Wednesday, December 12, 2007

Outsourcing and the backlash against it

A. J. Jacobs has a really funny and interesting article My Outsourced Life (in Esquire Magazine in 2005) about his experiences with using support staff in India while living and working in America. While on this subject, you might like to glance at the frontiers of outsourcing (hat tip).

While on this subject, S. G. Badrinath had pointed me to an interesting article The establishment rethinks globalisation by William Greider, in The Nation about people who are skeptical about the benefits to the US of the way telecom has made many things that were formerly non-tradeable into things that are tradeable.

I feel this is no different from all the previous stories about gains from trade. New technologies spring up; the purveyors of old technology get hurt; there's nothing surprising in it (to me) while there are benefits in the large. When cheap computer hardware started coming into India because of the lowering of trade barriers, it was very painful for thousands of workers employed in those sectors. Their human capital was obsoleted; they were mostly forced to shift into new sectors; their lifetime wage trajectory was pushed down to a lower level. In similar fashion, there is nothing new, in my eyes, when there are parts of the US economy which are hurt when one more new kind of trade a.k.a. technology springs up.

I am also optimistic when it comes to fears of protectionism. I am skeptical about whether the industrial countries will really go back to tariff or non-tariff barriers when it comes to goods. With goods, it's possible to have barriers, even though it would be really unwise to have them. In contrast, with services, I think it is not even possible for a State to come in the way without seriously interfering with personal freedoms and open telecom systems. Even if the worst politicians get their act together, and whip up a lynch mob, I don't see how they can block outsourcing of services jobs.

1 comment:

  1. I do not think they can do that. It will affect many people though. Thanks for posting this. -Chloe


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