Alan Blinder on "Offshoring"

David Wessel and Bob Davis write about Alan Blinder, who has very smart things to see about "outsourcing":

Pain From Free Trade Spurs Second Thoughts - WSJ.com: For decades, Alan S. Blinder -- Princeton University economist, former Federal Reserve Board vice chairman and perennial adviser to Democratic presidential candidates -- argued, along with most economists, that free trade enriches the U.S. and its trading partners, despite the harm it does to some workers. "Like 99% of economists since the days of Adam Smith, I am a free trader down to my toes," he wrote back in 2001.

Politicians heeded this advice and, with occasional dissents, steadily dismantled barriers to trade. Yet today Mr. Blinder has changed his message -- helping lead a growing band of economists and policy makers who say the downsides of trade in today's economy are deeper than they once realized. Mr. Blinder... remains an implacable opponent of tariffs and trade barriers. But now he is saying loudly that a new industrial revolution -- communication technology that allows services to be delivered electronically from afar -- will put as many as 40 million American jobs at risk of being shipped out of the country in the next decade or two. That's more than double the total of workers employed in manufacturing today. The job insecurity those workers face today is "only the tip of a very big iceberg," Mr. Blinder says.

The critique comes as public skepticism about allowing an unfettered flow of goods, services, people and money across borders is intensifying.... Some trade critics are bothered by the disappointing performance of Latin America since it slashed tariffs in the 1980s and 1990s while more protectionist China and Southeast Asia sped ahead. Others are struck by the widening gap between economic winners and losers around the globe. The rethinking on trade issues is the most significant since the early 1990s....

Some critics are going public with reservations they've long harbored quietly. Nobel laureate Paul Samuelson, whose textbook taught generations, damns "economists' over-simple complacencies about globalization" and says rich-country workers aren't always winners from trade. He made that point in a 2004 essay that stunned colleagues. Lawrence Summers, a cheerleader for trade expansion as Clinton Treasury secretary, says people who argue globalization is inevitable and retraining is enough to help displaced workers offer "pretty thin gruel" to the anxious global middle class.

Others are finding the debate moving closer to positions they've had for years. Ralph Gomory, International Business Machines Corp.'s former chief scientist who now heads the Alfred P. Sloan Foundation, says that changing technology and the rise of China and India could make the U.S. an also-ran if it loses many of its important industries. Harvard economist Dani Rodrik says global trade negotiations should focus on erecting new barriers against globalization, not lowering them, to help poor nations build domestic industries and give rich nations more time to retrain workers.

Mr. Blinder's job-loss estimates in particular are electrifying Democratic candidates searching for ways to address angst about trade. "Alan, because of his stature, provided a degree of legitimacy to what many of us had come to feel anecdotally -- that the anxiety over outsourcing and offshoring was a far larger phenomenon than traditional economic analysis was showing," says Gene Sperling, an adviser to President Clinton and, now, to Hillary Clinton. Her rival, Barack Obama, spent an hour with Mr. Blinder earlier in this year....

His critique puts Mr. Blinder in a minority among economists, most of whom emphasize the enormous gains from trade. "He's dead wrong," says Columbia University economist Jagdish Bhagwati, who will debate Mr. Blinder at Harvard in May over his assertions about the magnitude of job losses from trade. Mr. Bhagwati says that in highly skilled fields such as medicine, law and accounting, "If we do a real balance sheet, I have no doubt we're creating far more jobs than we're losing."

Mr. Blinder says that misses his point. The original Industrial Revolution, the move from farm to factory, unquestionably boosted living standards, but triggered an enormous change in "how and where people lived, how they educated their children, the organization of businesses, the form and practices of governments." He says today's trickle of jobs overseas, where they are tethered to the U.S. by fiber-optic cables, is the beginning of a change of similar dimensions, and American society needs similarly far-reaching changes to cope. "I'm trying to convince a bunch of economists who are deeply skeptical and hard to convince," he says....

