Heads I Win, Tails You Lose
At the Globalization Institute, Brian Micklethwait calls outsourcing a "win-win proposition." Sounds great! Except for a few niggling details like this (via Progressive Review):
So everybody wins except the American workers who lose jobs to government-subsidized overseas competition. And the Indian taxpayers who subsidize the infrastructure. Everybody else (i.e., the businesses--the only people who count) wins.
SUNIL RAMAN ,BBC - The Indian city of Bangalore must improve its infrastructure if it wants to hold on to vital IT business, company executives have warned. The heads of some of the biggest companies in India's IT industry have asked the government of the southern Indian state of Karnataka to improve infrastructure in Bangalore, or they will move their businesses to other states. The high-profile delegation included bosses of top Indian IT companies Wipro and Infosys, as well as representatives from Dell, IBM, Intel, and Texas Instruments among others.
So everybody wins except the American workers who lose jobs to government-subsidized overseas competition. And the Indian taxpayers who subsidize the infrastructure. Everybody else (i.e., the businesses--the only people who count) wins.
posted by Kevin Carson | 10:28 PM
7 Comments:
Kevin,
Well, the business interests certainly win, but so too does the overwhelming mass of American consumers. I agree that job losses due to government intervention in foreign markets is disagreeable, but it's untrue and unfair to say that ONLY businesses benefit.
The supposed saving to the American consumer overlooks one of the most important aspects of libertarian thinking which is TANSTAAFL. (There Aint No Sech Thing As A Free Lunch) While you can buy computers cheaper, you still will end up paying in the long run for the effects of Americans put out of work and whose lives are degraded, whether it comes in the form of welfare and unemployment insurance, medical costs, mental institutions or jail. Right now you can get a new computer with all the trimmings for $800, I would rather pay say, $1100 and keep the jobs at home, and I think most people would if they though about it. Anyway, most of this viciousness will end when Peak Oil really hits hard and it costs too much to ship all that cheap crap over here. I wait for that day…
The consumer benefits from cheaper goods when they're produced on a free market. But the cheaper price, in this case, is offset by reduced job security and reduced bargaining power for the average worker.
Kevin and Larry,
You have both made empirical claims without any supporting evidence. Kevin, you say that cheaper prices are "offset" by decreased bargaining power and reduced job security. Please provide evidence to support your thesis that decreased prices are “offset.” Larry, please also point me in the direction of a study that indicates government payments to those who have been laid off are even close to the savings coming from lower prices due to outsourcing.
Jude,
You're asking for empirical evidence to demonstrate what should be self-evident on a priori grounds. State intervention to make prices lower than they would be in a free market--like any form of coercive state intervention--is a zero-sum situation. Any such benefit provided by the state must come at somebody's expense. Only voluntary transactions are mutually beneficial.
Jude,to my knowledge there are no studies on this , and it would be a good idea for someone to do one. Nonetheless there are studies relating social problems and mortality to unemployment and studies that show the deterioration of working conditions and wages. If interested, you can Google for these. Nor can you reduce costs to unemployment payments alone. The general social costs are much higher. It may well be true that at this moment there is a trade off between cheaper consumer goods and the social costs of lower wages, unemployment etc. But we do not know what the long term costs will be. Should mass civil unrest result, those cheap computers and TVs will look pretty expensive. Furthermore, how does one monetize suffering?
Sorry to interject. The businesses would have moved their business to the lowest bidder, and I don't think that means the United States or India. So US workers lose their jobs either way. I hate subsidies, but as long as we have separate countries we will have them as well as militaries. I think an expanded Libertarian world view should be considered to deal with the fact that a "subsidy exuberant" state has an unfair advantage in dealing with more "free market" states.
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