Friday, February 20
Joshua Claybourn's Domain: Evil Outsourcing
From Joshua Claybourn's Domain: Evil Outsourcing:
Evil Outsourcing
In spite of my obvious love for economics, I generally avoid the topic as blog fodder. It's simply too complex of a field to be boiled down to short soundbites. Economics is a science and in some ways its complexity is on par with the scientific field. Reducing it to buzz phrases makes it nearly impossible to explain or defend concepts.
So when President Bush's economic adviser, Gregory Mankiw, seemed to endorse job outsourcing recently, I knew he was in for a hell of a time. I've read a few of Mr. Mankiw's books, including his Microeconomics textbook used in many Indiana University economics courses, so I knew what he was referring to. But I also knew there was no way he'd sound sensible in a soundbite-driven media.
The kind of debate currently resurfacing in the public square, partially driven by the Democratic primary, is not new to America. We saw it when an overwhelming percentage of the population earned its living through farming. New technology that allowed for cheaper and easier farming quickly displaced the majority of the population. People decried the loss of jobs, the ruin of our national backbone, and argued for the need to protect farm jobs.
What was really at work, though, was a move toward industrialization. New technology made new and existing products cheaper and more abundant. Would America have been better off to keep those farmers farming? If not, why? If so, how would the country go about doing that? More recently, America has seen a shift away from industrialized jobs toward a service-oriented job market, and eventually we'll eventually see a shift away from it.
People trade goods and jobs because doing so allows us to concentrate on what we do best, thus raising productivity and incomes. We trade because it allows us to enjoy a higher standard of living (can anyone deny that the standard of living continues to increase?). And we trade because exchanging what we produce with others for mutual benefit is an inalienable human right, whether we trade with a neighboring state or a worker on the other side of the world.
Imagine the United States in its infancy, under the Articles of Confederation, with each individual state noticing that its employers kept shifting work to various other states, and vice versa. Imagine what the country - and the world - would be like if those states had restricted such job movement. Heck, imagine what that would be like today. In spite of economics' complex nature, one doesn't need complex graphs and equations to understand why that would be bad for everyone involved.
Update: Robert Reich, President Clinton's Secretary of Labor, on CNBC 2/18/04: "In the long run outsourcing is indeed a good thing for the economy. But in the very short term we must ensure education, job training, and short term unemployment benefits. But you're right - job outsourcing is a healthy, natural occurrence."
My response:
I'm tired of all the cheerleaders (not just those here, but other pundits such as George Will) saying that outsourcing is good for America. Mainly because I haven't seen one cogent discussion about that an average Joe can understand.Permanent link posted by bytehead @ 2/20/2004 12:51:00 PM
Another issue that I see is that the cheerleaders keep pushing that cheaper is "better". OK. If cheap is so much better, are the cheerleaders driving scooters? They're not? Are they even driving stripped down economy cars? I doubt that very much. I predict that quite a few of these cheerleaders are probably driving expensive sport cars. Sounds like hypocrisy to me.
Then there is the greed issue, where the company's officers take the "credit" for the savings and then give themselves extravagant bonuses for their supposed suffering.
A good company should be able to take care of its shareholders and take care of reasonable demands made by society. There should be no or there. Unfortunately, again due to greed, people only want to look at what the current quarter's results are, to hell with anything that might require long range planning. There has been plenty of press about some companies that are considered possible takeover targets simply because they are sitting on more cash than the company is actually worth. If you want to get the most out of the company for the (final) quarter, just sell the damn thing off and distribute the proceeds to the shareholders. That is about where the greed factor is currently.
And finally, the unintended consequences are starting to show. Zipping private data back and forth across continents without any kind of safeguards in place will certainly make sure that the data is no longer private. What is going to happen to the economy when sufficient people are unemployed that the consumer confidence drops precipitously causing another depression?
Say what you want, but the consumer is what drives the economy for better or for worse. Now matter how you dress outsourcing up to make it look good, if it hurts the consumer in a real or imagined way, the benefits can not outweigh the detriments.
0 comments
Links to this post
