Thursday, January 27, 2005

Should we save jobs?

Walter E. Williams
We could probably think of hundreds of jobs that either don't exist or exist in far fewer numbers than in the past -- jobs such as elevator operator, TV repairman and coal deliveryman. "Creative destruction" is a discovery process where we find ways to produce goods and services more cheaply. That in turn makes us all richer.


That same principle applies when it's outsourcing serving as the engine for creative destruction. Daniel W. Drezner, assistant professor of political science at the University of Chicago, discusses outsourcing in "The Outsourcing Bogeyman" (Foreign Affairs, May/June 2004). Professor Drezner reports that for every dollar spent on outsourcing to India, the United States reaps between $1.12 and $1.14 in benefits. Why? U.S. firms save money and become more profitable, benefiting shareholders and increasing returns on investment. In the process, U.S. workers are reallocated to more competitive, mostly better-paying jobs.

Drezner also points out that large software companies such as Microsoft and Oracle have increased outsourcing and used the savings for investment and larger domestic payrolls. Nationally, 70,000 computer programmers lost their jobs between 1999 and 2003, but more than 115,000 computer software engineers found higher-paying jobs during that same period. By the way, when outsourcing doesn't work, companies backtrack, as have Dell and Lehman Brothers, which have moved some of their call centers back to the United States from India because of customer complaints.

Dr. Williams on the outsourcing question. Close to me because my brother outlaw (I'm engaged, not married) couldn't find an IT job, and said he was voting for the Frenchman because of it. He has started a new career and is doing well, but it is always traumatic to change careers (I've done it four times). BTW, I for one don't like to be calling Bombay to fix a computer problem, but if I have a problem, I want it fixed, and I could give a flying whatever if I'm speaking to Roger or Rajib.

"Outsourcing" will always be with us. I had a dear friend who died several years ago. Tom was a staunch Democrat, a UAW member, and a Union guy. He made a statement one day that "I'll never buy anyting not made in the USA". To show him the folly of that statement, I simply asked him what time it was on his wristwatch. He gave me the time, then I told him to look at the watch. Of course it was a Seiko or Citizen. Japanese made. He wasn't happy, but he was always willing to laugh at himself.

I'm sending this post to another Tom (my brother outlaw) so he can slam me in the comments. Tom, another story. My first two cars were a Sunbeam Alpine (British POS) and a Volvo (Swedish good car). I finally, after taking years of ribbing from some of my friends, bought an American Car. An Oldsmobile Cutlass. About I year later I was polishing it, and found that it was made in Canada. Oh well.....


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