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Outsourcing is good for you

The daft furor over the outsourcing of job to India (and other places) is just another example of how amazingly primitive the understanding of economics is which prevails amongst the media and political elites in the USA (though no worse than elsewhere I might add).

The same troglodyte notions that lead people to think that cheaper foreign steel being imported into the USA is a bad thing (which is just another way of saying that manufacturing cheaper cars, homes and ships in the USA are a bad thing), lead the same people to in effect say that allowing Americans to purchase cheaper computer programs and requiring them to pay more for call center services is also a bad thing.

President Bush went on the defensive Thursday on the issue of outsourcing after a firestorm erupted over an aide’s contention that free flow of jobs, including the migration of services to India, benefited the US economy in the long run.

Although the aide, White House economic adviser Greg Mankiw, was merely echoing what was stated in Bush’s economic report to Congress, Washington’s political class came down on him like a ton of bricks.

Lawmakers from both parties, including Republican House Speaker Dennis Hastert, demanded he be fired. The criticism forced Mankiw, a Harvard economist, to clarify that he did not mean to support or praise loss shifting of US jobs overseas.

Sure, if your IT or helpdesk job as just been outsourced to Bombay, it might seem like A Bad Thing for you personally… but then that is just as true if your job in New Jersey has just been taken by someone in Biloxi, Mississippi because your company has just relocated to where costs (and taxes) are cheaper… the overall effect is that companies, and outsourcable functions of companies, will go wherever it makes sense for them to go… and so they should!

However notion that India has such a comparative advantage just because they have produced a reasonable pool of IT and call centre people who will work for far less than their counterparts in California does rather miss the obvious fact that India is far from suitable for all or even most IT or call centre jobs. Troubleshooting a network in Texas is rather hard to do from New Delhi and to think people in Asia will have such a deep understanding of American (or British or European) cultural mores that all help desks and call centres will end up there is rather bizarre. Companies who out-source unsuitable jobs will end up being punished by the market if their quality falls below the point which lower costs can offset such a fall, and some jobs are very quality sensitive indeed.

It should be screamingly obvious that stopping people in India (and elsewhere) from exploiting their competitive advantages does not only hurt them, it hurts everyone who is a customer for those products. Rather than engaging in unbecoming grovelling, George ‘Steel & Lumber Tariff’ Bush should redeem himself by responding to the Troglodyte faction by pugnaciously asking them “So, what exactly did the American consumer do to you to make you hate them so much, guys?”

If a company is not free to run their business and the location of the people who make it work, to best suit the company’s interests, who pays in the end? The company’s customers do, of course. And that means you.

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59 comments to Outsourcing is good for you

  • billg

    There’s a strong element of deliberate chicanery mixed in with all that “primitive” understanding of economics. It comes from people who know exactly what’s going on with outsourcing, and who know the real cost that consumers pay when politicians try to stop money from flowing where it wants to flow.

    But, no one wants to listen to an economics lesson when their job has been pulled out from under them. That won’t pay the bills. No one who’s been sacked will take solace in the knowledge that they’re one more proof of the viability of free trade. If the choice is between a job for me and a job for some other guy, guess what people will choose.

    Politicians are expected to create jobs for their constituents, not lecture them about economics. Telling a newly unemployed voter “that’s how things work” is a sure way to lose an election.

  • Indeed… which is why I am so contemptuous of democratic politics.

  • All that said, the number of politicians, bureaucrats, people who work for NGOs, and other people in responsible positions who really should know how things work but none the less don’t is really quite impressive.

  • speedwell

    Why do we allow politicians the vote? Heck, why do we allow any government employees the vote? Isn’t that a conflict of interest problem?

    … in your answer I suppose you can tell me (I’d appreciate it) what, exactly, in the post and the above comments brought THAT thought out…

  • “… I am so contemptuous of democratic politics.”

    Cobden and Bright weren’t. They knew they had to make the case for Free Trade and win elections. This should be no surprise. The “victims” of Free Trade know who they are and are active in attempts to protect themselves — if necessary by seeking help from the Government. Such behavior (and all such rent-seeking behavior) is, in fact, rational self-interest, even if it is not wealth-maximizing for society at large or in the long run. And we good libertarians expect people to act in what they perceive to be their self-interest, after all, and not concern themselves overly much with society or long runs.

    The beneficiaries of Free Trade, on the other hand, are often diffuse, or not yet existent. So anyone in favor of Free Trade needs to mobilize support for it. (This is a classic Mancur Olson-type situation.)

    Therefore, the struggle for Free Trade is is a political process which NEVER ENDS, never will end, and never can end.

    In the case of outsourcing, we have an unusually sophisticated and articulate and well-connected group of “victims”, who are angry about losing their jobs. They have mouths to feed and mortgages. They are not going to just shut up because as a matter or economic principle, their hardship is just hard cheese they’ll have to choke down.

    Contempt for democratic politics is fine. Whatever tweaks your subjective utility function is fine. But if Perry or anyone else want certain public policies to prevail, it is necessary to engage in politics, or at minimum, try to educate and inform those who do. Or, I suppose, get yourself appointed philosopher-king with plenary legislative authority. But that post is not likely to be created, or if it were, it would not be filled by anyone who agrees with the positions taken on this blog.

