Categories
economics financial

Outsourcing

I promised a separate post on outsourcing, and here it is. I started to think about this a little more carefully in the context of income disparity. Outsourcing was the one thing I could possibly think of where someone in the top 1% could benefit at the expense of someone else. I do not believe that outsourcing is responsible for the numbers I have seen thrown around when it comes to middle class wages and I’ve come to the conclusion that even if it was responsible, it wouldn’t bother me.

 

I’ll start out by admitting to something that isn’t all that popular. I am at a loss as to why an American worker deserves a job any more than anyone else. Outsourcing doesn’t cause the loss of jobs, it causes a shift in who has the job. Most of the outrage over outsourcing really boils down to who they think deserves a job. I’m not going to pass judgment on that, certainly not from so far away. I will point out that phrases such as “They can’t compete,” should explain why outsourcing is done at all…

Anyway, if outsourcing is responsible for the 7% or so that the middle class’s wages have supposedly gone down in the US, it’s only fair to look at the increase in wages in other countries that outsourcing is responsible for. If you look at the countries most closely tied to outsourcing, India, China, Vietnam, etc. you will see an unambiguously positive rise in wages over the last 30 years. Those wages have gone up much more than 7%. This is why I’m not so worried about outsourcing in general. People were employed and products were made at lower costs. Some workers were made worse off, some were made better off, everyone else benefits from lower costs.

Is there a moral aspect to this? I dunno, it’s difficult to parse this stuff out in general. Yes, people here in the US lost their jobs. Of course they could just have easily lost their jobs to machines. On the other hand, other people got jobs and had their wages go up. Someone else could have made money on all of this, but not necessarily. Many things were outsourced just so the company could stay in business.

Bottom line is this, to complain about a 7% drop in wages in isolation to the rest of the world is a bit short sighted. In any case, I gave some other reasons why, if wages did go down over the last 30 years, it probably isn’t due to outsourcing and isn’t that big a deal anyway.

 

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