Home > Uncategorized > Outsourcing


I got in another argument about outsourcing a few minutes ago. It’s really amazing to me that yet again a simple bit of economic fact goes unheeded by so many.

The question is not whether outsourcing ‘costs’ us jobs or not. Jobs do not exist to keep people busy they exist to produce things of value, goods or services. Keeping people busy (and hopefully quiet depending on the person) is just a fringe benefit. The real question is this: is outsourcing work to someplace or someone cheaper or more effective better or worse than what you are doing now?

If the answer is worse, than you keep doing what you are doing, there isn’t any reason to outsource. If it is cheaper to produce cheese in China, but it would spoil before arriving in Augusta, Maine, than there is no reason to do it, even if it is cheaper to both produce it there and ship the cheese here.

If the answer is better, than you should outsource. It makes no sense to pay a software engineer 150,000 dollars to do the same job a Indian software engineer can do for 20,000 (even if he does it worse, provided that the decrease in quality is deemed acceptable to the decrease in price).

But what if it ‘costs us jobs’? If it is more cheaply done someplace else, than the person who is doing the work here is being overpaid and under-utilized and would certainly be better off, from an economic and societal point of view doing something else.

What if we are not outsourcing, but an invention is created than can analyze MRI results for a fraction of the cost? It will put a bunch of radiologists out of work but they can retrain and move to doing something more useful. No one would argue we should continue to use radiologists to do this if this new invention can do it just as well and cheaper. Right? This health care! We need to lower costs and this invention will do it.

Well hold your horses, because this new invention is a computer (such as the one I am using right now) and the internet (the very same one I am using incidentally, but I can share) and Asian radiologists. The data would be sent to them, they would analyze it and send back the results. In other words the work will not be feed into a magic machine but simply outsourced someplace cheaper. Yet the results are exactly the same.

If you are like Charles Schumer than you fail to see that it is exactly the same and provides exactly the same benefits to us and rather more to these Asian radiologists.

Outsourcing is not a bad thing. It is a good thing, the vast majority of the time for everyone involved and no different than a new invention making the jobs in question obsolete. It frees up people to do more productive things, because that’s what jobs are for, production.

Categories: Uncategorized
  1. 2011/04/02 at 09:13

    Well put! I would go further to say that all the same principles apply to immigrant labor within the US as well.

  2. 2011/04/02 at 09:48

    Too right they do!

    If I didn’t feel like it was too long already I would have said that it is another hit against the minimum wage. Given that if a company has work worth 6$ an hour and has to pay someone 7.50$ an hour to do it by law, than a machine will find it much easier to replace that person if it can do the work at 7.49$.

    Whereas if I’m doing 6$ worth of work, at 6$ per hour than the magic 7.49 machine isn’t likely to take my job.

    Minimum wage destroys jobs!!!!!

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