    We had a bunch of posts and many, many comments on this topic on the ChicagoBoyz blog a few weeks ago. Bottom line finding — it is unassailable that outsourcing is a good thing economically, and it is unassailable that the persons harmed by it are angry and they vote. Same story, different century.

  • Mark

    What Lexington said… 🙂

    -Mark

  • Michael DeMarchi

    Well, no wonder the peasants revolt when philosopher-kings like Perry de Havilland write them off as primitive troglodytes.

    I think this may explain why democracy doesn’t work for Perry. (Hint: it’s the contempt, stupid.)

  • Constitutional Republics which put broad swathes of civil life beyond the ready reach of politics are a far better idea than democracies in which the unfettered will of the people rules… my views on democracy are little different to those held by a great many of the people who are thought of as the fathers of the US Constitution.

  • billg

    I’d much rather have 300 million people I don’t know and have no reason to trust making decisions for me than one person I don’t know and have no reason to trust.

  • Laid Off

    I commend you, Perry, for your magnificent intellectual company, but you’re just being lazy. The point is, you didn’t really show why outsourcing is such a good thing, or why one ought to be as contemptuous as you are of contrary views. You just wave your hand, toss around a few supercilious remarks, and recede into the mists of Correct Economic Theory. Well, sorry, not good enough. Intellectually honest people aren’t cowed when liberals play the “you’re stupid” card, and they aren’t cowed by you either. This is a difficult and complex issue — one that deserves a real hearing. If you aren’t up to the task of making a cogent argument, stay out of it. No one needs another know-it-all spitting venom in their face.

  • billg: but is that the only choice? I would hope not. What of the idea that a state should have the political powers at its disposal severely limited by a liberal (in the traditional sence of the word) constitution, so that way the only person making decisions for me in most cases is… me. That was the idea, however imperfectly implemented, that was at the heart of the US Constitution. The only alternatives are not monarchic dictatorship or democratic mob rule.

    Britain is a far more democratic nation than the US, but I would argue that this fact is what lies at the heart of many British problems and why British civil liberties are so at risk right now. The extent to which older American notions of constitutional restraint have decayed into less fettered democracy and been replaced by democratic entitlement politics similarly marks where the USA has developed or exacerbated serious political, social and economic problems.

  • DSpears

    One of the new troglodyte constructs is this mythical concept called “absolute advantage”, a sort of play on words of the Ricardo principle of comparative advantage. Some of these people are educated enough to use all of the lingo to make their illogical theories sound intelligent. Many of them, particularly those directly involved in politics, may very well know the falsehoods they are perpetuating. Others are just educated enough to get themselves in to trouble, kind of like knowing a little karate. Lou Dobbs using his 30 year old memory of a college course in economics to argue that David Ricardo never anticipated unlimited factor mobility because he lived before technology.

    Now the absurdity of this concept is that if anybody ever achieves absolute advantage all trade will cease to exist. The entity that posseses such a thing will have nobody to trade with beacuse it will own everything of value and everyone else will have nothing of value to trade. Anything less will still lead to conmparative advantage, and hence trading.

    It is also hilarious that people in America would be afraid that a country that can’t even feed it’s people much less provide sanitation and electricity, would somehow in short order be able to gain an “absolute advantage” over the US. It was just as absurd 15 years ago when many Americans had the same fear of Japan, and Japan was in a much better position to achieve this unlikely result than India or China.

    My hope is that this nonsense will die down as the economy recovers, like it has in the past. Unfortunately like the last time these subjects reared their ugly heads, the economy took too long to recover and gave us Bill Clinton circa 1992 with “fair trade” and “industrial policy”. The good news is that with his ever maleable convictions, Bill Clinton circa 1996 was an unabashed free trader. Hopefully the same will happen again (the aprt where protectionism is killed by economic growth, not the Democrats regaining teh Whitehouse part.)

  • Economic theory cannot define good. You have implied that the economic benefit of free trade is good, presumably because it results in an increase in wealth on both sides (else why trade).

    But this is a hidden value judgement. It is not at all clear that increased wealth on both sides is always good.

    In theory, one can arrive at a situation where most Indians are better off and most Americans (for example) are worse off, since the theory doesn’t address who within those societies benefits.

    Ultimately, since intellectual capital is much less sensitive to geography than other kinds, free trade in cognitive processing may lead to a world wide levelling of wages in cognitive professions. Americans and Indians would make approximately the same amount of money, which is a great deal for the Indians and a catastrophe for the Americans.

    The total wealth in the system is increased (barring second order effects which, in fact, would become dominant if this happened quickly – see below). The total wealth of each side increased. But the wealth and income of the vast majority of individuals on one side of this trade goes way down.

    As Clausewitz describes war as a natural extension of political policy, I would argue that political action is a natural extension of free markets. Alternatively, one could say that there exists a market in government action and a payment system in votes.

    Put another way, if the economy delivers results which are too damaging to too many people, political action will happen. Not that it will necessarily be beneficial, but it will happen.

  • Laid Off: The case for free trade and laissez faire is really not that complex, but that is not the same as saying it is intuitive. The fact is that after many years of making it, I just cannot always be bothered to argue it from first principles every time. I do not argue such points out of a doctrinaire desire for ideological purity, for I care little for that sort of thing.

