I don’t want to trivialize the profession of Economics, but can someone remind me why outsourcing is good for us? When I see an economist on TV explain the merits of outsourcing, I understand right then, but am left scratching my head in frustration as the segment ends: “What did he just say?” I ponder, trying to remember. how the plot developed
First, it was mentioned that the world seems smaller and more interconnected since the advent of the Internet, Twitter and Facebook. So far so good: I pat myself on the back and concentrate on the discussion. Then another point was offered about the Stone Age coming to an end not simply because we “ran out” of stones, but because we found new and more efficient ways of doing things. Now I am beginning to understand it. That little word “efficient” actually plays a big part in how the outsourcing case is advanced—after all, who could argue with efficiency? So efficiency means the ability to do a task or produce an item better, faster, or cheaper or some combination of these three with a guideline: the word cheapest should be included. We can match cheaper with faster or better, and sometimes depending on the item produced, the cheapest can also appear on its own.
At this point I gather that if we can’t produce items more “efficiently” then we would be dwarfed by those who can and therefore we need our products to be made in regions that are more “efficient”. We are told that outsourcing is good for shareholders and consumers, is inevitable, and should be embraced and celebrated by all. This is where I start to squint and get disoriented.
During one of these segments, my gutsy TV host, who I suspect keeps his resume up to date, asks, “Tell me, when millions of Americans lose their jobs in cheaper jobs abroad, who will be left to buy our products?” ?”. He yelled at the television, “Hold him down and don’t let him get out of this.” “Good question!” answers our magician. “There are many emerging markets, including India and China, and the bet is that we will sell many times more of our goods and services to these new areas than we currently sell at home.” The host takes a deep breath and swallows. He picks up the pace a bit. “Let me understand something. So, in order for our products to be made abroad, we obviously have to reveal our trade secrets and manufacturing processes, correct?” Our magician nods, anticipating where this is heading. Our host continues, “So what’s to stop a foreign company from stealing our intellectual property, making some cosmetic changes, perhaps making the item more ‘efficient’ as you put it, and selling us the knockoff for 40%?” % less than the original, consumers should think it’s a good deal, right?” Our wizard offers a few words about the tightening of international standards regarding intellectual property laws and the existence of international trade bodies tasked with remedying such disputes.
Our intrepid host is not done yet. He dives in, “We now live in a world where knowledge and know-how are spreading to every corner of the planet. What do you think would happen to our GDP as cheap labor centers start to compete with us to higher and higher levels in the food chain of basic products? Yesterday it was bicycles, snowplows and cars, today passenger planes and satellites, where will it all end?” The wizard shrugs, saying, “It’s taken us a long time to become the powerhouse we are today and I suspect others will face similar challenges in their ancestry.” The presenter, leaning forward and responding to the voice in his headset, looks directly into the camera and says, “Thank you to our guest. It’s actually been a lively discussion. Looks like we don’t have time today, please join us again.” sometime”. want?”