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| Chart credit: David Wessel, Wall Street Journal |
From an astute reader, the chart of the week: since 2000 until 2009, major United States-based multinational corporations eliminated 2.9 million jobs in the United States. During that same time, they've added 2.4 million jobs overseas.
I doubt that pharmaceutical and chemical companies are responsible for that much of the gap between the two categories. That being said, I can't imagine that they have not contributed at all.
Gee, I hope this works out well for all of us.
What's strange about this is that the U.S. spends the most on education, in particular post-secondary education:
ReplyDeletehttp://nces.ed.gov/programs/coe/2010/pdf/38_2010.pdf
If we are already at the upper end of spending what the hell are we doing wrong? Shouldn't we be the most attractive employees in all of the world? That sharper decrease towards the end of that graph are very disturbing considering increases in tuition and length of study for Americans recently.
I can't tell you how much this chart depresses me. When will politics start addressing this issue? Until recently it's been low-paying jobs that have been outsourced, it's not stopping and it's moving up to the middle class and to the highly educated. Shouldn't there be some alarm about this?
ReplyDeleteJobs and level of eductation is the great American myth. Ben Stein wrote a very, very funny piece about this myth in Playboy back in the 70s. If higher eduction degrees are too common their value in the market place collapses. If I can hire a PhD at minimum wage, I will do that rather than a high school grad, especially if I do not understand what a management pain the PhD will become. Globally, PhD chemists are way to common as are engineers and other technical degree people. So global companies are shifting jobs to the cheapest sources of these jobs. This will always happen. In the US, people with BA degrees are employed at low end jobs because there are so many people with BA degrees and employers just love the fact that they get eductated people on the cheap and want more. We are caught in a trap. Employers want cheap educated workers and the self-interested education establishment claims that the country must spend its last dollar to provide them.
ReplyDeleteWe should be training people to start and successfully run small businesses, in the crafts, and in any other skills that society needs and can not be off-shored - mainly service focused jobs like buyers, nurses, baristas, you know the people you encounter every day.
Higher liberal arts and scientific education should become rarer especially at the MS and PhD levels for the sake of our future economy.
Thanks for the pick-me-up, CJ.
ReplyDeleteWhere did I put that bottle of Scotch....
"When will politics start addressing this issue?"
ReplyDeleteWhen tax rates become fixed and revenues depend on the overall income of the populace.
So never.
@6:29
ReplyDeleteIf we devalue education too much, we kill the middle class. Quite simply, a B.S./B.A. education at a reasonably priced institution should be able to get a you a middle class lifestyle. I mean, racing to the bottom for rock bottom deals on child labor, is not an economy I want to have any part of.
And how does this relate to chemistry related jobs?
As much as I brood over the doom and gloom to my friends, family, and close colleagues, chemistry is not the only livelihood that is being eviscerated and exported (as evidence by the chart and of course our non-scientist friends ).
It's also evidence that we have to build up entrepreneurship in the U.S. Is there any way we can build support groups, networks, internet think tanks as means to come up with profitable business models so that we are no longer at the mercy of global corporations?
There probably a few, and if someone can post a few of them (or start them) it will be a hell of a lot more productive than the gossip and doom-saying that we all seem to do on this site.
Where did I put that bottle of Scotch....
ReplyDeleteNext to the pistol. (Too morbid?)
"racing to the bottom for rock bottom deals on child labor, is not an economy I want to have any part of."
ReplyDeleteI doubt anyone does and, yet, there is no shortage of people lined up at Walmart to buy a dozen tube socks for a buck. The U.S. used to make these, but good luck finding 'Made in USA' textile products at Target.
It becomes a tough cycle to break: consumers get used to paying next to nothing for goods, which forces manufacturers to seek cheaper inputs. Unless you can make a differentiated, valued added, product, no one is going to pay a premium for it. The simple reality is that, a priori, a molecule made in China is the same as a molecule made in the US, it just costs a lot less (and yes, one can aruge endlessly about true costs, quality control, what not, but that doesn't change the cost gap). Maybe this is short term thinking, but we all live in the short term: try explaining the difference to folks who just lost their jobs at the latest paper mill closing in Millinocket or from textile plants in Smyrna.
Economically, this is a great example of Ricardo's theory of comparative advantage: The US is really good at education (no, I don't care about high school test scores that measure rote memorization) and China is good at making things cheaply. Chinese students can come here to buy our educations, and then go back to the PRC to make cheap molecules/tube socks.
Hey bbooooooya,
ReplyDeleteCostco sells store brand 'Made in USA" socks (although not tube socks and not for a buck). I'm guessing they're made by Wigwum from Sheboygan, WI.
"Shouldn't we be the most attractive employees in all of the world? "
ReplyDeleteNO, only the cheapest is the most attractive in today's world. Nothing else matters anymore.
