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February 21, 2004
Where will the new jobs come from?
A reader made a comment to my post on outsourcing referring to the human costs of outsourcing. There's no question but that dislocations cause real material and psychological damage--I don’t mean to diminish that. But you are not on the side of the righteous by advocating policies that will cost more jobs in the end than it will save. Economists from the left and right acknowledge the net costs of protectionism. If companies aren't allowed to keep costs competitive then they will face mortal competition from firms outside the US that will--resulting in even more jobs going oversees. Carly Fiorina, despite being perhaps a bit impolitic, is right to fight for outsourcing: if HP is prevented from outsourcing then the entire firm will be at peril from overseas competitors.
Whether we like it or not, in our global economy these services will go to where they can be accomplished most efficiently--the question is do we want to preserve US industry, and the jobs that go with it, in the process? We don't do the struggling families in the rust belt any favors by damaging the competitiveness of US industry and strengthening global competitors.
While I agree that there is a problem, the answer isn't protectionism, it is in fostering new job creation. Every month 8 million jobs are created and lost in this country--when more are created than lost (as has been happening for a while now) we have net job creation. If the state steps in to try and stem the tide of job loss it will have a greater impact on the other side of the equation--job creation. The better solution is to foster job creation--read this blog for my ideas on how.
And see this piece by Virginia Postrel in the NYTimes Magazine about where the jobs will come from.
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Virginia Postrel recently gave her vision of the future of work. Unfortunately, it was short sighted and unrealistic. That doesn't mean the anti-offshorers are right though. Most likely we will do OK although there will be dislocation and unpleasant... Read More
Virginia Postrel recently gave her vision of the future of work. Unfortunately, it was short sighted and unrealistic. That doesn't mean the anti-offshorers are right though. Most likely we will do OK although there will be dislocation and unpleasant... Read More
Interesting to read in today's WSJ that Vinod Khosla of Kleiner Perkins suggests that India go to the WTO to prevent the US from doing anything on outsourcing in this charged election year. The article indicates that VK is a Republican.
Protectionism will only give people outside the US more reasons to dislike our country, our economic might and our policies. I think Seimens employs more people in the US than Microsoft employs worldwide. What are JFK and company really thinking?