I read a really short post on another blog about a recent West Wing episode dealing with trade and globalization. The author of the blog said the show was trying to make a point that "globalization was good in the long run, but in the short run it is going to hurt people. Those people will be Americans losing their jobs to cheaper labor in different countries." One of my co-workers tried to explain to me once that it is actually good for people in America when lower paying, production jobs are moved to differenct countries because this creates opportunities for those people to get higher paying, white-collar jobs here. And it allows more people in the U.S. to be creative, pursue education, and come up with technological advances. I guess these would be the long-run benefits to our economy in addition to the long-run benefits to the global economy of globalization.
4 comments:
I think the arguments here are generally correct.
I wouldn't say that the process of sending jobs oversease creates opportunities in and of itself. What is important is that one part of the economy is creating opportunities for people to make more money while another is freeing up workers to go into those areas.
This is closely related to the post above this, and my comments there about Schumpeterian growth.
Here is my take on the comments by Lizzie and Kid.
No one is claiming that outsourcing is good for the people who lose jobs here. That is a big problem. Recall how in the first week of class I talked about the distributional problems associated with business cycles - most people aren't hurt seriously in recessions, but there is a small minority that is hurt severely.
What is being claimed is that the evidence is very strong that countries that don't discourage outsourcing or insourcing do quite a bit better than those that do discourage it. The theory behind that isn't perfectly solid, but tends to indicate that this is because the process of preventing outsourcing leads to better opportunities being foregone.
But, there is an ethical dilemna here. Is it OK to harm individuals for the betterment of a larger group? There are a variety of not very good answers to that sort of problem. Most of them revolve around whether you directly harm people. Philosophers call this a lifeboat problem. If you have an overloaded lifeboat, it is one thing to choose people to jettison, but quite another to not rescue people who let go of the boat.
Another idea to chew on is that governments typically are much more interested in punishing firms that outsource, rather than encouraging new firms that might hire the workers that lose their jobs. Is that right? If it isn't, does it tell us something about our government that perhaps we ought to change?
BTW - I also have a brother (age 49) who has been hurt by involvement in a dying industry (and a dying locality).
Dr. Tufte said:
"I wouldn't say that the process of sending jobs oversease creates opportunities in and of itself."
I agree. I think that when jobs are moved overseas, it serves as a motivation to gain more education and obtain higher paying jobs. But the mere moving of jobs doesn't mean they those obsolete workers will automatically get a better or different job.
Once again, the problem is distributional consequences. On average this is a good thing, but for many individuals, it isn't.
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