    I just think that the nature of reality is such that such political machinations work to the overall detriment of far more than they can even better. That the interests of workers here should use politics to distort markets to their joint and several interest at the expense of workers and consumers there is simply not reasonable or it is moral… and viewed from the perspective of any general economic weal, it does not make economic sense. Given that it is force backed, I see it as little different to criminal activity in fact. I make no apologies for occasionally sticking my tongue out at people who cannot see that.

    That a person looses their job is unfortunate for that person, but why is this economic reason acceptable but that economic reason not acceptable?

    Yet, the fact that forcing a company to not take advantage of cost savings will mean that company will be less competitive vs. a foreign company which is not thusly limited. And that it means more expensive products for its customers is quite frankly self evident… and so I really have no regret at pointing a bit of ridicule at people who cannot see that either.

    That statist have succeed reinforcing their case so often with exactly such tactics is also worth keeping in mind.

  • John Moore: you may be right that politics will intrude regardless, but ultimatly economic reality is pretty hard to resist. Capital will flow where it is best served, rather than to where political processes want it to go.

    That political action is a natural extension of free markets is a rather less clear contention if I understand you correctly.

  • Protectionism is always a bad idea. Just imagine how much things would suck today if politicians had been able to successfully protect the transatlantic cruiseline industry, or the trolley industry, or the coal fired stove industry, or the telegraph industry, or the horse industry, or the clipper ship transport industry, etc, etc, etc? Yeah, it would suck. No thank you, I’ll take progress and competition, if you please. Yeah, it sucks when people lose a job and have to move on to something else but this is how progress works, without change you have only stagnation.

  • billg

    Perry, a government empowered by an enfranchised population is not mob rule. Mob rule is the antithesis of democracy (or any other kind of government, for that matter.) Mob rule is anarchy. Since the only restraint on power possible in mob rule is greater power, it naturally devolves in the direction of a single power center ruling a disenfranchised population.

    Successful democracies aren’t those that allow the greatest number of individuals to do exactly what they want all the time. Those regimes won’t be able to resolve the conflicts that arise from the conflicting, but equally legitimate, interests of their citizens. As a result, a majority with shared interests will eventually rise to power by oppressing other portions of society with different shared interests. A successful democracy will resolve those conflicting interests in a way that benefits as many as possible. For that to work, however, individuals must forget about getting everything they want all the time.

    I don’t know how to measure if the UK or the U.S. is more democratic. Having lived in the UK for a few years, it seems to me that they’re about equal.

  • billg: with all due respect, please actually read what I wrote. I said nothing about ‘always’ getting what I want. I just do not want to have so much of my life regulated by others. Also anarchy is not a true synonym for chaos (though I am not in fact an anarchist).

    As for which is more democratic, please consider this: if the democratic representitives of the people wanted to make certain ‘hate’ speech illegal, in which country could that occur? The UK or the US?

    If the democratic representitives of the people wanted to simply ban and confiscate all previously legally owned handguns, in which country could that occur? The UK or the US?

    I hope you can see where I am going with this.

  • Michael DeMarchi

    I hate to have to point this out, but consumers only benefit from lower prices if they are consumers. In other words, if they have jobs.

    Perry treats consumers and workers as opposed categories. One benefits, the other gets screwed. That’s pretty simplistic. I thought markets take off when workers and consumers both benefit — when the consumption/production feedback-loop gets revved up.

    Apparently not. Or apparently it only matters if it takes place on a global scale. There indeed we see things revving up. Lost your job in Texas? Not to worry. Cameljit in Punjab can now afford those new shoes he’s been wanting. And not only that — the price of widgets just went down a nanocent! See how we all benefit? No? Shut up. Take your medicine.

  • It’s one thing for a large multinational company to outsource, but when a local company decided to outsource their customer support to India, that’s a problem. I like doing business with local companies because they are part of the community. Everyone’s economic well-being is tied together. But when a purely local company starts sending jobs to India, they are just shitting in their own bed.

  • Another point that is being missed about the whole India/China angle. All these IT people are relatively cheap because there is very little internal demand for their work at home. And that is changing very fast. And is, by the way, another brilliant aspect of technology and globalization. You do not need to achieve all the other steps of modern development, through industrialization and the birth of a middle class, to see the beginning of a high-tech class. You can start there, just like you can go straight from snail mail to cell phones. You can build both the technology infrastructure and the middle class from the top down. What that means, I have no idea. But what is possible seems certainly far beyond our rigid academic sociologic models.

  • billg

    Perry, I did read what you wrote, but I wasn’t responding to your specific points.

    I don’t know the answers to your questions about hate speech and guns. To me, democracy means allowing the people to vote, directly or through elected proxies, on the issues of the day. A democracy might decide to go either way on those two issues, and it would remain a democracy regardless. On the other hand, a dictatorship might also decide to go either way, but it would remain a dictatorship regardless.

    Of course, anyone whose speech was outlawed or whose gun was confiscated would feel their rights had been infringed. That would not change the nature of their government.

    To return to the subject of your post, Michael is correct. It isn’t ignorance of economics that motivates people to be angry about losing their jobs. It’s the loss of income and purpose. I’m sure even an economics prof would be upset if his or her job was farmed out to someone in another country. Economic dislocation hurts if you’re the one being dislocated, and no amount of rhetoric from politicians about how everyone will be better off in the long run will help you buy groceries. It is a foolish politician who tries to tell the unemployed that products they can’t afford to buy have dropped in price because their jobs where shipped elsewhere. People would rather have their jobs and higher prices than no jobs at all.