Mr. Blinder says he agreed with Mr. Mankiw's point that the economics of trade are the same however imports are delivered. But he'd begun to wonder if the technology that allowed English-speaking workers in India to do the jobs of American workers at lower wages was "a good thing" for many Americans. At a Princeton dinner, a Wall Street executive told Mr. Blinder how pleased her company was with the securities analysts it had hired in India. From New York Times' columnist Thomas Friedman's 2005 book, "The World is Flat," he found anecdotes about competition to U.S. workers "in walks of life I didn't know about."

Mr. Blinder began to muse about this in public. At a Council on Foreign Relations forum in January 2005 he called "offshoring," or the exporting of U.S. jobs, "the big issue for the next generation of Americans." Eight months later on Capitol Hill, he warned that "tens of millions of additional American workers will start to experience an element of job insecurity that has heretofore been reserved for manufacturing workers."

At the urging of former Clinton Treasury Secretary Robert Rubin, Mr. Blinder wrote an essay, "Offshoring: The Next Industrial Revolution?" published last year in Foreign Affairs. "The old assumption that if you cannot put it in a box, you cannot trade it is hopelessly obsolete," he wrote. "The cheap and easy flow of information around the globe...will require vast and unsettling adjustments in the way Americans and residents of other developed countries work, live and educate their children."... In that paper, he made a "guesstimate" that between 42 million and 56 million jobs were "potentially offshorable." Since then he has been refining those estimates, by painstakingly ranking 817 occupations, as described by the Bureau of Labor Statistics, to identify how likely each is to go overseas. From that, he derives his latest estimate that between 30 million and 40 million jobs are vulnerable.

He says the most important divide is not, as commonly argued, between jobs that require a lot of education and those that don't. It's not simply that skilled jobs stay in the US and lesser-skilled jobs go to India or China. The important distinction is between services that must be done in the U.S. and those that can -- or will someday -- be delivered electronically with little degradation in quality. The more personal work of divorce lawyers isn't likely to go overseas, for instance, while some of the work of tax lawyers could be. Civil engineers, who have to be on site, could be in great demand in the U.S.; computer engineers might not be.

Mr. Blinder's warnings, and his numbers, are now firmly planted in the political debate over trade.... Mr. Blinder says there's an urgent need to retool America's education system so it trains young people for jobs likely to remain in the U.S. Just telling them to go to college to compete in the global economy is insufficient. A college diploma, he warns, "may lose its exalted 'silver bullet' status." It isn't how many years one spends in school that will matter, he says, it's choosing to learn the skills for jobs that cannot easily be delivered electronically from afar....

Mostly he wants to shock politicians, policy makers and other economists into realizing how big a change is coming and what new sectors it will reach. "This is something factory workers have understood for a generation," he says. "It's now coming down on the heads of highly educated, politically vocal people, and they're not going to take it."

Comments

[jerry]

Brad,

Can you name the criteria of what it would take, what evidence, what issues, for you to switch from "free trader" to "fair trader?"

[leo]

Meanwhile tumbleweed blows across middle America.

[Fred]

Economists, like everybody else, have failed to predict the impact of the digital revolution. What we have left is "Faith" in the free market. You must admit that faith in God is more emotionally satisfying. Indeed, insecurity may foster religiosity.

As a portion of the West's employment base is exported to India and China, these new workers now have money to shop. There is no incentive for them to shop online at Sears or Target when they can get stuff cheaper locally. Only hard-to-get books will be bought by Indians from Amazon, but be fulfilled from a warehouse in India. And why not print it there too?

And it ain't just the digital revolution. The manufacturing jobs went out decades ago, and China benefits. Same falling tariff barriers. We let them go probably because of stereotypes of "Mill hunks" and the declining lobbying power of Big Labor.

When software engineers are laid off, should they retrain as truck drivers or as radiologists? That is, retraining is a joke.

And nothing is more offshorable than economics blogging, textbook writing, and making video lectures.

