Hi. I'm trying to understand the anti-outsourcing/offshoring position a little better (clear up some misconceptions I may have from reading the
financial press and whatever), so I was wondering if those who consider themselves in that group could answer these questions. My questions naturally
betray my bias, but I don't think they're skewed as to impede discussion.
For those who argue for restrictions against outsourcing, should restrictions also be made against automation? Automation seems to have
changed the economy a lot in areas like:
- Manufacturing - with automated control systems in factories, less factory hands are needed
- Web-services - reducing the number of transactions that occur with a live person (e.g. banking)
- Automating code generation, circuit design, structure and machine design, industrial process design etc. Some of the things researchers are
turning automation toward seem to me to be way above "code monkey" level. Many of these don't even rely on particularly abstract and untested
artificial intelligence techniques.
I anticipate an argument that these developments create jobs as well. But isn't it to be expected, from the restricted point of view of what labour
input is needed to sustain current production, that fewer jobs would be created? I would argue myself that more jobs would be created, but that is
because I believe the cost-savings and improvements in standard-of-living feed expansion; could these same benefits not also come from outsourcing?
Also, would these listed developments shift earning power to well-educated white-collar workers, and thus be seen as elitist? I personally disagree,
as I feel they encourage people to become better educated and seek higher-level opportunities, but then I would also apply that argument to
outsourcing, arguing that roles are needed in coordination of outsourcing and seeking new outsourcing opportunities (e.g. Phillipines or Bangladesh
over India) to make the market more competitive and bring lower costs and better value. Niches would also be created for quality control and
oversight, rubber-stamping where professional credentials are required, etc.
Could open-source software development also be seen as a threat? Should it then be restricted? Companies can design their systems around
open-source software in ways that allow them to avoid open-source license requirements. The result would seem to me to be free substitution for the
work of programmers (even Chinese and Indians don't work for free). The creators of open-source software don't receive direct material benefit from
it, though they can profit from things like technical support, and are they not depriving job-seekers of their livelihoods?
There's an article
in the Economist (stop barking already, Lou Dobbs, or I'll
beat you with this stick
) that speculates that the open-source model could be applied to medical research, benefiting consumers at the expense of
pharmaceutical companies. Wouldn't this be stealing jobs from workers in that industry?
If outsourcing is seen as the import of services, what of the import of goods? This has displaced workers in agriculture, manufacturing,
cottage-industries, etc. Should this trend be undone?
If so, would this not cause the standard of living to decrease, as costs would go up, and at the same time reduce revenue from abroad as American
companies lost competitiveness?
If not, why are certain workers being favoured? Is it a value statement of where our society should be? I've heard the protest that I crudely
paraphrase as "We went from manufacturing to services, if we lose services, what are we supposed to move to?" But if instead of seeking greater
competitiveness and innovation, we put up walls, are we not risking repeating the performance of other isolationist economies in the past? If we put
up many artificial barriers in global trade, won't the competiveness of American companies suffer? Consider Boeing vs. Airbus. If Airbus's prices
fall compared to Boeing's because of economic changes in the U.S., won't that hurt Boeing, its workers, and the US? Or perhaps this phenomenom on a
larger level would result in a huge devaluation of the American currency. Then OPEC might switch to the Euro, and American buying power in the energy
markets would drop, right? No?
Trade theory - Hasn't protectionism been proven to hurt market economies before? Or maybe that's a broad sweeping statement. Maybe if
the US only restricted trade with nations like China and India where the cost-of-living difference is huge, where workers rights and the environment
are not respected, etc.
But wouldn't this lead to exactly the same problems? Imagine that this were carried out. This would be American trade policy. Not EU policy, not
Japanese policy, not the policy of major American trade partners. Wouldn't these trade partners continue to trade goods and services with the
offending nations? Wouldn't they then enjoy huge cost advantages vis-a-vis the US -- consumer goods (thus cost-of-living, thus cost of labour),
machines and capital goods (thus cost of production)... Wouldn't this create a huge gap between the productivity and cost-effectiveness of America
and its partners? Wouldn't American companies lose market share? Wouldn't jobs still be exported, but just to the trading partners at a hugely
accelerated pace because of the deterioration of American competitiveness?
Perhaps trade negotiations could result in major trade partners to replicate our policies... Does the U.S. really have enough political clout to do
this? Does it have the trust of other nations? Is it not perceived by other First World trading partners as having a hypocritical trade policy (e.g.
the softwood lumber dispute with Canada), and wouldn't that interfere with its ability to make this deal?
Perhaps other major trading partners would perceive a threat to their own standard of living and consumer base due to outsourcing. Doesn't game
theory suggest that these countries will still keep their markets open to stay competitive? Hasn't outsourcing affected the U.S. more than other
First World nations, and wouldn't that be an argument against this idea?
Corporate profits -- I perceive that some argue that corporations use outsourcing to reduce costs but keep their prices steady, to fatten
their profits. Doesn't market theory suggest that doing this would put them at risk from competitors and new players? Agreed, barriers to entry and
partial monopolies partly interfere. But if companies could charge whatever they want regardless of the costs, what stops them from raising prices at
an accelerated pace? Isn't it logical to expect them, the greedy bloodsuckers that they are
, to raise prices as high as they can with the only
constraint being to prevent market conditions that would allow a new-entrant in (this assumes that there is complicit price-fixing among competitors,
otherwise the competitors would go at the price-hiking company's throat for better market share). Isn't that a better focus of concern -- limited
government interference to make markets more competitive rather than less? Hasn't it been shown in history that government 'remedies' that distort
the competitive market don't work?
Quality of services -- I hear opponents of outsourcing complain that the outsourced workers' replacements (e.g. in call centres) can't
even do the job. Isn't that an empty argument? If consumers don't want that quality enough to pay for it, isn't reallocation of resources wise?
If consumers do want that quality, and if it hurts a company's product that much, won't that company be punished as mentinoned in point 5?