In Jerome K. Jerome's novel Three Men on the Bummel, which I recommend quite highly as a classic of Victorian humor by the way, the narrator explains why so many people find journalism an attractive profession:
Of all games in the world, the one most universally and eternally popular is the game of school. You collect six children, and put them on a doorstep, while you walk up and down with the book and cane. We play it when babies, we play it when boys and girls, we play it when men and women, we play it as, lean and slippered, we totter towards the grave. It never palls upon, it never wearies us. Only one thing mars it: the tendency of one and all of the other six children to clamour for their turn with the book and the cane. The reason, I am sure, that journalism is so popular a calling, in spite of its many drawbacks, is this: each journalist feels he is the boy walking up and down with the cane. The Government, the Classes, and the Masses, Society, Art, and Literature, are the other children sitting on the doorstep. He instructs and improves them.
I'm often reminded of that quote when reading The Economist, which seems to take joy in instructing its readers. And, despite my cavils with its political direction these days, I admit that it remains a formidable instructor. Yet, as the saying goes, even mighty Homer nods.
A case in point is this week's story on Mexican-US trade, in which the author tries to make a case for Americans to embrace free trade across that border:
Cross-border trade boosts jobs. Theodore Moran and Lindsay Oldenski of the Peterson Institute find that between 1990 and 2009, a 10% increase in employment at US firms’ Mexican operations was associated with a 1.3% increase in their US workforce. Granted, the new jobs tend to be for skilled workers, and some unskilled ones lose out. But everyone benefits from lower prices. If an American family saves $100 buying a washing machine made in Mexico and uses that money to go to the cinema, it supports the jobs of the ticket-seller, the cinema manager “and maybe even Brad Pitt”, argue Mr Wilson and Mr Wood.
Let's pick that apart. First. a whopping 10% increase in a company's Mexican employment translates into a minuscule 1.3% in its US employment. BFD. (Of course, absolute numbers matter but they're not provided.)
Second, The Economist has no problem with high-paying blue collar manufacturing jobs going south of the border, because American citizens will be able to get a job collecting tickets at the movie theater (presumably at minimum wage with no benefits). And, of course, as the Economist earlier instructed us:
Technological progress seems to be boosting opportunities for automation all the time, and at some point firms will cross the threshold beyond which it makes sense to replace labour with capital rather than invest in more productive labour. Amazon's fulfillment centres generate tens of thousands of jobs, many at or near minimum wage. Maybe a higher minimum wage will lead to better pay without much of an employment effect. Or maybe Amazon will accelerate the deployment of warehouse robots. Maybe a higher minimum wage will boost pay at fast-food restaurants. Or maybe it will lead the restaurants to get serious about automation.
Our movie theater ticket taker would seem to be at particular risk. As for Brad Bitt, moreover, even his job could be endangered by CGI automation.
Look, I get the theory of free trade. I got an A in Econ 101 largely by spitting it back to my true believer professor. But I worry a lot about the sustainability of blue collar jobs in the American economy as it is pressured by unfair trade from dictatorships/managed economies like China, unpatriotic American CEOs who ditch their countrymen to save a buck, and tech titans making automation ever more viable.
Supposedly, of course, blue collar Americans will land new high paying jobs in tech. Or so tech titans and others in what Christopher Lasch called the New Elite, keep telling us. But, as the Wall Street Journal reported this week, that is not going to happen:
The technology revolution has delivered Google searches, Facebook friends, iPhone apps, Twitter rants and shopping for almost anything on Amazon, all in the past decade and a half.
What it hasn’t delivered are many jobs. Google’s Alphabet Inc. and Facebook Inc. had at the end of last year a total of 74,505 employees, about one-third fewer than Microsoft Corp. even though their combined stock-market value is twice as big. Photo-sharing service Instagram had 13 employees when it was acquired for $1 billion by Facebook in 2012.
Hiring in the computer and chip sectors dove after companies shifted hardware production outside the U.S., and the newest tech giants needed relatively few workers. The number of technology startups fizzled. Growth in productivity and wages slowed, and income inequality rose as machines replaced routine, low- and middle-income, human-powered work.
Marc Zuckerberg, Tim Cook, Sergey Brin and Larry Page don't give a damn about their fellow Americans. Nor does the rest of the Davos elite and the journalists who live to instruct them. And that's why Donald Trump and Bernie Sanders heterodox take on trade has captured the support of so many Americans.
It's also why the outrage industry Adrian Wooldridge derides in this week's Economist is likely to persist. It's not just the supply side factors on which his Schumpeter column focused, important as they are and as cogent as his assessment of them is, but it's also the demand side. As long as the working class is angry and the elite class does nothing but drink champagne on their private jets en route to Davos, there is going to be a market for outrage.