  • Verity

    I like Speedwell’s notion that people employed in the public sector should not be granted the vote. I think more thought should be given to how this could be presented.

  • Guy Herbert

    billg: Mob rule is the antithesis of democracy (or any other kind of government, for that matter.) Mob rule is anarchy.

    That’s wrong on both counts, I fear.

    Mob rule is the logical and practical consequence of democracy. A lot of smart Britons and Americans are still thinking of “democracy” as constitutional rule by detached, deliberate representatives, not the febrile totalitarian populism that has inexorably replaced it in a mass media age. Democracy only stays liberal while it isn’t fully democratic.

    Mob rule is far worse than anarchy, because the power of the state used to please the mob has greater reach and less predictable caprices than any gangster king.

  • Michael DeMarchi: I think BSpears answered your point rather well.

    billg: To me, democracy means allowing the people to vote, directly or through elected proxies, on the issues of the day. A democracy might decide to go either way on those two issues, and it would remain a democracy regardless.

    You miss my point completely. In the USA the Constitution means that the First Amendment makes outlawing ‘hate speech’ impossible regardless of how much the democratic tribunes of the people want to do that. Likewise the Second Amendment means that regardless of hiw many people vote for a nationwide handgun ban, is should (in theory at least) be blocked by the courts. Both however have indeed occured in democratic Britain. Now do you get my point? Britain, a Parliamentary Democracy is far more democratic that the USA, which a Constitutional Republic.

    This is why the notion that democracy = liberty is simply false. If my neighbours vote for my oppression, then I am still oppressed. Thus, I care little for unrestrained democracy. To the extent the USA is free, I would argue that it has vastly more to do with its constitution than the fact people can vote on things. In other words, it is because people can not vote on some thing that the USA has a broadly admirable liberal society.

  • Laid Off

    Perry:

    I just cannot always be bothered to argue it from first principles every time. I do not argue such points out of a doctrinaire desire for ideological purity, for I care little for that sort of thing.

    Fair enough. But I will add that “first principles,” being a philosophic term, is just the sort of language one associates with those who care a great deal for ideological purity — which makes your claim somewhat ironic.

    That the interests of workers here should use politics to distort markets to their joint and several interest at the expense of workers and consumers there is simply not reasonable or it is moral.

    Moral? Now you sound like some sort of transnational progressive. Why should I or anyone else sacrifice my job for your lofty market principles? I thought libertarians were supposed to act out of self-interest (this is a libertarian blog, right?). So here we have exactly that — a bunch of workers scratching and clawing to hold on to their livelihoods — and they’re immoral? You lost me.

    and viewed from the perspective of any general economic weal, it does not make economic sense. Given that it is force backed, I see it as little different to criminal activity in fact.

    Criminal activity! Those IT workers have a lot of nerve asking their elected leaders to represent their interests. Who do they think they are! Round the bastards up!

    I make no apologies for occasionally sticking my tongue out at people who cannot see that.

    Anyone that blind deserves what they get! Stick away!

    That a person looses their job is unfortunate for that person, but why is this economic reason acceptable but that economic reason not acceptable?

    Maybe because American jobs are good for Americans? (I’m sorry, was that politically incorrect?)

    Yet, the fact that forcing a company to not take advantage of cost savings will mean that company will be less competitive vs. a foreign company which is not thusly limited. And that it means more expensive products for its customers is quite frankly self evident…

    Let me ask you something. If an American company ends up employing all foreign workers… is that an American company? And if it is, why should I care how well it does? It doesn’t benefit me, now, does it? As for expensive products… if I don’t have a job, I don’t think I’m going to care very much how expensive they are.

    and so I really have no regret at pointing a bit of ridicule at people who cannot see that either.

    yes, yes, I see your point. People like that — fools! — deserve ridicule.

    That statist have succeed reinforcing their case so often with exactly such tactics is also worth keeping in mind.

    Who cares. I never heard the term “statist” before reading this blog anyway.

  • zmollusc

    Ahah! So cheaper sources of services and materials are passed on to the consumers as lower prices! I never realised! I wondered why all the things I buy have been getting cheaper and cheaper over the last 30 years. Quite frankly I am embarrassed by how much cash I have left over every month.

  • billg

    Guy: I don’t believe any state or government exists under mob rule. That’s why mob rule is the antithesis of government. Mob rule means no government. Under mob rule, more powerful individuals will eventually begin to manupulate others in order to bolster their own self-interests. This is the beginning of government. These individuals will come into conflict with each other, and power will tend to be concentrated in fewer and fewer hands.

    Perry: There is no necessary equivalency of voting and individual liberty. And, the structure of the American democracy — the Constitution — (which needs to be distinguished from the American government) does establish institutions and power relationships that protect individual liberties. Individual liberties expressed without restraint threaten the liberties of others who have different and conflicting interests. If not addressed, this tendency will eventually result in the destruction of liberties (if nothing else, via a majority that uses their democratic vote to oppress the minority). The American Constitution was deliberately crafted to balance and restrain these conflicting interests to ensure the greatest liberty for the greatest number.