[Dean Baker]

Since we can (and do) bring in workers to do the face to face jobs that Blinder sees as being safe from international competition (dishwashers, custodians, domestic help), I really don't understand his point. If we think that trade is good, why wouldn't we want to reduce the barriers that prevent face to face workers in law, medicine, and other high paying occupations from entering the country. It sounds like he is advocating selective protectionism,to preserve and extend wage inequality.

[roublen]

I have a vague feeling that the phrase "initial endowment" should kind of go with this discussion? That is, as producing stuff becomes easier and easier (whether through offshoring or other labor-saving technology), labor becomes less intrinsically valuable, capital takes larger slices of the pie, and therefore initial endowment of capital becomes relatively more important?

Technically CEO pay counts as labor, but if you counted CEO pay and other similar things as capital, what would the income breakdown between "labor" and "capital" look like?

[roublen]

also reminded me in some vague, woolly-minded way of your "citris kickoff" speech

http://www.j-bradford-delong.net/TotW/citris_kickoff.html

". . .As our productivity at growing crops and making things has exploded, demand for the things we make has grown too, but not fast enough to keep the crop-growing, food-cooking, mineral-extracting, clothes-making, box-carrying, and other goods-producing share of our economy's labor force from falling. Today those who in any earlier age would be classified as "production workers"--and would have been the overwhelming majority of the labor force--are perhaps 20% of our economy, and the bulk of them are better characterized as machine-watchers and machine-fixers. According to Stanford's Robert Hall, as early as 1980 there were twice as many salesmen in Ford-selling auto dealerships as there were assembly-line workers employed by Ford Motor Company.

So what are the rest of us--the other 80%--doing? In a sense, we all--from U.C. professors to chief technical officers to xerox operators, Ford Salesmen, cashiers, and parking-lot attendants--are and have long been information workers: people whose jobs are, if we examine them closely, largely concerned with determining what exactly the goods-producing sectors should make, how it should be made, where it should go, and to whom it should be distributed--and that is leaving aside the large chunk of our economy that is symbolic communication as an end in itself. . ."

Also I have a question whether nurses, cooks, etc. are counted as production workers. If they are not counted, but if they were, how would the numbers change?

[Doug]

Let's face it, Ross Perot was right in 1991 and he's right now. Soon, the only thing we will produce in this country will be lawyers and accountants. Brilliant.

[sm]

REmember when production workers were politically vocal?

[a]

Great. An economist finally figures out the obvious twenty years after the rest of the world, and he'll probably expect a Nobel Prize.

[Ponzi Q. Globalization]

Blinder is an intelligent man and so he sees that the majority of Americans will be screwed by globalization. He sees that globalization, technology, and differences in living standards have combined in a very ugly way. Blinder realizes that with this ugly combination there's really no good reason to produce much of anything domestically.

Blinder is an orthodox member of the economics community and so he will not propose anything substantial to get us off the destructive globalizationized path we are currently on. That is, he would rather let the majority of Americans suffer than enter a state of sin by proposing heterodox solutions.

Blinder and his ilk are not bad or stupid. They just can't think out of the box in which their orthodox training has imprisoned them.

[Jon Fernquest]

"Blinder is an orthodox member of the economics community and so he will not propose anything substantial to get us off the destructive globalizationized path we are currently on."

Blinder is a "planner" not a "searcher" in the sense of Easterly at NYU (not going to repeat the offensive title of his book).

He does not know any situation on the ground. (cf the way the US bungled Iraq behind the walls of the green zone) The possibilities could only apparent to grunts working on the line, and this is ultimately the opinion that has to be valorized above all others and that means getting back to America's entrepreneurial roots. Where I live, if people don't have a job they sell things on the street, so they have a wonderful sense of what is real. They have been purged of all wishful thinking.

Otherwise, having been embedded deep within the social contracts of other cultures depp within their institutions, at foreign universities for many a year, I can assert for the most part you are faced with hopelessly rigid rent-seeking hierarchies, stable, predictable, easy to survive, but not to advance, innovate, and grow, and given peoples' proclivities for creating babies that could be fatal eventually.

