Your source for outsourcing
Follwing up on some previous links on outsourcing, Brad DeLong has a long post on why outsourcing will not doom the U.S. economy. He’s particularly trenchant on this point: Remember: few would be worried about “outsourcing” if the U.S. unemployment rate were still close to four percent, rather than at the above six percent level ...
Follwing up on some previous links on outsourcing, Brad DeLong has a long post on why outsourcing will not doom the U.S. economy. He's particularly trenchant on this point:
Follwing up on some previous links on outsourcing, Brad DeLong has a long post on why outsourcing will not doom the U.S. economy. He’s particularly trenchant on this point:
Remember: few would be worried about “outsourcing” if the U.S. unemployment rate were still close to four percent, rather than at the above six percent level that it is. To the extent that a structural cure is being proposed for what is really a macroeconomic problem, do not expect it to end well. And remember: a network-design job artificially kept in Sacramento when it could be done more cheaply in Singapore produces extra income for a network engineer in Sacramento, but has costs as well: in a diminished capital inflow that reduces construction and the earnings of construction workers, in higher costs for businesses installing their networks that shows up in lower salaries they pay their workers, in lower earnings and stock prices for HP.
That said, Glenn Reynolds is also correct in pointing out that precisely because of our current macroeconomic travails, this will be a campaign issue. Why? Not because outsourcing is new, but because it’s going to affect an entirely new set of professions. As Raghuram Rajan and Luigi Zingales (for more about them, click here) point out in Saving Capitalism from the Capitalists, (p. 282):
For centuries, technology has created new products and new ways of making them that render workers and their skills redundant. While the dislocation stemming from technological change is not new, its pace has increased tremendously. Moreover, it is now affecting the professions that have not much changed their way of doing business over the centuries (emphasis added).
That quote, by the way, provides the best counter to outsourcing anxiety. Opposing it perfectly akin to opposing technological progress. They’re both Luddite. [That’s easy for you to say. You’re an academic facing minimal market pressures.–ed.] Not true. Rajan and Zingales use academia as one example of a profession newly affected by technology:
Technology is also having a differential impact on within professions. Take our own, teaching in universities. Using new communication technologies, one gifted professor can teach students in many locations around the country. While technology will increase the demand for such superstar teachers, it will reduce the demand for the mediocre that may vanish completely. Teaching is a job that has been performed the same way for thousands of years, by people who have not feared becoming redundant even in the worst of economic depressions. This will change. While the new economy will increase the demand for education, it may not have room for all of us (p. 283).
Daniel W. Drezner is a professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University and co-host of the Space the Nation podcast. Twitter: @dandrezner
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