  • rsasko

    Ahah! So cheaper sources of services and materials are passed on to the consumers as lower prices! I never realised! I wondered why all the things I buy have been getting cheaper and cheaper over the last 30 years. Quite frankly I am embarrassed by how much cash I have left over every month.

    Mostly true. And THAT is where the problem truly lies. Yup, we in the USA can buy oodles and oodles of cheap goods. We are awash in them. Except for housing, schooling, and a few other “luxury” items, life would be so perfect! When consumers in the USA can purchase a home for $40,000 please let us know. (One without wheels on it.) When that happens, outsourcing and free trade with Third World nations will be a good thing. Until that point, it ain’t.

  • rsasko: the fact that Americans have a standard of living that is the envy of the world largely because of vast amounts of fairly free trade with the rest of the world. Wal-Mart et al supplies blue-collar America and how much of that is made in the USA? I would guess that 90% of the people reading this comment are wearing some item of clothing or a watch made in China or the Philippines which would have been more expensive if made in the USA. I would also guess that a large proportion are using monitors made in Korea. The fact is all the jobs to produce those things were ‘exported’ out of the USA over the last few decades. Yet the USA continued on to become the economic engine of the world and develop new jobs in their millions. Forgive me if I think your understanding of how you have indeed benefited from trade with the Third World is rather out of sync with reality.

    billg: thank you for agreeing with the very point I was making. It is because of the constitutional limitations on US democracy that the US system works reasonably well: hence my (at best) ambivalence to democracy.

  • “Constitutional Republics which put broad swathes of civil life beyond the ready reach of politics ”

    This is always a myth. Politics exists because there is an organized desire for the government to go something. Constitutions can be amended, ignored, intentionally misread. They are mere parchment if they don’t represent an existing consensus in society. Our written Constitution bears virtually no relationship to what our courts do on many subjects. Still, it is better than nothing.

    The reasons why certain policies should be adopted and retained must be re-argued in perpetuity.

    Free trade, free markets, etc. are good things. These things are the result of a long political and legal struggle which lasted for centuries and which will continue forever.

    Economic freedom per se is not, however, to most people, most of the time, self-evidently good. Rather, most people, most of the time, assess how they are doing and what is good for them and their families. If they find themselves in trouble, they look for some protection or assistance withoug any consideration of whether doing so is long-run freedom maximizing, or whether their libertarian neighbors don’t want their taxes increased as a matter of principal.

    There will always be losers in the competitive struggle of capitalism. They will not submit to their fate upon being shown a page from Milton Friedman’s textbook on microeconomics. They will have to be persuaded to abide by the rules of the game, or defeated in a political process when they try to change them.

    Demonstrating contempt for the losers in the process is not a way to persuade them, or others, to your views. It is way to actrivate their pride and make them enemies of you and your views unto the third generation. Contempt for losers is a deep strain in libertarianism, Ayn Rand had a strong streak of it. A new product has come on the market, you are out of a job, you and your family are on the sidewalk — tough. The market has spoken, and your problems are your own. Fine. Think it. But if you speak such sentiments aloud, bear in mind that you have gratuitously made an enemy for life.

    But of course offended pride and resentment and the desire for revenge for an insult are not part of the “rational” world. Just the real one.

  • zmollusc: I wondered why all the things I buy have been getting cheaper and cheaper over the last 30 years.

    Which indeed the great majority of things have.

  • Lexington Green: Personally I am increasingly indifferent to the term ‘libertarian’ because it means so many different things to different people and certainly I could not care less what Ayn Rand thought. I am a social individualist and a Popperian if you insist on labels for me. Above all however I try to be one of the ‘shock troops of reality’ and I do not see my job as that of persuading people, but rather just writing about how I see things. That people disagree with me is not a bug, it is a feature and I certainly do not take it personally.

    I do get annoyed because if people cannot see how their prosperity is linked to free trade, and I can get a bit contemptuous because in truth the way I see it they are little different to armed robbers who use their misfortunes to justify that fact they use force to take from others… they just ‘contract out’ the force being use to a mafia-like group called ‘The State’. Yet if they loose their job, they are vastly more likely to find another one in a dynamic capitalist economy that a statist stasis based system.

    I realise most people can rarely be convinced to see beyond their most immediate self-interest and thus end up working to their own long term detriment. I also realise that what I write here is unlikely to convince people that their true self-interest lies beyond their next paycheck. Of course when one is one paycheck away from nothing, that is easier said that done, but that does not change the reality that politics is the enemy of prosperity. That my dislike springs from my seeing people who distort trade with politics as little different morally from armed robbers may not make me friends in some places but that is what I think.

  • snide

    Maybe because American jobs are good for Americans?

    i buy jap cars, koriean computers, italian clothes and american guns. why? because they are either better or cheaper. how does that make american jobs good for me? simple. it doesn’t. i buy what is best for me and so does everyone else and i do not give a flying fuck who makes it. that market pressure makes american companies find better ways of doing things if they want to compete. i have lost jobs and found new ones. spare us your whining.

  • “…if you insist on labels for me…” I don’t. I meant it only the small-l fashion which I think does apply generally to you and which I adhere to myself, though I am in fact a Burkean Conservative and Actonian Liberal and Hayekian libertarian and Jacksonian nationalist, etc., if I must have a label. Like Treebeard’s name, it might take all day to tell it all.