"Lawrence Summers, a cheerleader for trade expansion as Clinton Treasury secretary, says people who argue globalization is inevitable and retraining is enough to help displaced workers offer "pretty thin gruel" to the anxious global middle class."

It is thin gruel, very thin. But people can educate themselves and we do have the internet, so there is a solution there waiting to be found. It's amazing how fast the internet has grown into a gigantic library that one can educate oneself from. Abraham Lincoln would love it.

[bigTom]

Whenever I hear things like, we have to concentrate on the few non-outsourceable professions, like gardeners, health care workers, and Divorce lawyers I shudder. Since none of these profeesions produce anything the rest of the world can use, we will have no foreign exchange to buy anything from the rest of the world!

[golddog]

Can we talk about the implications of what Blinder is saying?

As I understand it, he is not advocating trade protections, but that something has to be done to help the people who have been displaced by free trade.

Isn't that what we Clinton Democrats have been saying for a long time? Deal with the effects of trade, rather than stopping it.

[Kelly]

As we dither, the crack grows wider. "When software engineers are laid off, should they retrain as truck drivers or as radiologists? That is, retraining is a joke."
So, let's just look at the WSJ for the possiblity of having a living job as a truck driver;
http://online.wsj.com/public/article/SB117227168857317806-iTt6Q_abavr_dOmotFN2Zo5xnKE_20080324.html?mod=tff_main_tff_top
"WASHINGTON -- Following a decade of dispute, the U.S. will open its highways to Mexican cargo trucks, in a move that could alter the economics of the domestic trucking industry and is already uniting some American lawmakers, unions and trucking companies to oppose the change.

The Transportation Department on Friday said it is starting a pilot program that could begin as soon as April that will allow 100 Mexican trucking companies unfettered access to U.S. roads. Under the program, both drivers and trucks must first pass certain safety checks designed and overseen by U.S. officials in Mexico. The program could eventually be expanded to include additional Mexican trucking firms."
Can nurses be far behind? How about engineers from China?
The notion that you're safe because your job has to be done here was destroyed in the 80s with what happened to the honorable profession of carpentry. Try to find one that speaks English on any housing job site.

[Ponzi Q. Globalization]

"Isn't that what we Clinton Democrats have been saying for a long time? Deal with the effects of trade, rather than stopping it."

I suggest you read (or re-read) Blinder's 'Fear of Offshoring' at http://www.princeton.edu/~ceps/workingpapers/119blinder.pdf.

Tell me if you think he is optimistic about the longer-term effects of globalization on the American workforce. The impression I get is that Blinder thinks the American workforce is eff'd but is unwilling to suggest we do anything substantial to stop it.

[Jay]

If I'm remembering the statistics right (it's hazy), more of the downward effect on wages is due to technology than to outsourcing. In other words, skilled Americans aren't competing with skilled Chinese but with skill-embodying computers (probably made in China, for what it's worth).

It seems to me that there was a brief period in American history, roughly 1910 to 1980, when the economy was advanced enough to need a lot of skilled labor but still primitive enough to need a lot of skilled labor. That period made the middle-class America that we fondly look back on. But as skill increasingly becomes embodied in capital (raising profits) rather than in people (raising wages), the economy inevitably changes to a much less equal one.

The question is, what do we do as a society about it? Can we mitigate the effects on the masses?

Jay

[Gabriel Nichols]

"The critique comes as public skepticism about allowing an unfettered flow of goods, services, people and money across borders is intensifying"

Except of course for the fact that there is no free flow of people accross national borders and that is a problem. The model that economists show us in which wages and prices fluctuate then equalize with more for everyone due to the loss of inefficency only works if workers are free to follow their jobs. If my job can move to India but I can't then the system doesn't work screwing over workers in both the first and third worlds for the profits of corporations.

