President Obama recently lectured Americans on economics during a campaign stop in Osawatomie, Kansas. The New York Times congratulated President Obama’s speech as a potent blow against market economics. Cal-Berkeley professor Robert Reich called it the most important speech of his presidency. The Kansas City Star gushed over his good policy and good politics.
In reality, President Obama disastrously misdiagnosed the source of U.S. economic problems:
Over the last few decades, huge advances in technology have allowed businesses to do more with less, and it’s made it easier for them to set up shop and hire workers anywhere they want in the world. And many of you know firsthand the painful disruptions this has caused for a lot of Americans. Factories where people thought they would retire suddenly picked up and went overseas, where workers were cheaper. Steel mills that needed a thousand employees [were] now able to do the work with a hundred employees, so layoffs too often became permanent, not just a temporary part of the business cycle. If you were a bank teller, or a phone operator, or a travel agent, you saw many in your profession replaced by ATMs and the internet. Today even higher-skilled jobs like accountants and middle management can be outsourced to countries like China or India. And if you’re somebody whose job can be done cheaper by a computer or someone in another country, you don’t have a lot of leverage with your employer.
President Obama appears to see these developments as symptoms to be treated by the government, when in fact the freedom to create new technologies and engage in international commerce is the best potential cure for our economic ailments.
Just ask any of the nearly 6 million Americans who owe their jobs to foreign companies that have “outsourced” production to the United States. According to the International Monetary Fund, many more jobs are outsourced from other countries to the United States than vice versa.
Or ask one of the 3.2 million Americans who work in the computing industry or any of the millions more who have jobs because computers have made them more productive.
The U.S. Bureau of Labor Statistics (BLS) reports that there are more accountants, steel and metal workers, and bank tellers working now than there were back in 1997.
President Obama’s statement that we employ fewer telephone operators today is accurate, but there is an even better example he can use at his next campaign stop. In 1997 there were over 6,000 “telegraph and teletype operators” in the United States. By 2010, the BLS had eliminated this employment category entirely. Although we’ve lost those telegraph operator jobs forever, the BLS has been forced to create new job categories for ATM repairers, cellular equipment installers, and others.
Here’s the thing: Economic freedom works, but we have less of it now than we used to. It is this loss of freedom—not the Internet, ATMs, or outsourcing—that is the source of our economic ills. More freedom is the cure.