In the section above I said that people often think that “there is a special problem when we buy from people in other countries.” In a sense that is true. If you buy a cheap toaster, Chances are it was made in China. Buying one from China means you are not buying one made anywhere else, including America. Americans who may have produced toasters here, albeit at much higher costs, are not getting those jobs.
But there are three important responses to this point. First, workers who don’t produce toasters here produce other goods or services. Our current unemployment rate, U-3, which is a measure of people who are out of work and looking for work, is low 4.1 percent. Moreover, the ratio between the number of vacancies and the number of unemployed is the same 1.1. There are more vacancies than unemployed people.
Secondly, there is nothing special about the fact that the toaster is produced in another country. If I buy GAF shingles made in Baltimore, Maryland, instead of Owens Corning shingles made in Portland, Oregon, I’m helping hire someone in Baltimore instead of someone in Portland. But we hear little outrage about that.
You could say that’s because I employ an employee in America anyway. So it comes down to employment. But then go back to my first point. American residents who don’t have jobs producing toasters get jobs producing other things.
The third point is that most people exaggerate the number of jobs lost to imports and do not understand the number of jobs lost to technological innovation. Our production output is only 6.4 percent below all-time highsthat was in 2007. We are not ‘de-industrialising’. Instead, thanks to improved technology, our industrial sector is becoming more productive. Employment in the industry is 33.9 percent below its peak in 1979. In addition, manufacturing employment as a percentage of all employment, which peaked at 38.7 percent in December 1943 and peaked at 31.9 percent in September 1948, is now 8.1 percent.
This is from David R. Henderson, “Why trading should be free,” Defining ideasOctober 30, 2024.
Read the whole thing. Please note that it is longer than my usual article. I had a lot to hide.
Thanks to Don Boudreaux for providing comments and suggesting data sources.