But somehow we never seem to hear the free trade zealots calling for open borders. Funny that.

[JonF]

Re: But now he is saying loudly that a new industrial revolution -- communication technology that allows services to be delivered electronically from afar -- will put as many as 40 million American jobs at risk of being shipped out of the country in the next decade or two.

But this will most likely not happen, for several reasons:
A) The drawbacks of offshoring (linguistic and cultural conflicts; time zone variances etc.) are becoming manifest and have slowed the offshoring boomlet considerably in the last two years.
B) Rising energy costs (peak oil and all that) may well reverse the current long-distance, low-cost factors thet helped drive this boomlet.
C) The present halcyone days of international politics is unlikely to last-- for example, how attractive would Bangalore be, if India and Pakistan start rattling nuclear sabers (or, god forbid, start using them)? History, I suspect, did not really end in 1991.

Re: When software engineers are laid off, should they retrain as truck drivers or as radiologists?

Laid off software engineers find other IT jobs. In case no one has noticed, IT is still a job growth industry in the US, and is predicted to remain one for the foreseeable future.

[David Lloyd-Jones]

What stunning localism! It borders on solipsism!

The dumb bastard entirely ignores the good being done by and to the Chinese and Indians who are dragging themselves up from both poverty and the ravages of Western imperialism.

[me]

"Laid off software engineers find other IT jobs"

Really? Not if they are over 50.

"IT is still a job growth industry in the US"

and only now has as many workers as in 2000.

A friend that works at IBM saw a presentation intended for sales managers. The pitch? Install our software on your servers and we will monitor them in India and you can fire you US staff saving lots of money.

You are right, IT is growing, too bad it is in India, not the US.

[golddog]

I reread Binder's paper and to my understanding it says that economic restructuring is inevitable and the best thing to do about it is rethink how we educate people.

He explicitly states that the worst thing that we could do is erect trade barriers.

Also remember even if all trade barriers are removed, and it is possible to move many jobs overseas, that does not mean it will happen immediately. The Indian and Chinese are simply not educated enough yet and won't be for decades. Even in things like calling services, companies are running into barriers where they are having a hard time finding people who speak English well enough to speak over the phone. The companies are limited in moving jobs overseas by the lack of people speaking english well. This gives us a few decades, while the other countries are educating their populace, to start working on solutions.

I'm not saying this isn't a problem, but that our solution should not make the situation worse. Education, not barriers, seems to be the key (not just the amount of education, but the type of education). I agree with Blinder that the current trade assistance programs are not nearly enough.

[jerry]

So on Diane Rehm this morning, Blinder said he is a religious free trader. Then he gave two examples of services that can't be offshored.

Low wage: manicurist
High wage: brain surgeon.

This tells me that tenured economists believe there is a need for lots and lots of brain surgery. I suspect they got that view by listening to all the other tenured economists, but I suspect their sample set is flawed.

[dissent]

Blinder is indeed advocating nothing more than sop: we'll be a nation of face to face workers, whatever that means. We're already headed there. I've read blurbs from computer science departments, reeling from the drop in enrollment as a result of outsourcing & the decline of the profession. They say they're changing the major, taking out tech and including more stuff related to 'managing off-shore projects'. What's next: CSC 201, How to Manage Frequent Flyer Miles? What a crock. How is that going to preserve 'America's R&D lead'?

The free trade economists on globalization remind me of the hard core neo-cons on Iraq. They are incapable of a critique of their own ideology, because they don't recognize it as such. They think globalization is reality (and truth and beauty and history). And so there are no choices but to more heavily commit ourselves to a policy that is proving to be a failure.

And when this House of Cards collapses, will these guys finally shut up?

[DRR]

It's interesting that for all the hyperventilating over this piece, Blinder is not actually having "second thoughts" and his general case is the same one he's been making for 3 years I.E. that progress in technology will put many more high-wage jobs in competition than previously thought. If anything his estimates for those potentially risky jobs, still exaggerted IMO, are refined & less than his previous warnings from his Foreign Affairs piece. What is he proposing should be done public policy wise? Government help in worker adjustment. No "Close the borders!" no "800 percent tariffs!" simple, and fairly reasonablt public policy. Much to the chagrin of the globophobes.

