Not letting up on outsourcing

Two new stories on the web today about the outsourcing phenomenon, about which I’ve blogged here, here, here, here, here, here, here, here, and … er, here. [Why don’t you just create a new category for these posts?–ed. Hey, good idea!] The Washington Post has an editorial blasting the Democrats for demagoguing the outsourcing issue (link via David Adesnik). The last paragraph:

It’s true that the shift of service jobs to countries such as India, like other trade-related dislocation, adds to the temporary pain of structural unemployment. But, as Mr. Greenspan says, new jobs will be created. If a U.S. firm shifts employment abroad, the savings flow back to the United States in the form of lower prices for consumers and higher dividends for shareholders; the consumers and shareholders will direct their new spending power at things that create employment. Meanwhile, the fall in prices will allow the Federal Reserve to keep interest rates lower, boosting the job-creation engine. At its meeting today and tomorrow, the Fed is almost certain to keep short-term interest rates at a rock-bottom 1 percent because forces such as “offshoring” are keeping inflation in check despite a rebounding economy. Offshoring, like trade, creates winners and losers, which is why open trade should be accompanied by social safety nets. But the winners will outnumber the losers, because the adjustment creates new efficiencies. Each worker can produce more, meaning that he or she can be paid more. Do the Democrats really mean to oppose that?

Meanwhile, Wired has an in-depth cover story (and a few sidebars) on the outsourcing phenomenon (thanks to axiom for the link). One the one hand, the main piece by Daniel Pink gets at the core of current frustrations:

A century ago, 40 percent of Americans worked on farms. Today, the farm sector employs about 3 percent of our workforce. But our agriculture economy still outproduces all but two countries. Fifty years ago, most of the US labor force worked in factories. Today, only about 14 percent is in manufacturing. But we’ve still got the largest manufacturing economy in the world – worth about $1.9 trillion in 2002. We’ve seen this movie before – and it’s always had a happy ending. The only difference this time is that the protagonists are forging pixels instead of steel. And accountants, financial analysts, and other number crunchers, prepare for your close-up. Your jobs are next. After all, to export sneakers or sweatshirts, companies need an intercontinental supply chain. To export software or spreadsheets, somebody just needs to hit Return. What makes this latest upheaval so disorienting for Americans is its speed. Agriculture jobs provided decent livelihoods for at least 80 years before the rules changed and working in the factory became the norm. Those industrial jobs endured for some 40 years before the twin pressures of cheap competition overseas and labor-saving automation at home rewrote the rules again. IT jobs – the kind of high-skill knowledge work that was supposed to be our future – are facing the same sort of realignment after only 20 years or so. The upheaval is occurring not across generations, but within individual careers. The rules are being rewritten while people are still playing the game. And that seems unjust.

On the other hand, Chris Anderson makes the most trenchant point:

For US workers, the path beyond services seems uncertain. But again, history provides a guide. Thirty years ago, another form of outsourcing hit the US service sector: the computer. That led to a swarm of soulless processing machines, promoted by management consultants and embraced by profit-obsessed executives gobbling jobs in a push for efficiency. If today’s cry of the displaced is “They sent my job to India!” yesterday’s was “I was replaced by a computer!” Then, as now, the potential for disruption seemed infinite. Data crunching was just the start. Soon electronic brains would replace most of the accounting department, the typing pool, and the switchboard. After that, the thinking went, the modern corporation would apply the same technology to middle management, business analysis, and, ultimately, decisionmaking. If your job was emptying an inbox and filling an outbox, you were begging for someone to draw the I/O analogy – and act on it. Indeed, computer terminology is littered with traces of what were formerly jobs: printers, monitors, file managers; even computers themselves used to be people, not machines. Computers have, of course, reshaped the workplace. But they have also proved remarkably effective at creating jobs. Bookkeepers of old, adding columns in ledgers, are today’s financial analysts, wielding Excel and PowerPoint in boardroom strategy sessions. Secretaries have morphed into executive assistants, more aides-de-camp than stenographers. Typesetters have become designers. True, in many cases different people filled the new jobs, leaving millions painfully displaced, but over time the net effect was positive – for workers and employers alike. At the same time, we learned the limits of computers – especially their inability to replace us – and our fear of a silicon invasion diminished.

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