Free Lunch by David Cay Johnston

society prosper and endure?
    Every economist is taught that while international trade results in overall gains to the planet, it also creates
winners and losers. For the losers the results are grim. The losses they suffer are not temporary effects, like closing a factory for
retooling, but permanent losses. The factory jobs that have gone to China, India, Bangladesh and other very low-wage countries
are not coming back.
    Another bedrock principle of economics is a tendency toward what
economists call equilibrium. Most of us know this as simple supply and demand. When
a frost damages the orange crop, or war in the Middle East reduces the flow of oil, then prices rise. People buy fewer oranges when
they cost more, but they need gasoline to get to work so when prices rise they must cut spending on something else. How much
price influences demand is called elasticity. Demand for oranges is elastic, for gasoline
inelastic.
    From the perspective of a company, people who do factory and most office work are
so many oranges and tankers of gasoline; their labor is just another commodity purchased in the market. Minimally skilled labor is
far more common in China than it is in the United States. This means that until the vast supply of Chinese labor is fully employed,
the forces of supply and demand, combined with our government’s current rules, will relentlessly force more and more jobs to
move to China, depressing wages in the United States. The process will continue in other countries with vast labor pools and
enough stability to attract capital. By the time a global equilibrium is reached and the downward pressure on American wages
eases we will all be dead—and so may our great grandchildren’s great grandchildren.
    Traditional manufacturing work is not the only labor that is going offshore, either. Any work done on a
computer can be moved overseas. Banks, software firms, and airlines now have people in India answering calls, eliminating a
major source of modestly paid work in America. The big accounting firms now hire Indian firms to prepare tax returns. Ads in the Los Angeles Times are laid out by a company in India that promises 100 percent
perfect copy every time. Computer-assisted design and engineering work is often sent to India and China. Reuters, the British
news agency, fired 20 American and European journalists in 2004 and replaced them with 60 new hires in India, saying it was to
save money.
    White-collar jobs moving offshore may well be the next great economic issue
confronting America. It is a problem that even the most ardent advocates of free trade are beginning to acknowledge has a huge
potential to disrupt our society.
    An emerging concern can be found in official statistics on
advanced technology. China is selling ever more advanced technology to the United States, running a trade surplus in this
high-value segment that tripled in just five years.
    In the next decade or two, as many as 40
million American jobs will be at risk of moving overseas, according to an analysis by a leading supporter of free trade. That means
that more than one in four jobs in America may evaporate. To put this in perspective, in 2007 there were about 147 million civilian
jobs in America, fewer than 7 million people were unemployed, and another 4 million or so wanted work but had been without a job
for so long that they were no longer counted in the labor force. The loss of 40 million jobs would be an economic catastrophe
worse than the Great Depression.
    This estimate was made by Alan Blinder, who was a vice
chairman of the Federal Reserve under Alan Greenspan. Blinder, a respected economist at Princeton University, once wrote that he
is “a free trader down to my toes.” But his detailed analysis of how many Americans hold various types of jobs shows that almost
every kind of work done at a computer or with a telephone is vulnerable.
    Losing those jobs
would mean wasting a vast