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How American Jobs were Lost and Why they will Never Come Back

The current popular American narrative is that the jobs that US has lost have happened due to the various Trade policies, the negative trade deficits with Mexico and Canada (bad impact of NAFTA) and China’s subsidy policy.

How American Jobs were Lost and Why they will Never Come Back #Trump Click To Tweet

Trade and Globalization have become the new villains in the Western world.  The problem is that people – specially in the testosterone-pumped hinterlands – want easy answers and ready-made villains.  So, they are looking for straw-man plots and simple (but devastating) answers.

The truth is that US has lost 5.6 million manufacturing jobs between 2000 and 2010.  But what has really caused the loss of those jobs?  A study by Center for Business and Economic Research says “Its the Technology, Stupid!”.

The US did indeed lose about 5.6m manufacturing jobs between 2000 and 2010. But according to a study by the Center for Business and Economic Research at Ball State University, 85 per cent of these jobs losses are actually attributable to technological change — largely automation — rather than international trade.

To understand the impact of technology on lowering employment despite increase in manufacturing one needs to look at this graph.

Employment and Manufacturing

Technologies like Artificial Intelligence, 3D printing, and robotics has rendered many jobs useless.  Now, factories do not need people, because they can use the tools of automation to do the work much better and faster.  And, the populist and uninformed rhetoric notwithstanding, the truth is that not only is US losing the jobs to automation, so are China and India!  While major brands in China are looking at ways to automate and reduce cost, 9000 employees were laid off at Infosys in India because of automation!

The fact is that the world is changing.  Whether we like it or not.  The future will see self-driven cars, trucks, boats and ships.  Imagine that self driving Cargo ships from Rolls Royce could be a reality as soon as 2020!  We are easily looking at loss of jobs in the shipping industry by the tens of thousands!

Rolls Royce Self-Driving Ship

Per a Boston Consulting Group’s report, the use of Robotics in various areas is now – around this decade – reaching an inflection point, where the use of robots due to three major factors (Availability to Small Manufacturers, Advanced Robotics advancements, Improving Robotics economics) is bound to rise.

Robotics growth

One graph is extremely instructive, where the comparison between cost of human labor and robot for the same work is given.  The economics of both are changing.

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Robotics - cost of human vs robot

As we see automation will lead to more job losses in the coming years.

And none of all this has anything to do with trade with anyone!

So, are we going to turn the clock back on automation and computerization?  But with leaders like President Trump who knows terrifyingly little about computers who make truly asinine comments about technologies of the future, we may as well see Advanced Technologies as the future villains in an election cycle!  Look at how he almost was building that case in this very run.

“I think the computers have complicated lives very greatly. The whole, you know, age of computer has made it where nobody knows exactly what’s going on. We have speed and we have a lot of other things, but I’m not sure you have the kind of security you need,” Trump told reporters Thursday evening.

So what is the solution for the future of jobs?

New industries.

We need to move to new industries and make our skills aligned to the new world.  That is the ONLY solution.  We can use “wise-fools” like Trump to slow the timeline for a bit (or maybe not, because he will harm economy in others ways) from the technology to impact our jobs, but we cannot stop it.  Unless we do to the Western civilization that the Jehadis are planning to do to us and themselves anyways – take everyone to the 6th century!

Creating Jobs in the New Industries

While robotics may be bringing down jobs in so many industries, the truth is that there are very high paying jobs in the field of robotics and the skills that feed into it like high-end mathematics and electronics.  The future jobs – many of them – will be created in robotics just as internet created many more than it took away.  Ditto with other technologies.

In fact, the jobs of tellers did not go down when Automated Teller Machines (ATMs) arrived on the scene.  In fact they grew!

Since the 1970s, when automated teller machines arrived, the number of bank tellers in America has more than doubled. James Bessen, an economist who teaches at Boston University School of Law, points to that seeming paradox amid new concerns that automation is “stealing” human jobs.

Also, as the world of fuel and energy changes and we move away from the petrol-based economies to renewable energy alternatives, the jobs in the renewable energy sector are rising.

The study, published by the Environmental Defense Fund’s (EDF) Climate Corps program, says that solar and wind jobs have grown at rates of about 20% annually in recent years, and sustainability now collectively represents four to four and a half million jobs in the U.S., up from 3.4 million in 2011.

 

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Conclusion – Much Ado About Nothing?

United States in a remarkably unfortunate situation with President Trump.  We have a government and a narrative which has been owned by the populace – specially those who have mattered in elections – which is pushing to break apart the very basis of all global trade.  The aim is at the Globalization and its tremendous impact on trade and business around the world.  Western civilization has thrived on the back of global trade.  From Christopher Columbus to the British Colonial forces to the large global multinationals like Unilever, Coca Cola, IBM, Google, Microsoft, Nestle’ and the many many other countless companies, Global trade was the basis of Western Civilization.

Whatever the force behind pushing through the current Trump and Brexit agenda, the truth is that the very foundation of Western civilization and prosperity is not the target and the victim.  The answer to the employment woes in the western world is the same that was the answer for centuries – enhance and change the skills to adapt.  Whether it was change from horse-carts to cars or manual accountants to calculators and computers.  It was always about better skills and growth in education and knowledge.  Only this time, not only has the West forgotten the simply lesson of change but is willing to dismantle the very foundation which has made it great in history.

The truth is that irrespective of whether the US and UK leaders breakdown trading groups, create commerce wars, erect trade barriers and penalize the heck of the companies – the jobs lost will NOT come back.  They will simply not.

And, you know what?  They SHOULD NOT!

Because that would mean we are now firmly and strongly on the Jehadi train to the 6th century world.  Only it won’t be colored green with a star and half moon, but rather white with a big cross embossed all over it!

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Desh Kapoor

The panache of a writer is proven by the creative pen he uses to transform the most mundane topic into a thrilling story. Desh - the author, critic and analyst uses the power of his pen to create thought-provoking pieces from ordinary topics of discussion. He writes on myriad interesting themes. Read the articles to know more about his views and "drishtikone".

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