The Problem With Being an Economist
Well, one of the problems anyways, is highlighted (WSJ, subscription required) by Nobel laureate, Edward Prescott.
Of all the thankless jobs that economists set for themselves when it comes to educating people about economics, the notion that society is better off if some industries are allowed to wither, their workers lose their jobs, and investors lose their capital — all in the name of the greater glory of globalization — surely ranks near the top.
Yep, it is right up there with mechanization which leads to “onshore” outsourcing. People in a given industry will lose their jobs and go through the difficult period of looking for a new one. What jobs will these people find? Beats me, which makes it so hard to argue that things like offshore outsourcing and mechanization so difficult to support from a populist/political point of view. Nevermind that in the past when these kinds of things happen, people do find new jobs, and things don’t, generally, become worse, but instead better. This is one reason why I despise that flaming hypocrite Lou Dobbs.1
Via Greg Mankiw who has a unique perspective on this issue.
1Dobbs is a hypocrite, or if you want an outright liar, because when it comes to financial advice Dobbs will recommend companies that engage in offshore outsourcing and will point to the offshore outsourcing as a reason to invest (lower cost => higher profits => greater share holder value).
Dobbs devoted a column in the March issue to touting the prospects of the Minnesota-based Toro Company, which makes outdoor landscaping-maintenance equipment. He told subscribers that Toro was a “long-term wealth-builder,” and praised Toro’s “formal code of ethics, something I think is sorely needed at more of America’s companies,” and its “…exemplary corporate governance structure, which aligns the interests of shareholders, employees, and customers.” He concluded his interview with Toro CEO Kendrick Melrose by frankly telling him, “I like the way you treat your shareholders, employees, and customers.”
One wonders whether Dobbs’ admiration extends to Toro’s 2002 decision to move 15% of its workforce — about 800 jobs — to Juarez, Mexico. Indeed, CEO Kendrick Melrose might be interested to know that Toro appears on Dobbs’ own list of companies that are “exporting America.”