"It becomes a tough cycle to break: consumers get used to paying next to nothing for goods, which forces manufacturers to seek cheaper inputs"
ReplyDeletePrice has nothing to do with it. If it did we would be paying the same for goods as people in other countries, which we don't. We pay much more. Government regulations have everything to do with it.
China will not allow the sale of goods by a company unless the technology and manufacturing has been introduced to China.
If the US participated in similar protectionism our jobs would have remained here. Instead, we tax corporations for repatriating money to the US. Why would they want to repatriate money to the US when they then have to give a large chunk for taxes? Write your congressman.
One thing to keep in mind about that education spending is that even in the U.S., doctorates are still bring produced at a higher rate than before. Worldwide, production has been going up and is not even close to stopping
ReplyDeletehttp://www.nature.com/news/2011/110420/full/472276a.html
Read that recent article, and we can see that the next decade will be much worse then the last for job opportunities in science.
The problems with taking advantage of comparative advantage are multiple, though:
ReplyDelete1) If we have an advantage, it's in developing things that other people can't. We lost jobs because we couldn't make things as well as others, and couldn't make anything that others couldn't - then it becomes a game of "Who's the cheapest?" which we can't win. But the jobs we're sending away are the ones that help to develop things that others can't, and developing that capacity in others - we're not trying to fix it, but giving up. A service economy only works either locally (where you can't outsource, but if your customers don't have money, well, you won't, either) or if you do things that others can't do with technology (the jobs that are leaving).
When manufacturing went, it was said that we were an information economy. Now info is going, and without info or manufacturing, innovation is not possible. What else is there?
2) None of the places that lost manufacturing seem to have found anything to replace it. Manufacturing people, in theory, like scientists, have transferable and useful skills, yet the people who had those jobs haven't been able to find or make any jobs that take advantage of them. If there isn't any chance to reuse the people who lose their jobs, then following comparative advantage is likely to build stocks of poor and disgruntled individuals with little future. That is not a recipe for anything good, I think.
I'm just not seeing reason for hope in a service economy, because the skills we use to make it work are skills that other countries and their people will have, soon, and without the money or tech to make it go, maybe not even as much capacity as others. What happens when we don't have jobs (or most people have crappy ones, with little hope), have a huge debt (and thus no services and/or high taxes), and little else? Oh, and 5K nukes?
there is no point to be suicidally depressed about the pharma job market. Try to be homicidal and manic - it is a lot more fun.
ReplyDeleteboth ways have been tried milkshake:
ReplyDeletehttp://m.bnet.com/blog/drug-business/updated-suicide-follows-stabbing-linked-to-pfizer-layoffs/3578
http://m.bnet.com/blog/drug-business/-8220creepy-8221-pfizer-worker-charged-with-murder/3641
I don't think it's a question of whether we can win the race to the bottom, the question is whether we want to. I don't think we do. Should we allow business to pollute all they want and screw the little guy because it's a "job?"
ReplyDeleteThe US already allows business to pollute all they want and screw the little guy because its a job.
ReplyDeleteIt's called outsourcing to China. Out of sight, out of mind, just keep costs low. It is the new American way.
Hap: "None of the places that lost manufacturing seem to have found anything to replace it."
ReplyDeleteI suggest you learn a bit more about Pittsburgh.
And there is more--much more--to providing services than you allude to. Would you put your money in a Russian bank? Would you trust a patent agent in China? Are you going to hire a consultant from India for anything (besides IT)? Are you going to trust your data to Baidu over Google?
"I don't think it's a question of whether we can win the race to the bottom, the question is whether we want to. I don't think we do."
ReplyDeleteWe clearly do want to: the throngs of people buying cheaper than can be manufactured in America goods at Pick n' Save are the proof. Maybe ask them if they'd rather pay even 20% more to help keep their neighbors employed making microwaves or T shirts.
Regarding learning about Pittsburg, I've been there, and it's not as bad as I expected. I suggest, however, that a steady decline in population (in a country whose population has grown) is not a sign that the job losses caused by shuttering of manufacturing have been cured: http://www.post-gazette.com/pg/11069/1130976-455.stm
"We clearly do want to: the throngs of people buying cheaper than can be manufactured in America goods at Pick n' Save are the proof."
ReplyDeleteI boycotted WalMart for many years. Then I got laid off due to outsourcing of my job to China. I stopped boycotting WalMart. I feel like a hypocrit but it was just too hard to not shop at Walmart after the salary hit.
When I see all the businesses that are going under due to everyone shopping at the super-saver stores, it makes me afraid for this country.
