"Outsourcing creates jobs!"

[johnpalmer]

That's what we're told. Outsourcing will cut costs, and with lower costs, businesses can expand, and create more jobs.

Sending jobs overseas is *good* for America, they say.

Let me think about this, really hard.

A company ships programming to India, cutting salaries to a third of their previous high.

It now has 2/3 of their previous payroll to reinvest, and grow, and soon they can re-hire the number of people they fired from their programming team for "good, high paying, highly skilled jobs".

Why, exactly, aren't they going to outsource *those* jobs to India, as well? And re-invest the 2/3 of the payroll they're saving to grow, etc.?

When, precisely, do the companies stop sending all the jobs they can overseas, with all the wonderful savings coming home to roost?

I'm not going to debate whether it's better to have "free trade" or whether "protectionism" is good... but the reasoning being used in this debate is starting to unravel quickly, by people who really ought to know better.

Comments

[siliconshaman.livejournal.com]

Oh, didn't you know? I guess you didn't get the memo.
The end point is when the only money being spent in your country is what the CEO spends tipping the waiters etc. [since all of his savings would be abroad in offshore investments.]

[pernishus.livejournal.com]

"Economics. Hydraulics. Second Law of Thermodynamics," says Pernicious the Musquodoboit Harbour Farm Cat enigmatically, while wondering just why it was that the Nobel Committee sent his faithful amanuensis and general factotum a letter requesting nominations last fall... (That last little bit is actually true, -- although I have absolutely no idea how my name was put on their mailing list...) "It may be quite wrong of me, but I see the outsourcing issue as one small sign of either natural justice beginning to assert itself in world wealth distribution, or yet another increment in the establishment of the anti-Christ's Kingdom here on li'l ol' earth -- I haven't decided which. In either event it is painful for at least half of its participants..."

[pernishus.livejournal.com]

John, I posted a comment earlier, but it doesn't seem to have got here for some reason -- do you get e-mail copies of them? The gist of it was that economics is very much like hydraulics -- the implication being that if you open the valves the water is going to try to distribute itself evenly insofar as permitted. I wish I remembered what else I said -- anyhow, I sympathize with those who are being hurt by this, while being at least moderately happy for improvements, however minimal and even at such a cost, to lives in third world countries.

[pernishus.livejournal.com]

And now that I have posted this new comment, the old one shows up -- as the Wizard of Oz said when the balloon got away -- "I can't stop it, I don't know how it works..."

[johnpalmer.livejournal.com]

I have to admit, I'm glad that there are jobs being created out there, as well. That's a large part of why I don't want to debate free trade versus protectionism.

What bothers me, I suppose, is that, in the end, I expect that all of the net benefit will end up going to make the rich even richer, with the overall net benefits going to the worker getting smaller.

And, while that will always be the way of the world, I still don't like it.