    You are not obliged to try to persuade people to do anything. Certainly not.

    However, if someone doesn’t argue persuasively for these positions, the ideas and policies you favor will NOT prevail. That is why I started out by mentioning Cobden and Bright, great free traders and great polemicists and great stump speakers and great political organizers. They did not imagine the benefits of free trade were self-evident, or that strong political opposition would evaporate unless strongly challenged.

    My further point is not that being disagreed with is bad. I’m a lawyer. Disagreeing categorically with my clients’ opponents is my bread and butter. But, even in those situations the tone one takes can have substantive consequences. One can disagree with someone who has lost a job and does not immediately perceive how being replaced by someone in a foreign country is “good”. You and I agree it is. He may even come to see it. But responding as an initial matter to such people with disdain hurts the cause of economic liberty (they do vote) for no positive gain.

  • Hi

    People care more about jobs than cheap goods. If politicans want to make outsourcing less painful, they need to find a way to do it with the minimum of disruption, instead of giving into greedy multinational corporations. The purpose of a government is to care for the people of it’s country and not those of other places. We can have very little affect on other places without actually invading them. How do you know a county won’t take it’s new found wealth and build a military industrial complex to attack others and gain world power? It seems to me that that is a terribly naive and superficial strategy from people who have lived in a safe comfy world all their lives. Our ancestors, on the other hand, came from dangerous places and knew the value of a strong and self sufficent country. Vanity, Vanity all is Vanity.

  • billg

    Perry, I’m afraid I don’t understand your ambivalence about democracy. Done correctly, it is the only form of government that won’t collapse into a struggle for authoritarian control.

    From where I sit, our drive to maximize our own individual interests will cause any form of government or social structure to devolve into an authoritarian regime, with power concentrated in few individuals, or only one, who successfully maximized their own interests by denying the rights and interests of everyone else. The only way to prevent the rise of authoritarianism and preserve as much of the liberty of every individual as possible is to create the kind of democratic social structures laid out in The Constitution. Of course, that structure includes limitations on individual liberties, but those limitations insure the greatest freedom for the greatest number. Absent those limitations on the abilities of individuals to maximize their own interests by minimizing the interests of others, democracy is only a way station on the road to authoritarianism.

    In other words, an unfettered drive to maximize everyone’s freedoms, without regard for conflicting interests, becomes a simple competition for concentrated power.

  • billg: you are just talking past the matter at hand. The issue is that the USA does not have unfettered democracy whereas many other countries do and thus are far more democratic than the USA. When I say I am not vastly impressed by the whole ‘democracy thing’ it is because I see how a limited (though not limited enough these days to my mind) democracy like the USA does better than parliamentary democracies elsewhere in the world in which the ‘will of the people’ (which really just means the will of the politically active plurality) is given far more power than is the case in the USA. The essence of the US consititution is not ‘limitations on individual liberty’ but rather limitations on the power of the polity. My contention is that this decaying into ever more democracy is not a good thing and more democracy means a more political society.

  • Lexington Green: try living in some other countries and you will quickly realise that for all its many and variegated flaws, the US system does indeed put far more areas of civil society off limits to politics than just about everywhere else (other than perhaps places like Switzerland or Somalialand). That much of the US Constitution is a dead letter does not change the fact much of it still is not. I have in the past airily dismissed the constitutional infatuation of many Americans I know as I find it annoying that it is so often used as an excuse for not examining the underlying (im)morality of most political process… but undeniably the US Constitution has proved a very useful tool indeed at preventing the complete overwhelming of liberal society by the periodic authoritarian impulses that seems to sweep through the USA like a passing fever every now and again.

  • sark

    What sillyness. The idea that only multinationals outsource overseas is just plain wrong. Our small specialist tools manufacturing company (120 employees) outsources about half our back office functions overseas (mostly India).

    It is also wrong that people care ‘more about jobs than cheap good’. They care about standards of living. Try telling them they have to pay $300 for their favorite Adidas shoes because Adidas has been forced to make them in the USA and you will quickly see how much they care about US jobs if they have to pay for them.

  • DSpears

    “People care more about jobs than cheap goods.”

    Maybe, but this is a false choice. Cheap goods are most important to the poor and especially to the unemployed (unless you make the absurd arguemment that the unemployed not long but anything). They allow people to spend less of their total income on the things they need and the things they want, and leaves more of their income for savings, investment or spending on goods and services that they could not afford before. This creates MORE jobs, not less. Through the magic of compounded returns, the economy grows for years to come.

    It is also a false choice to assume that protectionist policies even “save” jobs, they don’t. The best that governments could possibly achieve through protectionism is to spread job losses from a few isolated industries to the whole of the economy through higher taxes, regulation and prices. Then the downweard spiral begins: higher taxes and regulation in the name of “saving” jobs leads to slower economic growth AND higher prices. This in turn leads to retricted money supplies to control inflation. This restriction leads to even lower economic growth with more job losses, probably again blamed on foreigners which leads to even more protectionism (higher taxes and regulation) and the cycle continues….So in the naem odf “saving” jobs you have actually ended up destroying them and making everybody worse off in the process.

    Thanks.

    Now if your solution to the problem of people losing their jobs is to attack the root causes: Taxes, regulation, and America’s disfunctional legal system, well then I’m with you. But I would be in favor of that no matter what.

