Offshoring

When i wrote about offshoring last week, i got some advice from readers - "don't ignore the suffering of those who lose their jobs". It was good advice.

Well, my friend David Kirkpatrick got a lot more hate mail when he wrote about offshoring two weeks ago. In David's most recent column, he shares with us some of the most violent hate mail. It's worth reading. These people are angry.

Their anger and the pandering that the democratic candidates are now doing on this subject doesn't change my view on free trade and the free flow of jobs across national borders one bit. I think its good for the economy and its inevitable in the long run. As David points out in his column:

The economist Jagdish Bhagwati, who wrote "In Defense of Globalization," replied to Kerry on the New York Times op-ed page last Sunday. "In a world economy," he wrote, "firms that forgo cheaper suppliers of services are doomed to lose markets, and hence production. And companies that die out, of course, do not employ people." A similar point was made in a recent interview by Lee Kuan Yew, Singapore's founder and senior minister, speaking of the competition between nations, he said, "If you deprive yourself of outsourcing and your competitors do not, you're putting yourself out of business."

I really don't know what to say to these people who are out of work. But I do know that my companies that outsource some stuff to India and Russia also are hiring people in skills that aren't easily outsourced like sales, sales engineering, account management, system design, marketing, and business development.

I'd like to see these unemployed people's anger channeled in a productive way so that they can find new work. It may not be the same work, but working is a lot better than sitting at home fuming.

Comments

[Jay]

I know what to say to those people-- start a company! Or join one being started by your unemployed co-workers.

The really unfortunate thing is that in this great opportunity to start companies that we've been presented with-- so many are unprepared to do it. No savings, high cost of living--because they bought large houses or apartments in the boom.

I could use some co-founders, actually.

[Adam Smith]

Rhetoric aside, headbanging aside, what types of policies can be implemented in the real world to help Americans who lose their job to workers in poor countries.

Discussion just began at http://techpolicy.typepad.com/tpp/2004/02/what_to_do_abou.html

I'd love to get your guys opinions
Adam

Short list, so far...

For the recently fired:
- A strong safety net, with unemployment and health benefits
- Strong re-education, training program so people get the latest skills
- Support for helping find new jobs (although I'm skeptical about this because of Monster.com, and that most good jobs are gotten through social networking)

Education and research
- Strong K to 12 education system
- Continue American leadership in its university and community college system
- Strong government support for both basic and applied research to keep America at the leading edge of the technology curve

Keynesian
- Create government paid jobs in slumps

Tax credits??-
Don't give tax credits to firms who outsource. OK... I'll be honest, I've heard this about a million times, but never have seen the underlying facts, can anyone enlighten me here?

Free marketeers
Take no action, allow for lower cost of goods and services in US to create wealth and let the market take its course. (we've seen that, politically, this don't fly)
Recognize that more job loss has happened due to technology, then all the Indians and Chinese put together.

I know there's got to be more then this... this list just doesn't seem to cut the mustard.

[MattS]

"I really don't know what to say to these people who are out of work."

Well, obviously you don't, and that's why you aren't going to convince anyone of anything but your own selfishness on this front. I'm not saying you are selfish, but preaching free trade which benefits you while admitting that the costs are borne by others for whom you have no sympathy or solutions seems a bit, well, self-serving.

The obvious move here is to help displaced workers with health care and education, like Robert Rubin suggests. This is beneficial on two counts. One, it's more efficient if people are healthy and can switch jobs without a switch threatening the livelihood of their family. Two, the political support for free trade is totally undercut by the lack of support for displaced workers. Where do you think the demagoguery comes from, if not the anguish of workers whose lives are destroyed?

I'm Harvard educated in economics, but I'm consistently surprised by the ignorance of the free-trade-at-any-cost-crowd. Obviously, free trade is a good thing, and industries should be placed where they can be done at lowest cost. But it's not wholly a good thing, and the flip side is that people are angry that their lives are being wrecked by unseen forces; it's easy to pin this on the foreigners taking their jobs. It isn't necessarily true, but it's pretty obvious that free trade doesn't benefit everyone, and if you expect political support for free trade and expect our politicians to not pander to those destroyed by large economic forces, you can do better than to say that we should pursue a policy which helps wealthy VCs and the resulting unemployed should be less lazy.

Jay,

Start a company? What are you talking about? Most of this country doesn't have a college education, let alone the small amount of capital to outlay on incorporation. They are struggling with credit card debt and health care costs.

Adam,

Those are worthy points to discuss, and your list is great so far.

[Dhrumil]

This is kinda interesting:

FROM: YAHOO BIZ-NEWS
E-LOAN Gives Home Equity Customers the Choice to Participate in Indian Outsourcing Program

Testing Shows 86% of Customers are Opting to Participate in the Program

http://biz.yahoo.com/prnews/040301/sfm067_1.html