[beckya57]

The comment about "highly skilled" professions like medicine is interesting. Brad, I'm guessing you're familiar with Dean Baker's argument that those "highly skilled" professions are doing better because they're being protected, e.g. by high barriers to Indian doctors being allowed to practice here, while manufacturing workers have not been protected. I'm curious as to what you think of that.

[me]

"by high barriers to Indian doctors being allowed to practice here,"

The trend is now for insurance to pay for policyholders to go to India to have their surgery. They even cover the air fair and its cheaper.

And then Columbia is the cosmetic surgery hot spot.

[Dean Fragnito]

Invent others implement. I want my son and daughter to invent and innovate and yes then take it to where it can get produced the cheapest. What is wrong with a having a population of inventors and innovators. It's an IP based economy, reward the risk takers and count their inventions and innovations as production even though noting has been "produced" yet, value the prototype. I believe its the next stage for the US.

[bigTom]

"Laid off software engineers find other IT jobs"

Really? Not if they are over 50.

I guess I was just darned lucky, my layoff was at age 49.8. A couple months latter and I would have been eff'd. I think the fear for IT is a bit overblown, at least the decrease of new students seems to be larger than the likely decrease of opportunities.

And my local MD is a middle-aged Indian ex-pat to boot! As others have noted high value medical proceedures are already being off-shored.

[bakho]

You can listen to Blinder and Jeff Faux on Diane Rehm today. 3/29

http://wamu.org/programs/dr/

[Exileinsc]

I do not mean to sound an optimist, but as I was reading Blinders article, I kept wondering about the assumptions made. His analysis seems to me to sufer from the assumption that China and India will always have a large number of "overeducated" who are underemployed (which is one of the factors driving this outsourcing).

One would like to think that as the economies of China, etc, develop, demand for such people will increase, thus making outsourcing relatively more expensive.

A swedish study of outsourcing (see:http://www.iui.se/wp/wp654/IUIWP654.pdf) seems to indicate that contrary to Blinders prediction, those who most suffer from outsourcing in the long-run seems to be those who are less-educated.

[jon livesey]

One problem with this discussion is that people seem to be assuming a zero-sum game. Software engineers don't have some finite "nut" of software to write. It's not like weaving, where if your job moves to India you are on the street. In a knowledge-based economy, the potential product is unbounded in scope, and so is its complexity. Fifty year ago we wrote programs. Forty years ago we wrote programs to compile programs. Then programs to debug programs. Today people are working on suites of software to assist the programming problem from beginning to end. We've gone through a tech bubble and out the other end, and the job market in Silicon Valley is as tight as it has ever been. And of course employment in software generates jobs - unexportable jobs - in a host of support functions. There are plenty of people in Silicon Valley who never touch a computer.

[Swedish Chef]

What about attacking the supply side of the problem? Right now, China and India flood the world with exported products and services because their domestic demand is far lower than their capability to produce. Boost domestic demand in China and India and their economic resources will need to be diverted from export to domestic use.

This sounds like a win-win for everyone. Increased domestic demand in China and India means improved living standards--something these countries desperately need. Reduced export capacity means more expensive exports and less economic justification for 1st world outsourcing.

I believe this is probably the only long-term solution to the employment crisis. Trade barriers aren't very effective against underlying economic force. Retraining is a crock of shite because virtually every job can be outsourced or handed to low-wage migrant labor (H1B or illegal). It's only through demand management that the global crisis of oversupply can be mitigated.

[Doctor G]

Jon, what do you mean "the job market in Silicon Valley is as tight as it has ever been?" That usually means it is hard to find a job, which it is. Personally, I've been able to find jobs, but no one will pay what I want, and pay levels overall hadn't budged in six years at the big, big company I used to work for, which was in the process of moving all new engineering to India.