  • billg:

    Individual liberties expressed without restraint threaten the liberties of others who have different and conflicting interests

    This is an oft-repeated canard which is used to justify all sorts of assaults on liberty. “Expression” of my liberty “without restraint” cannot threaten your liberty, no matter what our conflicting interests, unless you presume a “liberty” to steal my property.

  • DSpears

    Upon further review, my typing skills leave a lot to be desired. This site needs and “edit” button.

  • Shawn

    The only way to stop out-sourcing is to resort to the use of force against people and their property. Any restriction on voluntary free trade requires the state to use force. The initiation of such force is always morally wrong. Its is morally wrong even if it is supported by a democratic majority. If a majority of people in my street vote to tie me up and steal my property, that is wrong, regardless of the fact that they got together and voted themselves the psuedo-right to take this action.

    As a morally based government has no right to steal private property, so it has no right to restrict trade.

    The only way to argue for free trade is to argue from the first principle of the non-initiation of force. Arguing that free trade is in the long good for most people, that it creates wealth, and that it is more efficient, is largely pointless. Because even though this is all true, a person who’s job has just been out-sourced is not open to hearing it. Lexington is right that dismissing the concerns of those who have experienced the blunt end of the market, and arguing about wealth creation and efficiency, is not going to win the argument. It will only create resentment and opposition.

    My own experience is that bringing the debate back to the first principle of the non-initiation of force is the most effective way to argue the issue. I always begin such debates by asking the person I’m talking to if they believe that another person has the right to use force against them, assault them, or steal from them. Most people obviously dont think that anyone does have such a right. Then its just a mater of getting them to apply that principle consistently.

    The problem of majoritarian democracy is a serious one. I agree with Perry that majoritarian democracy is in fact mob rule. The only way to prevent it is through a combination of an absolute constitution (one that cannot be ammended), and restricting franchise.

    How to restrict franchise is a tricky issue, but as I have argued here before, I support the idea of restricting the excersise of democratic franchise to those who choose to perform a term of voluntary national service. R.A.H will be proven right sooner or later 😉

  • Horace Lerner

    I think Lex has a point. It’s not the content of Perry’s original post that is the problem. It’s the tone. Perhaps it’s just me, but I understand most of what Perry says to be amended with an implied “you’re an idiot.” That indeed is no way to carry on a discussion.

  • Brock

    When I have to make a simple argument (or simple to me, anyway) for the 1000th time I can get annoyed too. The benefits of free trade and competition have been known for a very long time, but Protectionism raises its ugly head at least once a generation anyway. Frankly it pisses me off, so I can understand why Perry was ‘testy’ in his original post.

    I think that Lex is right though, or he would be if it weren’t for one thing: Few people reading this blog need to be convinced. This is Perry’s blog, and generally, there probably aren’t any Samizdata regulars who need to learn the benefits of free trade. If the original post was Perry’s submission to the Guardian, and this was the only libertarian article they were going to post that year, Lex’s arguments would be a lot more on point.

    Be that as it may, I think that the predictions that ‘free trade’ will be discussed as a political topic in perpetuity are overblown. Eventually, this argument will be won on a global scale.

    The United States and the British Empire lead the world in the development of free trade (as they did in so many other ways).

    Quite relevant to that though was that they were the only industrialized nations at the time that had global territories. They had the ability to specialize their work forces and take advantage of competetive advantages in the global marketplace. No other nation had a sophisticated enough legal system to allow human creativity and labor to do its magic (including France and Germany- they’re good, but not as good as us).

    The crucial step that India and China went through in the last couple decades (as Japan, Singapore, etc. did in the years before them) was change their politics and legal system to grant economic liberty to their citizens. This allowed them to not only industrialize, but do so efficiently and dynamically. Only then were these two very large nations able to start taking advantage of their advantages.

    How does this guarantee that Free Trade will one win all arguments? The British Empire was the largest free trade era of the 19th centurty. I believe that NAFTA was the largest of the 20th. America has signed free trade agreements with Chile, Australia and Singapore during 2003. Last year the Euro area took the USA to the WTO Court over steel tarifs and got Washington to cry uncle.

    Do you know what that sound is? That is the sound of inevitability.

    In 1787 the Several States of America signed a Constitution banning for all time any tartifs or trade barriers between them. One day all nations will sign a similar agreement. Forget the politics of this day. That is just one receding wave in a rising tide.

    By the way, my last point make’s Perry’s other point quite well, if indirectly. Our nation is ‘free’ from the tyranny of protectionism between states precisely because the ability to tax inter-state trade is forbidden to the polity. Three cheers for McCulloch v. Maryland!!

  • Laid Off

    i have lost jobs and found new ones. spare us your whining.

    I wasn’t aware that I was whining over a lost job, but since you mention it: SCREW YOU.

    I’m a free market guy (not that anyone cares) but reading this blog has made me rethink things in a big way. Now I see where Higher Education has failed. Students learn Hayek and Friedman and Popper and [insert Academic God Who Understands the Universe here] — but they learn nothing of humanity. They learn vanity, self-absorbtion, and the virtue of Being Right. Life, to the extent they notice it, is merely a test tube for proving the ism-du-jour, likely propounded by some bow-tied charlatan hiding from the real world in his Ivory Tower. No wonder students develop such contempt for the “losers” in life: they haven’t lived in the first place.

