Friday, January 28, 2005

Creative destruction

Job loss to outsourcing and technological innovation was quite a subject last year. Walter Williams looks at the effects of job loss, and what happens when we try to prevent it.

Let's look at a bit of job-loss history. Anthony B. Bradley, a research fellow at the Acton Institute in Grand Rapids, Mich., has written an article on the subject, "Productivity and the ice man: Understanding outsourcing." Citing the work of Forrester Research Inc., a technology research firm, Mr. Bradley says, "Of the 2.7 million jobs lost over the past three years, only 300,000 have resulted from outsourcing." Job losses and job gains have always been a part of our history. Let's look at some of the history of job loss described in Mr. Bradley's article. We might also ponder whether measures should have been taken to save these jobs.

One example, the mechanical refrigerator, did away with the ice man delivering ice every week. It also did away with ice gatherers, people who handled and stored ice all along the delivery chain, and jobs making the tools and equipment used to handle all this ice.

We could probably think of hundreds of jobs that either don't exist or exist in far fewer numbers than in the past — such as elevator operator, TV repairer and coal deliverer. "Creative destruction" is a process by which we find ways to produce goods and services more cheaply. That makes us all richer.

Skills and resources don't go away when people are laid off. They wind up (usually) in other jobs where they're more productive. It's stressful, and it's no fun to go through, but in the long run, we're all better off.

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