Wednesday, March 16, 2005

Wrestling the Elephant in the Living Room: In (feeble) Denfense of Outsourcing

With admitted reluctance, I should address the whole globalism/outsourcing issue, lest I be taken for a stooge in this process. I suppose I’ve hesitated thus far about the topic because, frankly, the size and scope intimidates the hell out of me and I’m cowed by the towering minds of economists who come out on both sides of this topic.

When I told acquaintances that I was traveling to Southeast Asia to explore outsourcing opportunities, I received more than a few raised eyebrows. Never mind that we’re talking about textile manufacturing, a vocation that educated Americans haven’t pursued since the Great Depression. Outsourcing anything, even the production of golf shirts, is bad for America because it ships jobs overseas, right?

This bit of populism played fairly effectively under John Edwards’ “Two Americas” banner, but I really don’t buy it.

First, the only circumstances in which outsourcing is inherently and absolutely bad for America are ones in which globalism doesn’t exist, i.e., there are no trade agreements and every country except ours operates under some policy of economic protectionism. Well, globalism does exist and all the WTO protests in the world aren’t going to put that toothpaste back in the tube. Speaking of tubes, turn one on and tell me how many American flags you see getting burned in the streets of countries that have long-standing trade agreements in the US. Now count the number of burning Old Glories in countries that don't do business with us. I realize this is a very simplistic argument for free trade as an antidote to terrorism and if you'd like me to elaborate further, please post a comment below.

At some point, making a case for or against globalism starts to sound like a discussion of how long it would take a one-legged monkey to kick all the seeds out of a dill pickle, to borrow a metaphor forever embedded in my mind by a high school teacher of mine. It has its benefits and its ugly sides and any country whose leaders don’t think long and hard about how to do business with China and the US is likely a fatally misled country.

Secondly, implicit in the anti-overseas outsourcing argument is the notion that a person, by virtue of being a tax-paying American citizen, is entitled to produce buggy whips until he drops dead. In that scenario, the implications for innovation and entrepreneurship – the two movements that catapulted America to its current global position – are pretty horrific.

Third, poverty. This is the morally dodgy piece of the argument, since a government has an obligation to concern itself, first and foremost, with the welfare of the people it governs. But I’m not a government official. I’m a traveler who’s seen just a sliver of the kind of third-world poverty that most Americans can’t comprehend and will never witness firsthand. Anti-globalists gnash their teeth about sweatshop scandals and wage rates that resemble the pittances paid during America’s pre-union Industrial era. But those supposed pittances are a multiple of the average household incomes in many of these areas. Indeed, in Vietnam, a primary reason the government acts as a labor broker for foreign corporations is to prevent members of the intellectual elite, such as lawyers and teachers, from leaving their posts to take better-paying jobs in factories.

If you take a truly egalitarian mindset to outsourcing, then it’s tough to look away from people living in absolute squalor and insist that the opportunities that could uplift them should be reserved for Americans, where new business creation, job growth and GDP expansion are each, in both relative and absolute terms, greater by an order of magnitude. Now, I know this can be a pretty self-righteous spiel to deliver to someone whose job just got sent to India, but, in my case, it’s coming from someone who’s every bit as unemployed and upon whose head rests nearly six figures’ worth of student debt. Anyone who thinks MBAs are somehow immune to outsourcing and other economic ebbs never spent any time in the Bay Area in the past few years.

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1 Comments:

Anonymous Ron Mori said...

Tommy,

While most of the economic force for outsourcing are sane & natural, American (and their soft underbellies) loath this race to the bottom for wages.

With the cost of higher education moving further out of reach for the society (aristocracy vs meritocracy, left for another time), those left behind are feeling the pressure of seeking a economic middle class life in a work world of employment musical chairs that just had 2 billion foreigner drop in.

The times they are a changing.

10:26 AM  

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