“We just started a company that created 180 new jobs in the middle of a recession,” said Andreessen, whose company, Opsware, uses automation and software to replace human beings in the operation of huge server farms in remote locations. By automating these jobs, Opsware enables companies to save money and free up talented brainpower from relatively mundane tasks to start new businesses in other areas. You should be afraid of free markets, argued Andreessen, only if you believe that you will never need new medicines, new work flow software, new industries, new forms of entertainment, new coffeehouses.
“Yes,” he concluded, “it takes a leap of faith, based on economics, to say there will be new things to do.” But there always have been new jobs to do, and there is no fundamental reason to believe the future will be different. Some 150 years ago, 90 percent of Americans worked in agriculture and related fields. Today, it's only 3 or 4 percent. What if the government had decided to protect and subsidize all those agricultural jobs and not embrace industrialization and then computerization? Would America as a whole really be better off today? Hardly.
As noted, it is true that as Indians or Chinese move up the value chain and start producing more knowledge-intensive goods-the sorts of things Americans have been specializing in-our comparative advantage in some of these areas will diminish, explains Jagdish Bhagwati, the Columbia University expert on free trade. There will be a downward pressure on wages in certain fields, and some of the jobs in those fields may permanently migrate abroad. That is why some knowledge workers will have to move horizontally. But the growing pie will surely create new specialties for them to fill that are impossible to predict right now.
For instance, there was a time when America's semiconductor industry dominated the world, but then companies from other countries came along and gobbled up the low end of the market. Some even moved into the higher end. American companies were then forced to find newer, deeper specialties in the expanded market. If that weren't happening, Intel would be out of business today. Instead, it is thriving. Paul Otellini, Intel's president, told The Economist (May 8, 2003) that as chips become good enough for certain applications, new applications pop up that demand more powerful and more complex chips, which are Intel's specialty.
Once Google starts offering video searches, for instance, there will be demand for new machines and the chips that power them, of which no one was even dreaming five years ago. This process takes time to unfold. But it will, argued Bhagwati, because what is happening in services today is the same thing that happened in manufacturing as trade barriers were lowered. In manufacturing, said Bhagwati, as the global market expanded and more and more players came onto the field, you saw greater and greater “intraindustry trade, with more and more specialization,” and as we move into the knowledge economy, you are now seeing more and more intraservice trade, with more and more specialization.
Don't be surprised if your son or daughter graduates from college and calls you one day and says he or she is going to be a “search engine optimizer.”
A what?
A slew of firms has started up around Google, Yahoo!, and Microsoft to help retailers strategize on how to improve their rankings, and increase the number of click-throughs to their Web sites, on these major search engines. It can mean millions of dollars in extra profits if, when someone searches for “video camera,” your company's product comes up first, because the people who click through to your Web site are those most likely to buy from you. What these search engine optimizers (SEOs as they are called in the trade) do is constantly study the algorithms being used by the major search engines and then design marketing and Web strategies that will push you up the rankings. The business involves a combination of math and marketing-a whole new specialty created entirely by the flattening of the world.
And always remember: The Indians and Chinese are not racing us to the bottom. They are racing us to the top-and that is a good thing! They want higher standards of living, not sweatshops; they want brand names, not junk; they want to trade their motor scooters for cars and their pens and pencils for computers. And the more they do that, the higher they climb, the more room is created at the top-because the more they have, the more they spend, the more diverse product markets become, and the more niches for specialization are created as well.