Where will the new jobs come from? I have your answer right here

Why mortgage brokering of course.

Remember this (below): You never acknowledged it never mind addressed it. I dare you to let it run on your blog, or does your 'libertarianism' not extend to allowing criticism?

The Outsourcing Spindoctor: Daniel W Drezner

Economic policy under Bush: Freed from oppressive regulation, Wall St crashed the economy while policy and media elites agreed on the need for free trade which undermined industry, employment and wages.

Those who advocated these policies need to be held to account

Daniel W. Drezner is a ‘libertarian/conservative’ professor of international politics at Tufts University. He has worked for the US Treasury and RAND corporation and written for The New York Times, Newsweek, Wall Street Journal, Foreign Affairs and Foreign Policy. A central theme of his work is convincing his fellow Americans to embrace the free trade-globaliastion policies favoured by the business and financial elite and accepted as orthodoxy by most politicians and media.

In a 2004 article titled ‘The Outsourcing Bogeyman’ for Foreign Affairs Drezner mounted an argument that American workers had nothing to fear from globalisation. Declaring his faith in classic free trade theory he wrote, “The current trend of outsourcing business processes overseas is comparative advantage at work” and “The creation of new jobs overseas will eventually lead to more jobs and higher incomes in the United States.”

When a 2002 report by Forrester consultants predicted 3.3 million jobs could be lost to outsourcing by 2015 in US service industries, alarm bells rang. As part of his attack on the outsourcing bogeyman, Drezner sought to play down the significance of the findings:

That would mean 220, 000 jobs displaced per year by offshore outsourcing – a number that sounds impressive until one considers that total employment in the United States is roughly 130 million, and that about 22 million new jobs are expected to be added between now and 2010. Annually, outsourcing would affect less than .2 per cent of employed Americans.

Spot the sleight of hand? Drezner calculates Forrester’s estimate of job losses as a percentage of the total employed labour force, but the report only looked at the effect of outsourcing on service industry occupations which employ 45 per cent of the workforce. What about outsourcing in manufacturing which, according to the US Department of Labor, lost 2.9 million jobs between 2000 and 2006 ?

For free market disciple Drezner, “once the structural adjustments of the current period are complete job growth is expected to be robust”. Really? To back up this assertion he approvingly cites a Federal Reserve Bank of New York study which found that jobs are disappearing from old sectors, “(such as manufacturing) and being created in new ones (such as mortgage brokering).”

As laughable as that prediction now sounds, it was not credible when made in 2004. Unsustainable growth in a pumped up property market, creating jobs in finance and construction, helped mask decline in other areas for most of this decade, but was always going to end with a bust.

Now, following massive market failure, American workers will get a clearer picture of how free trade-globalisation theories have affected their job prospects. Drezner’s “more jobs and higher incomes” are nowhere in sight. Job growth has been slowing over the long term and is going pear shaped in the short term; real wages have been going backwards for the average male worker.

As an ideologue, Drezner feels the need to defend his free trade-globalisation model from all criticism, home and abroad. In a 2001 article titled ‘Globalization and Policy Convergence’ he attempts to debunk the race to the bottom hypothesis that competition for investment puts downward pressure on wages and labour standards, particularly in non-industrialised countries.

As part of this argument he points out – citing a 1998 ILO report - that in 1995 The Philippines, rather than relaxing labour standards, introduced them to its export processing zones (EPZs), where none previously existed.

A glance at International Trade Union Confederation reports from 1998 to 2001 shows increasing firing of unionists during union registration attempts in EPZs and criticism of failure to enforce the law. These reports also detail early attacks in the bloody war of terror waged against organised labour for the last seven years.

Since Gloria Arroyo became president the direction of labour relations has been more Colombia than Sweden. 76 workers were victims of “an orgy of extrajudicial violence” from 2001 until December 2006, and masked assassins continue to kill with impunity.

Just as history wasn’t kind to Drezner’s vision of a future writing home loans for laid off factory workers, 2001 turned out to be a bad year to be talking up industrial relations in the Philippines.

Professor Drezner’s figures are rubbery and his arguments weak, but they do accord with the economic orthodoxy of the Bush era. Too much influence and too little scrutiny for the likes of Drezner have contributed to the economic policy failures now facing the US.

Dan Drezner, first off I don't want to attack your 2004 claims. There could have been a link between outsourcing and increasing US jobs, it isn't impossible. And protectionism, stupidly done, would probably not have helped us in 2004. It was an election year, there was a lot of stupid talk, and I think it was proper for you to write something that was not as stupid as the norm, even if you had to oversimplify a whole lot so you could be heard.

But your defense of that work is also necessarily far oversimplified and it seems to imply some things that are probably not so.

In 2004 the labor force was about 147 million, with 8.4 million unemployed and 1.6 million who didn't count as unemployed because they hadn't looked for work recently. 4.7 million who worked part-time because they couldn't get full-time. This was from a civilian noninstitutional population of around 222 million.
http://www.bls.gov/news.release/History/empsit_04022004.txt

Now the labor force is 155 million, 12.4 million unemployed and 2.1 million who didn't count as unemployed. 8.6 million who work part-time and want full-time, from a population of around 222 million.
http://www.bls.gov/news.release/empsit.nr0.htm

There are various interpretations possible. Mine is that we have 8 million more people who think they need work than we did then, because times are tougher. We have about 4.5 million more people who want work, which would say about 3.5 million more jobs. About 4 million more who work part-time and want full-time.

I don't see where you get 11 million new jobs, but I may have misread it.

Anyway, I think you were right that increased global trade should have brought new US jobs. Simple protectionism would have resulted in less wealth both for us and for the world. It didn't work out that way because of foreign government intervention.

There's an economic theory that we are better off if the US government never does anything to affect the US or world economy, regardless what foreign governments do. I think this theory is wrong. It would be possible for the US government to do things that might tend to counteract the bad effects of other governments' intervention. We did not do so and now we are living with those effects.