Sunday, January 08, 2012

Some Thoughts Between Me and a Few NYT's Economix Blog Readers

Here is the original link about Obama and the size of the government work force.

My First Response:
Crediting Obama for presiding over a decrease in the size of the public sector?

1) As mentioned, the majority of the public sector jobs reduction is from state and local governments.
2) This reduction is the result of....
A) Shrinking government revenues due to less economic activity.
B)The necessity of maintaining less than astronomical debt/revenue ratios in order to continue to finance state and local government activity through bond issues.
3) Your tone is adulatory, as if the president intended to reduce the public sector (I'm giving you the benefit of the doubt and assuming you sincerely admire the man for reducing the scope of government). If he did, then he spent over a trillion dollars to help the economy shed public sector jobs. It could have been done for a lot less, the cost of paying their unemployment benefits for example.

My Second Response:
Ross is not right. You fired your cashier bc you invested in a piece of advanced technology. Thus, you created demand for highly advanced technological goods. The person who made your advanced good gets paid much more than the cashier you fired and they spend a lot more. Yes, demand matters, but you were part of the demand for high end goods.

People who want to keep manufacturing, of the lower end type, in the United States miss a key point: low end means low productivity, low productivity means low income, low income cannot afford technologically advanced goods. Let the low productivity jobs leave this economy, let individuals or colleges or technical schools or whatever, find the next level of skills that will allow a person (cashier) to re-enter the workforce in a more productive capacity (point of sales station repair person). Then your cashier might have a chance in partaking of high end goods without assuming too much debt.

Third Response: Banty, think more clearly about the argument. No one claimed that low-level jobs would disappear, but the definition of low-level, low-skill, and low-investment jobs is dynamic (meaning it changes over time for you non-"phd level engineers" out there). Low-skill, low-investment, low-whatever jobs today are much more productive than their counterparts 25 years ago. In other words, many low-productivity jobs from 25 years ago no longer exist today, and many of the low-level jobs 25 years from now will seem highly technical and complicated compared to their contemporary counterparts.

The spectrum of jobs you describe has always existed, but the spectrum shifts along with technological advancement the same way that the bottom 20% of income earners shifts upward along with a society's overall level of wealth. No one would insist that a healthy distribution of wealth requires some people to make $1 a day, and no one would argue that a healthy labor force requires some people to still sew mittens by hand with sharpened wooden sticks. I've heard the argument before also, as a former barista, personal trainer (model....not really) and as a phd level economist. It makes sense to me.

Fourth Response: Obvious, the person in China makes components. Companies in advanced economies do not find it profitable to export the production of high-end technological goods to peasant economies like China, because the Chinese just can't do it. Any healthy economy engaged in trade outsources low productivity jobs as it creates higher productivity jobs. The less productive in society lose in this scenario, but there are training centers (including government funded ones) designed to upgrade their skills.

GKR, you didn't dispute anything I said. So which 75% is wrong. You just pointed out, I think, that an electrical engineer (or someone similar) has their work divided by 10,000 units. I'm not sure what that means. It sounds like you're saying that a cashier can make $1000, an electrical engineer can make 5*1000 = 5000, but then has to divide the 5000 by 10000. Then, 5000/10000 < 1000, so the electrical engineer makes less than the cashier?

Banty, check the math above before agreeing with GKR. Do not feel sorry for the cashie; by making sure that he or she always has a job as a cashier operating a piece of low-end technology, you essentially make sure that he or she always has a low-income and will never afford some of the neater gadgets a society puts out.

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