Saturday, January 31, 2004

Outsourcing again... 

I'm not up to speed on the outsourcing literature but I several points jumped (fell) out at me from Geoffrey's post below...

3) Amazing, too, how much more sympathetic people are when a job is lost to a foreigner versus to a machine. The huge increases in productivity made possible by IT, mechanization and other technological upgrades have always cost jobs, but few claim that we should role back that process analogous to protectionist arguments for roling back outsourcing.

I assume the first sentence is a bit of a typo: he intended to write "Amazing, too, how much less sympathetic people are when a job is lost to a foreigner than a machine." Beyond that, though, I think this is a good point. There seems to be no good reason why one type of productivty gain (job loss) should be seen as OK, or even good, while another should create such problems.

5) Not noted in the article, but perhaps as important, is expanding the base of shareholders, or owners of assets, within our economy. Many of the dividends of outsourcing accrue to these parties, so finding ways to distribute those benefits to a wider investing class would seem valuable. Wealth building strategies, such as targeted increased incentives for personal saving and investment, or perhaps the use of employee stock options triggered by outsourcing's productivity gains, might enable greater numbers of individuals here to profit. I wonder if it's possible to "protect" our workers not by cravenly holding onto jobs in a way that makes businesses less competitive and less capable of achieving the very success we want for them, but by making more owners out of our workers in the first place. There asset would be a useful hedge against potential disrupted employment.

In theory I think this idea is fine, in practice bogus. The basic problem is that you (an employee) needs a lot of equity in a company before this equity can be a significant hedge against job loss. Put another way, the amount of money I need to invest before my investment income exceeds my wage income is really significant. Stock options, unless you're a programmer at an early internet company, seem unlikely to match what most middle class folks mage in wages.
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