And Dean, there is nothing wrong with a population of innovators and inventors, but I doubt that most people are cut out for that. To the extent they are, I'd like to see policy that makes it easier to start and succeed at very small businesses, like hot dog carts and housecleaning services. Currently the system is slanted towards the big guys.

[JonF]

Re: Really? Not if they are over 50.

Age discrmination is illegal. You should not even be asked your age during the hiring process.

RE: and [IT] only now has as many workers as in 2000.

Well, here's my own experience (reposted from, a thraed above):

Unless your skills are obsolete (e.g., COBOL on mainfarmes) or you live in a depressed region liek Michigan and are unable/unwilling to relocate you will not need much luck at all. IT remains a growth field, albeit less torid than it was in the late 90s. Last year the company I worked for went belly-up; I posted my resume online, my phone rang off the hook with recruiter calls for weeks, and I was back to work in three days. Then I took another job ten days later (the first job having proven utterly unstisfactory) then I moved across the state to yet another job two months later. In fact, thirteen months later I am still getting the occasional headhunter call. And by the way, I am now making 7K more than my original lost job paid.

[Ponzi Q. Globalization]

"Age discrmination is illegal. You should not even be asked your age during the hiring process."

Yeah, and make sure you get some cosmetic surgery before the face-to-face interviews.

"And by the way, I am now making 7K more than my original lost job paid."

Congratulations! But your happy ending is sadly not one shared by all.

[jon livesey]

Doctor G. No, I mean that it's as difficult to find qualified employees as it's ever been. Probably I talk to too many recruiters. When they say the market is tight, they mean they aren't making as much money as they think they ought.

[Walt]

Gabriel: What you say is precisely wrong. Economists models of free trade do not assume mobile labor or mobile capital. I don't know why this misapprehension is so common...

[Doctor G]

Well Jon, I'd say the trouble is that the recruiters can't find enough qualified people willing to work harder for less compensation.

And Ponzi, in addition to cosmetic surgery I would need to chop off most of my resume, from which you could easily guess my age. And then play coy when they ask me whether and when I finished college.

[Tapsearcher]

First of all Adam Smith held labor as something sacred and as the core of any society.
Secondly, the industrial revolution is not over. We still use the products but they are made somewhere else.
Free Trade and Globalization is based on moving production and factories from place to place based on the cheapest labor markets of the world. Workers are put on a Global trading block to compete with one another for the same jobs. There is an endless pool of impoverished workers, Free Traders take advantage of. See a popular ezine article - Lend Lease was real Free Trade and not chopped liver as it is in the Globalist world at http://ezinearticles.com/?id=390710
It demonstrates that you can not do business with people who do not have money. President Roosevelt said he would not let the foolish dollar sign get in the way of winning the war. It shows you have to get money to the people who do not have it someway for the sake of survival.
Even if everyone in the world was provided a good education and high tech skills it would serve no purpose if everyone has to compete for the same jobs. It is like a dog chasing its own tail.
The Second Coming of Clintons with Hillary coming is like putting a fox in charge of the chicken coop. See http://tapsearch.com/tapartnews/id17.html and view The Clinton Years, The American Dream Reversed artwork by Ray Tapajna at http://www.graphicsforums.com/public/list.asp?id=1247 where it is highly rated worldwide and there is more than a million references under the phrase Clinton Years American Dream Reversed at Google and http://www.gigablast.com has a good indexing under the phrase.
See also http://www.graphicsforums.com/public/list.asp?id=1328 The Pearl Harbor attack on Workers led by President Clinton who was later joined by President George Bush riding shotgun as the new Doctor Strangelove of our times.
The Free Enterprise system has been wounded severely and history tells us what happens when workers have no voice in their destinies as it is now with Free Trade and Globalization. Only local value added economies in balance geopolitical settings will work. The working phrase should be local production for local consumption.