A SANE ASSESSMENT OF "OUTSOURCING"
Brad DeLong provides a clear-eyed analysis of the latest economic panic. For those who haven't been paying attention, high-tech pundits have suddenly decided we're doomed because of "outsourcing"--a.k.a. hiring engineers in other countries. Read the whole thing. Here's a sample:
Remember: few would be worried about "outsourcing" if the U.S. unemployment rate were still close to four percent, rather than at the above six percent level that it is. To the extent that a structural cure is being proposed for what is really a macroeconomic problem, do not expect it to end well. And remember: a network-design job artificially kept in Sacramento when it could be done more cheaply in Singapore produces extra income for a network engineer in Sacramento, but has costs as well: in a diminished capital inflow that reduces construction and the earnings of construction workers, in higher costs for businesses installing their networks that shows up in lower salaries they pay their workers, in lower earnings and stock prices for HP. Given the all-thumbs hand the U.S. government has to try to guide industrial development through tools other than maintaining the infrastructure of a market society and the provision of basic research and other public goods, it is hard to imagine that the costs to the country as a whole will not greatly outweigh the benefits.
Sometimes I feel like we're reliving the late '80s/early '90s fad for "declinism," as though nobody had learned anything about how economies work in the intervening years. Every time there's a recession, pundits discover the "end of work." (Looking for the American middle class? Try "red America," where you don't have to make six figures to buy a house and educate your kids.)