Detroit's Problem is Doctors Get Protection and Autoworkers Don't

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Friday, 16 August 2013 05:06

It is standard practice in elite circles to blame U.S. workers for their lack of jobs and low wages. The problem is they lack the right skills to compete in the global economy. The NYT gave us another example of this complaint with Stephan Richter's column today.

While it would be desirable to have a better trained and educated workforce, the reason why our manufacturing workers lose out to international competition, while highly educated workers like doctors and lawyers don't, is that the latter are highly protected. By contrast, it has been explicit policy to put manufacturing workers in direct competition with the lowest paid workers in the developing world.

If we had free traders directing policy, our trade deals would have been as focused on removing the barriers that make it difficult for smart and ambituous kids in the developing world from becoming doctors, dentists, and lawyers in the United States. This would have driven down wages in these fields and led to enormous savings to consumers on health care, legal fees and other professional services. However trade policy in the United States has been dominated by protectionists who want to limit competition for the most highly paid workers, while using international competition to drive down the wages for those workers at the middle and bottom of the pay ladder.