We keep talking about Walmart like that is our problem. Let’s talk about drugs and how no one wants to pay the costs - our salaries - for inventing them. Governments and old people especially do not want to pay these costs. They don’t want to pay the risk premium investors demand to fund high risk drug invention. People demand infinitely safe drugs, and they want the FDA to make sure that they are absolutely safe before they go on the market no matter what the ultimate costs or time delays. They do not want any chemical industry in their back yards and have zero tolerance for chemical exposure in the environment. They want no patents on drugs, or if they must exist, they should be easily toppled in court and be as short-lasting as possible. Everyone loves those industry leaches known as generic drug companies who employ no drug inventors. We are all forced to always buy our drugs from these guys instead of buying higher cost drugs from companies who actually fund drug invention in this country. Of course we could never have a rational tort approach to drugs because the M-Fing lawyers could not make a zillion dollars when a drug actually is not perfectly safe.
ReplyDeleteSo if are a drug invention company executive what do you do about these issues? You move all drug R&D plus chemical manufacturing to the cheapest sources of scientific manpower with the least environmental and safety controls. You hire a zillion salesmen and purchase lots of expensive TV time to push as much product out the door as fast as possible and at the highest price the market or government will let you charge before the patent goes south. You move whole hog into biological drugs where patents are much less a headache. You pay off the lawyers and pass along the costs to customer in jacked-up drug prices, plus downsize expensive low-level R&D employees as necessary especially guys who work with chemicals. You agree to all kinds of drug giveaways and pricing restrictions that limit money for R&D. Under financial pressures on product valuations and liability issues, you do whatever offshoring, downsizing and cost containment is necessary to keep the short term shareholders happy, so they only dump your stock in an orderly way. You figure out a way to both bend over and take it from governments and regulatory authorities while simultaneously spending tons-O-dollars on pricy lobbyists (instead of R&D) to stop or at least minimize the pain in your tail. Finally you realize no one cares about this industry, the long term future or the health of drug R&D in this country, so you screw your company and employees while lining your pocket before the party is over. If the next guy is handed a sick company, that’s not your problem as you already got yours. If you leave the industry trashed, it doesn’t matter because you got yours. If jobs are lost, employee’s lives are trashed and a vital US industry disappears, so what! If the country’s costly scientific talent is squandered, it’s just so much collateral damage. You can sleep well at night and enjoy your windfall as you watch the pharmaceutical industry sail off into the East, because you know when you look in the mirror that you were only taking you guidance from what Society wants.
The sick and dying people each of us dreams of helping with our inventions hates us and could care less about our jobs or employers. They certainly do not want to pay for our failures and really rather their cures came from nature and the GNS store. Certainly none of them wants to wait years for us to invent perfectly safe drugs to cure their diseases.
Now tell me again why we privileged, highly educated drug inventors should remain employed in this country?
If it weren't for the more highly privileged, more highly paid, low educated sales and marketing team for direct-to-consumer drug marketing, pharmaceutical companies would not be hated. If it weren't for all the me-too drugs, with minisical added benefits, pharmaceutical companies wouldn't be a joke.
ReplyDeleteThe problem is not the 'overpaid drug inventors'. These scientists did not go to 7-15 years of training in the dreams of making the third drug which does just about the same exact thing as what is already on the market. Most grew up with the dream of making a difference. Curing diseases which do not already have treatments. Curing cancer or AIDS.
The problem is that scientists are underutilized by the companies that employ them. Short term profit strategies determine where resources will be allocated. Why cure AIDS, when you can get a higher profit by introducing the next "best" statin? Why help patients who NEED invention to survive, when you can reach a easier segment of overweight consumers who would rather buy your slightly improved drug then making a life-time habit of eating right and exercising?
This underutilization of scientific talent jades many from biopharma all together. Therefore many good scientists find it easier to quit then try to correct the broken system.
Funny thing about patents. Drugs would actually be much cheaper if patents had infinite lifetimes. Additionally, research and development would be more innovative and better funded as there would be a longer period to recoup the investment costs.
ReplyDeletePeople wrongly assume that faster generics are the only answer. Longer patent life would accomplish the same goal much more easily, with the added benefits of stimulating R&D.
Um, no. Infinite patent life wouldn't necessarily increase R+D (see Derek Lowe's posts here and here for reasons why it might not save R+D, nor lower costs for consumers (the phrase "what the market will bear" starring prominently)). It would, however, cost a metric f*&kton to enforce (because, if everyone doesn't follow along, rampant importation between markets will likely occur, and since your chances are better at winning MegaMillions than getting India to ride that pony, it's pretty much a certainty), and without assurance that everyone else plays by those rules, there's not much benefit. Lots of certain costs and few certain benefits probably spells "nonstarter".
ReplyDeleteI'm guessing that Pittsburgh is doing better than, say, Cleveland, but population shrinkage is not particularly encouraging on either front, though Pittsburgh's unemployment is lower than average. PNC's not as big a chunk of the economy as I might have thought, which is also helpful. Pittsburgh seems to have a better mix of large businesses, and though health care spending isn't sustainable, I can't see the need for it going away, so Pittsburgh's reliance on it probably isn't that bad.