I've posted a couple of rants recently (1|2) about some of the stupider things people have said on the subjects of trade and 'offshoring' (among which, this is my current all-time favourite). So I figured, why not go for a hat-trick?
What these economically illeterate comments fail to acknowledge is that trade is not a zero-sum game. That's why everyone stands to gain from it. But don't take my word for it. According to McKinsey's conservative estimates (also reported on CNET), for every $1 of spending sent to India, the US gains at least $1.12 (in addition to the $0.33 that India gains). The US gains come from:
That last point is crucial, of course. The US economy has proved very flexible and its workforce is highly educated, which means that it's well equipped to move up the value scale. This is exactly what it has always done — to even greater effect than Europe and Japan. But at the indivudual level these wrenching changes are often extremely painful and people do get left behind. Governments and companies therefore have a geat responsibility to use some of the 'offshoring dividend' to support and retrain those directly affected.
But the overall long-term benefits to the world are so large that no one should seriously be arguing against global outsourcing. Yet quite a few otherwise intelligent people do. Sad isn't the word. It's closer to being tragic.
Posted by timo at October 26, 2003 06:20 PM | TrackBack