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DOWNSIZING HURTS IN SHORT TERM BUT BRINGS PROGRESS IN LONG TERM

SHARE DOWNSIZING HURTS IN SHORT TERM BUT BRINGS PROGRESS IN LONG TERM

One strategy of those who seek increased control over our lives is to manufacture a crisis. Corporate downsizing stories on the presidential campaign trail and in the national press are an example of that strategy. Let's put downsizing in perspective by asking whether it's bad for the country and something government should prevent. But first, a brief history of down-sizing.

At our nation's birth, 95 percent of the population was in one way or another engaged in agriculture. Today, only 2 percent of Americans farm. In anybody's book, that's some heavyweight down-sizing. Was it bad for our country? Should earlier Congresses have taken legislative action to prevent losses of agricultural jobs? Years ago, heavy construction - building railroads, roads, dams and tunnels - involved teams of men laying track and wielding sledgehammers, picks and axes. Today, there are highly paid guys pushing buttons and pulling levers on huge pieces of construction equipment. They do in a day what hundreds of men couldn't do before. Construction downsizing destroyed thousands of jobs. What should Congress have done to save those jobs?Downsizing is mostly a process where companies find cheaper production methods. Labor tends to be the costliest input; therefore, companies have profit incentives to seek methods to save on labor. When they use less labor, that labor is freed up to be used elsewhere in the economy. If labor-saving methods had not been found to free up that 95 percent of early Americans engaged in farming, where would we have gotten workers to produce other goods that contributed to our wealth?

We don't have to go back to our early history to make these points. Last year, according to an article in Policy Review, Wal-Mart added 41,000 new jobs, Motorola added 5,000 and Intel added nearly 10,000. In fact, there were 9.5 million new jobs created in the last four years. If AT&T, IBM and others weren't finding ways to use less labor (down-sizing), where in the world would Motorola, Wal-Mart and Intel have gotten their new workers?

In a dynamic, robust and growing economy, there are always going to be changes in the use of labor. Some jobs will be eliminated while others are "born." Using government to prevent this process will make the nation poorer. We'd be far less wealthy had an earlier Congress saved the stagecoach driver's or the ice man's job.

None of all this is to deny there are hardships faced by displaced workers. They may be forced to retrain or accept lower-paying jobs. A robust, growing economy facilitates their transition, not one crippled by various "job-saving" laws and regulations. Should we accept crippling the economy by stifling innovation for the benefit of a tiny percentage of American workers who find themselves unemployed as a result of changes in labor use? I think not.