THE MIGRATION OF JOBS IS HAPPENING. SHOULD IT? DO WE WANT IT?
By Dr. Ichak Adizes
The reality is that there is the migration of jobs from the US to developing countries – India, China, and Mexico, for example, and that there is higher unemployment in the US because of this migration. But the questions remain, is it good or bad and what, if anything, do we do about it? There are several alternatives.
One is a protectionist policy, which will impose some high tariffs on services with those countries, eliminating the advantage of exporting jobs, and that may improve the short-term economic condition in the United States. While we might want to do this because it serves our short-term self-interest, the question should be asked, should we do this?
We all realize that the world is increasingly becoming a village with the global economy. A protectionist policy stands in the way of the natural progress of investment and does not take advantage of our competitive advantage. We are all familiar with economics 101 that teaches us that strategy should be based on the analysis of competitive advantage. What advantages does one company or country have vis-à-vis other companies or countries? The United States’ competitive advantage is not in low cost labor force; it is a developed country with a high level of sophistication and technology and thus it cannot compete with countries such as China where engineers earn $150 a month. A protectionist policy would be negating the premise of exploiting competitive advantages and disadvantages.
Furthermore, it will increase the gap between the haves and the have-nots. If business does not migrate to developing countries, these countries will have less of an opportunity to join the world economy. Poverty will rule even more. The protectionist policy that might make sense in a short-term economic point of view might not make sense from a political and social point of view, because this economic policy of protectionism will have tremendous social and political repercussions. Poverty breeds resentment and eventually aggression.
We need to look at economic policy in the context of its social and political repercussions and in the global sense of the word and not with a “silo” outlook. The direction that economic policy should take is with an eye toward the future or long-term view. It should take into account the competitive advantages that the United States has and capitalize on that.
Using the Adizes® methodology, the United States’ competitive advantage is not in (P) or producing. Work can be done in all different countries where work is cheap. The competitive advantage in the United States should be in (E), or the entrepreneurial function. This is in the center of economic and financial activities, the stock market, financing capital, and the innovation and syndication of businesses, building the infrastructure of networks that can compete in the world. With the entrepreneurial spirit in the United States, the labor should and could be wherever it is cheapest and available. The upside is that it will bring business to those countries and reduce those in poverty.
That, however, still leaves the question of what we do with those unemployed because their jobs migrated out of the United States. Instead of protectionism, what we need is more effective and efficient education so those people can transition from jobs where the United States had no competitive advantage to those jobs where the United States has a competitive advantage. Our needs are enormous in the field of criminal justice, social work, and education; our country is lacking teachers, youth leaders, and social workers. Instead of doing metalwork or textiles where we have no advantage, we should be training our future generations of people to work in the areas we need.
The older people who are working in these dying industries are victims of these tremendous transitions and do bear the cost. They may not be able to make the transition. When companies make a transition from one technology to another, they have a cost of retooling or changing; the same is true for a country. A country needs to allocate certain resources to help with the transition. The next generation will be better prepared. There is a cost to the present generation, but we have to take that into account and pay.
Let’s take Singapore as an example. Singapore wanted to avoid being another developing country where the business is based on unskilled labor, capitalizing on the cheap labor that that part of the world has to offer. They enforced high taxation on the textile industry and discouraged the emergence of cheap labor industries in Singapore. Instead, they invested in the best Internet network that money could buy: Big broadband networks so the next generation of Singaporeans wouldn’t go into the textile industry, they would study computer science and be computer literate and work in the high-tech industry.
This should also be the strategy of the United States. Do not go backwards and try to protect industries that have no competitive advantage in the post-industrial environment. Invest in social systems that promote affinities that a post-industrial society needs so we can go forward and not retard progress that is necessary and cannot be stopped. We need to solve our problems using the competitive advantages of societies from around the world, not just within our own borders with a silo effect. We have to start thinking globally with multiple countries working together.