Class Summary #23 for 10/26/11

Class began today with Prof. Rizzo reiterating the message to us that as long as we specialize in what we are good at and we aren't giving up a significant amount of other things (low cost), we all get much richer.

Then we went on to learn about unemployment and trade. Here are some of the key notes we learned:

1. In the US, the jobs we see going away are the ones that are easily mechanized.
2. People losing jobs is not necessarily a bad thing. It may even make us richer. Consider this:
1. If people at the UR registrar lose jobs, we are richer because there is more money in our pocket, as machines will be doing their jobs. Then, they will be forced to acquire new skills to get new jobs, which will benefit us because they could then go on to create new things.
3. The most important concept of class is that self-sufficiency is the road to poverty
4. Peoples' wages are higher when their jobs are close to being outsourced. Rizzo's wage is high because he could easily be replaced by another person/machine.
5. Trade doesn't cost jobs, it just changes the jobs in an economy
6. Technology is the greatest job destroyer in history.
1. Interesting question posed by Rizzo: If we are concerned about job loss, why is it that we worry our selves with the impact trade has on job loss and not technology. Technology takes our jobs away as new machines are made, yet we as a society welcome new technologies all the time but say trading with other countries is bad.

Trade Deficit= the amount more we buy from another country than we export (the difference)

Trade Surplus= the opposite of above

Since 1976, we have bought more abroad than other countries have bought from us. 10 trillion more goods have been bought by us since 1976 than they have bought from us. Yet, US total employment since the beginning of trade deficits since 1939 employment has increased overall.

People claim that unemployment today can be attributed to trade deficit, but this is not true. Trade simply creates/affects the types of jobs we are present in an economy, it doesn't cause unemployment.

Today, because of influx of machinery, manufacturing jobs have been decreasing since 2000. Just 9.1% of American workers today are manufacturers.

Despite this, we are manufacturing more than ever which is much due to machinery- we are manufacturing by 5.1% more than in 1931 and we have increased production despite having less workers (more machinery).

IMPORTANT: When jobs are lost by machinery/technology, it gives people incentives to go back to school/learn/develop new skills and help our society in another way. Having this new technology saves us money and helps us grow wealthier because new jobs are being created that give us new tools. Technology has saved us a load of money because less people need to be paid for work, which has helped our economy because we have more money to spend on other things. Thus, all of this makes more jobs and gives us more wealth as a society.