In the 1980s, and even after, there were Americans who were warning about the Japanese taking over economically.  It’s still not clear what “taking over” means, but whatever it means, it obviously hasn’t happened.

Part of the supposed threat was that the Japanese were selling more inexpensive products to Americans, thus undermining American companies.  Today, most Americans don’t seem to have an issue with buying a Toyota or Honda (Japanese companies) or other foreign brands.  Of course, many of the jobs associated with these “foreign companies” are American.

If Americans face any threat, it is from their own government.  There is no foreign power willing or able to invade the United States via pure violence.  Therefore, the only way others can obtain property from Americans is through voluntary exchange.

When you think about the argument warning against the Japanese from decades ago, it is silly, but not just because it didn’t come true.  It is useful in this case to use a reductio ad absurdum.

Let’s say the Japanese (whether that means companies, individuals, or the government) started giving away cars and televisions to undermine American companies.  Americans could just go to the store and pick up their new car and television set for free.  If this is too ridiculous to imagine, then just think if a new car sold for only $2,000 that would normally sell for $20,000.

This would obviously be unsustainable for the Japanese, regardless of whether it were companies giving away products or the government heavily subsidizing them.

But let’s say that the Japanese decided to waste resources and had enough savings to do so for a long period of time.  Would it make sense for the Americans to turn down the free (or highly inexpensive) products?

Some would argue that it would cost American jobs.  This isn’t completely wrong, but we have to be specific.  It would cost Americans very specific jobs, but it wouldn’t mean there would be fewer jobs overall.

If I wanted a new car and only had to pay $2,000 instead of $20,000, then I would have $18,000 left over as compared to having to buy the American car.  I now have $18,000 in savings that I can continue to save, or invest, or spend on something else.  Now multiply this by tens of millions of Americans.

The important point is that we would not have to expend resources on cars and televisions any longer that we previously would have spent.  We now have additional resources to consume in the form of other products (goods or services).  The new jobs created would be determined by consumer demand.

Overall, Americans would be far richer at the expense of the Japanese who are subsidizing the products.

Tariffs and Artificial Intelligence

We don’t hear much about the Japanese taking over any longer.  Some people have switched it to the Chinese.

Hardly a day goes by that I don’t hear a bad economic argument about jobs being destroyed. It is used as an excuse to enact tariffs, which make foreign products more expensive.  They also make some domestic products more expensive if they are using materials that are imported (such as steel and aluminum).

The same claims are being made about artificial intelligence (AI).  We are supposed to be worried about robots taking our jobs.

Again, robots will take certain jobs.  They already have.  Just think about the self-checkout at a store.  This means a reduction of jobs for cashiers.

But when a company is able to reduce its labor force with the same productivity, then it reduces its costs.  This tends to happen across the board, and competition will lead to lower prices (all else being equal).

If robots became so efficient that they eliminated half the jobs that are currently in existence, this would actually be beneficial for people.  It could be temporarily painful for any particular individual who just lost their job, but you must consider that new jobs would be created based on consumer demand.  Since humans have virtually endless wants and needs, there is always work to be done.  It is just a question of what the work is and how it will be done in accordance with consumer demand.

In this scenario where half the current jobs go to robots, you have to consider that society would be so much richer, and this would be a benefit to everyone, since everyone is a consumer.  If robots can cook your meals, fold your laundry, and make you healthy at a very small cost, then you will have a lot of resources to consume in other areas that would not have previously been available or attainable.

Technology and robots make us wealthier because things can be done more efficiently.  And in regards to tariffs, we are better off with free and open trade without barriers.  This makes for more efficiency and lower consumer prices.

The Chinese are not taking over any more than the Japanese were decades ago.  We should actually hope that the Chinese and Japanese and everyone else get richer.  They will not get richer at the expense of Americans.  If anything, it will be beneficial to Americans, as it provides that much more opportunity for trade and efficiency.

We should not be fearful about jobs going away due to efficiency or changing consumer demand. As long as the government doesn’t interfere too much, there will always be jobs available.  And if anything, the jobs will actually be more fulfilling for people, as the robots take on the mundane tasks.

A few hundred years ago, the majority of the population worked on farms.  Maybe this was a dream come true for a few people, but I doubt that most people today want to be farmers.  We have computer programmers, massage therapists, dog groomers, marketers, athletes, singers, and the list goes on.  Most don’t want to be farmers, and they don’t have to be now because of technology and productivity.  Even most people working in a corporate job in a cubicle would not trade it for a long day in the fields.

The number of fulfilling jobs will only expand as long as we allow it.  We must accept free trade, and we must not be afraid of advancing technology.