Thursday, October 06, 2005

Manufacturing Jobs Disappearing: That's a Good Thing!

This article from the Economist calls attention to the high number of manufacturing jobs disappearing in highly-developed, richer countries.

It suggests that less than 10% of jobs in America are of the manufacturing variety, yet America still leads the world in manufacturing (by dollar amount). This gets to the heart of an observation and its implications.

The article implies that manufacturing in richer countries is inefficient. Change is a good thing and those economies are changing toward more service-oriented economies. R&D, marketing, and management are becomming the strong points of the American economy. Putting together shoes or cars is left to economies that may have an edge on wages, but don't necessarily have an edge on inovation.

With respects to the common worry about China taking everyone's jobs the article has this to say:
a basic principle of economics, proven time and again, is that even if a country can make everything more cheaply, it will still gain from specialising in goods in which it has a comparative advantage. Developed economies' comparative advantage is in knowledge-intensive activities, because they have so much skilled labour. For years to come, China will be more likely to assemble the best computers than to design them.
Tom Peters, a management guru, in the book Re-Imagine! talks about a white-collar chateclism, which will change all our jobs forever. He forsees a world where companies are no longer eternal entities. People will come together with a good idea, produce the idea, and when the idea is beaten by another or becomes obsolete the "temporary company" will disolve and those workers will move on to other projects. His point is that business and the world change. It is up to us to change with it.

The Economist article illustrates this point at the closing:
People always resist change, yet sustained growth relies on a continuous shift in resources to more efficient use. In 1820, for example, 70% of American workers were in agriculture; today 2% are. If all those workers had remained tilling the land, America would now be a lot poorer.

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