The Great Job Machine

This one is about the global economy. An op-ed piece that appeared in The New York Times points out that the recycling of jobs is just part of the economic growth cycle.

“A century ago, 40 of every 100 Americans worked on farms to feed a nation of 90 million. Today, after one of history’s most brutal downsizings, it takes just two agricultural workers out of 100 workers to supply an abundance of food to a nation more than three times as large. Suppose we’d kept 40 percent of our labor on the farm. Absurd, yes, but if we had, we wouldn’t have had enough workers to produce the new homes, computers, movies, medicines and the myriad other goods and services of our modern economy.

Likewise, the telecommunications industry employed 421,000 switchboard operators in 1970, when Americans made 9.8 billion long-distance calls. Thanks to advances in switching technology, telecommunications companies have reduced the number of operators to 78,000, but consumers ring up 98 billion calls. Let’s face it: Americans are better off with more efficient long-distance service. To handle today’s volume of calls with 1970’s technology, telephone companies would need 4.2 million operators, or 3 percent of the labor force. Without the productivity gains, a long-distance call would probably cost 40 times what it now does.”

This article puts the entire movement of service-jobs to countries such as India, igniting the BPO boom. I saw an article in the McKinsey quarterly which explained how a dollar spent on outsourcing to India creates value for the United States as well.

What this means for countries such as the United States is that innovation will be the only guarator of economic competitiveness.