views about the court's action. Perhaps this can be addressed in a follow-up piece.
The NYT's truth vigilante was apparently sleeping when the paper printed without comment the Motion Picture Industry's claim that the country lost 100,000 jobs due to on-line "piracy." The truth vigilante would have pointed out that the money that consumers do not spend paying for copyright-protected work is available to be spent in other areas. The payments for copyright protected items have the same effect on the economy as a tax, they pull money out of the economy. While some of this may end up supporting more creative work, it is likely that most would simply end up as greater profits for the industry and larger royalty checks for a small number of highly paid performers.
By contrast, the requirements of the Stop On-Line Piracy Act are a good example of "job-killing" government regulation. They would impose additional costs on intermediaries which would be passed on to consumers and slow technological progress.
It is incorrect to use the term "piracy" in this discussion, even though the entertainment industry has paid lots of money to get it accepted. The items in question may not be in violation of the law in the countries where they are posted. In that case, the posting cannot properly be termed "piracy." It would be more accurate to use the neutral term "unauthorized copy."
Morning Edition did a segment this morning on the 35 hour work week in France. To show how bad the 35 hour work week is, the segment told listeners that hospital workers had accumulated 2 million days worth of overtime, which they will have to take as days off by the end of 2012. It warned that this would force hospitals to shut down for months at a time.
Most listeners would have little ability to assess the risk from taking this many days of leave since they probably don't have much idea of how big France's hospital sector is. In the United States the hospital sector employs 4.8 million workers. If the sector in France is proportional to the size of its employed workforce, then France has approximately 1.2 million workers in the hospital sector. This means that if everyone uses their days off (workers in the U.S. often lose days of paid leave), they will have to take an average of 1.7 extra days off in 2012. Is that scary or what?
The piece also included the completely unsourced assertion that few people believe that the 35 hour work week has led to increased employment by dividing up jobs. The people who do not believe that the shorter work week created jobs must believe that the 35 hour work week led to sharp increases in productivity. If workers can produce the same amount in 35 hours as they did in 39 hours (the previous standard work week in France), it would imply an 11 percent increase in productivity.
This would be an astonishing gain in productivity. Economists view productivity as the primary determinant of living standards. Productivity growth is the whole point of all those great plans for tax cuts (usually for rich people) that people like Mitt Romney, Newt Gingrich, and Paul Ryan keep throwing on the table. If NPR's sources are correct in their view, and shorter work weeks lead to massive gains in productivity (none of the tax cut bills are projected to lead to productivity gains of even one-fifth this size), then shorter work weeks could be a great way to both increase equality and improve growth: a classic win-win situation.
[Addendum: The transcript is now available. It seems that the 2 million days referred to a single hospital in Paris, not the entire hospital system.]
[Addendum 2: Andrew Watt has a more serious discussion of the impact of the 35-hour work week in France.
Senator Patrick Leahy, the sponsor of the Protect Intellectual Property bill, claimed that if Congress rejected his bill it would "cost American jobs." This is almost certainly not true.
Insofar as individuals are able to able to gain access to copyrighted material for which they would otherwise have to pay, they are able to save money. This if effectively the same thing as a tax cut, putting more money in their pocket, the vast majority of which will be spent on goods and services in their community, thereby creating jobs.
If they are denied access to this material, most would not be paying the copyright-protected price. Insofar as some of these people would pay the copyright protected price, it would mean some additional revenue to companies like Disney and Time-Warner. Most immediately this would mean higher profits for these companies. It may have some marginal impact on their employment, but the jobs lost from the money taken away from consumers would almost certainly be larger than the jobs gained by allowing these entertainment companies to gain more revenue. This is similar to imposing quotas on imported clothes. This will lead to more jobs in the textile industry, but fewer jobs everywhere else.
Senator Leahy's bill will also impose additional cost on search engines like Google and intermediaries like Facebook. These costs are like a tax on the Internet. They pull money out of the economy and make these providers less efficient.
The NYT should have included this sort of economic analysis along with Senator Leahy's comments.
The NYT went overboard in an effort to present numbers in no context whatsoever when it discussed efforts to pay for the extension of the payroll tax cut for the rest of 2012. The article discusses the cost of various spending cut proposals without putting them in any context whatsoever, including even the number of years involved.
For example, it told readers that requiring a Social Security number to claim the child tax cut would save $9.4 billion according to the Congressional Budget Office. The article never gives a time period over which these savings would be realized.
Presumably, this is a 10-year estimate. Over this period, the federal government is projected to spend more than $43 trillion, so these savings would amount to a bit more than 0.02 percent of projected spending over this period. It would be helpful to include some context when presenting these numbers, otherwise they have little meaning to readers.
The Wall Street Journal had a bizarre article about capital investment and robotics to explain the slow job growth in this recovery. There actually is a much simpler explanation, it's called "slow growth."
Productivity growth has averaged close to 2.5 percent since 1995. That means the economy must grow at a 2.5 percent rate just to keep labor demand constant. If it grows slower than this, we expect the demand for labor to fall and the number of jobs to decrease or the average number of hours worked to fall.
Since the recovery began in the summer of 2009 GDP growth has averaged just under 2.5 percent. These means that we should not have expected the economy to create any jobs over this period. In fact, it has added almost 1,500,000. Insofar as there is a mystery, given the weak growth of the economy over the last two and a half years, it is why the economy added so many jobs.
The Wall Street Journal wants us to be worried that we will be paying less for our shoes, clothes, and engineering services. Actually, they only want us to be concerned about the last of these three, although it never tells us why.
It had an article the point of which is to warn readers that engineering is increasingly being outsourced to Asia. This may be bad news to people who hope to work in engineering, but for the rest of us, it means cheaper products, just as buying clothes and shoes manufactured abroad meant cheaper products.
The outsourcing of manufactured jobs is of course bad news for manufacturing workers and there are many more people who either work in manufacturing or could potentially if the jobs were there. In other words, the WSJ would have a much more compelling case if it warned us about the risk of losing jobs in clothing and shoe making to Asia than it does with engineering. For the overwhelming majority of people in the United States, this should mean an improvement in living standards.