    Enjoy Being Right you pseudo-intellectual textbook-humpers. Here’s a little wisdom from a real man — one who knew better than to bet other people’s lives on mere reasoning:

    Should no disease thy torpid veins invade,

    Nor Melancholy’s phantoms haunt thy shade;

    Yet hope not life from grief or danger free,

    Nor think the doom of man reversed for thee:

    Deign on the passing world to turn thine eyes,

    And pause a while from letters, to be wise.

  • Shawn

    “Now I see where Higher Education has failed. Students learn Hayek and Friedman and Popper and [insert Academic God Who Understands the Universe here] — but they learn nothing of humanity. They learn vanity, self-absorbtion, and the virtue of Being Right. Life, to the extent they notice it, is merely a test tube for proving the ism-du-jour, likely propounded by some bow-tied charlatan hiding from the real world in his Ivory Tower. No wonder students develop such contempt for the “losers” in life: they haven’t lived in the first place.

    Enjoy Being Right you pseudo-intellectual textbook-humpers.

    Some facts. I have never been to University, and I left school without a high school diploma. I went to work as a welder. Then I worked for many years in a metal working factory, which involved beating metal and working with a burning furnace in protective coveralls at the hight of summer. I have worked on farms as a labourer, getting up at 4 in the morning and spending 10 to 12 hours at a stretch doing back breaking work. I have worked on a fishing trawler, as a builders labourer, a fruit picker, a ditch digger for a road works company, and several other jobs that involve extreme physical exertion. I have been laid off for one reason or another many many times. I’m now re-training, at the age of 38, as a computer techie. I was for 3 years a volunteer telephone counsellor, and twice I had to listen while the person on the other end took their own life, one because he had been ruined and made bankrupt by the IRS. I have never read Popper, Friedman, Hayek or Rand for that matter, and to be honest I probably never will. Some may sneer, but I have no shame in admitting that much of my political education has come about through personal life experience, and the writings of a sci-fi author. I could use all sorts of fancy labels to explain my beliefs, and like Lex, I’m a bit of a mix of libertarian, Burkean conservative, and Jacksonian nationalist. But those are just labels.

    Fancy labels aside, what I do know, what I have learnt from my own life experience and what I have learnt from looking at history, is that granting governments, or any group or individual, power over the lives of others is a recipe for tyranny and tragedy. This is not abstract. It is as real, personal, and life or death as it is possible to get. The 20th century is piled high with the dead of those sacrificed on the alter of state worship. Hundreds of millions were killed because some twit, or some group of twits, decided that giving the state the power to command and control and regulate peoples lives was a cool idea. And giving the state the power to regulate trade and force companies to behave in certain ways, is no different.

    I’m no puritan, but I understand, not from some book, but from experience, that for life to be than just oppression and tyranny, for the good life, however we may each concieve of what that is, to be possible, it must be based on a few basic moral principals, and the most important of these is that no person, group, or state, should ever have the right to initiate force against any other person.

    Now you can stick around and debate these issues like an adult, or you can throw a hissy fit and say “Screw you”. Personally I couldn’t care less. But please spare us your diatribes about who and what you think the people here are. It just makes you look silly.

  • John Davies

    Since a large percentage of my pay goes to the government is there any way that I can successfully compete with an Indian not paying US taxes?

    Accordig to this page, an Indian programmer’s Tax Freedom Day was March 14 in 2000.

    The American Tax Freedom Day was May 3.

  • Laid Off

    Shawn, I agree with you, even the part about me having a hissy fit. I trust the state even less than you do. But when you say this:

    And giving the state the power to regulate trade and force companies to behave in certain ways, is no different.

    I see that you do not understanding that I am not promoting government regulation, merely objecting to 1) the bland pronouncement that outsourcing is good for you and 2) the smug contempt expressed for those who think otherwise.

    I’m for personal and corporate liberty. If Microsoft wants to hire programmers from India, more power to them. Just don’t tell me what’s good for me, because you don’t know the half of it.

  • I have long been a believer in free trade. But then I once was a big-L libertarian, a cognitive affliction that exposure to reality cured quickly. I never did fall for Ayn Rand, having early on been exposed to one of her students (who taught her classes who was out of town) and seeing his nuttiness. Looking at how Ayn Rand behaved as a private individual (which was highly dishonerable and not at all in keeping with her philosophy) didn’t help her case much.

    Recently they started outsourcing IT, my profession. It caused me to look more closely. It is easy to hold the high and pure ground when your own ox is not being bored.

    That freely made trades help both sides is almost always true (unless somebody miscalculated when making the trade). Why trade if you are going to lose. But as has been mentioned before, that the traders themselves gain does not mean that others don’t lose. If a big company moves most of its work to India, those who gain are the stockholders and those who survive in that company (and, of course, the Indians).

    Of course, this has been going on for a long time, and I have always benefited from it. Heck, as a programmer and systems architect for many decades, I have “outsourced” people’s jobs to computers (i.e. replaced people with automation). And I drive Toyotas, some of the parts of which are made by my sister-in-law’s plant in Japan.

    But… if there is currently a significant imbalance (such as the current vast salary differential between programmers in the US and India), somebody is going to get very much hurt, at least in the short term. Ultimately, one could image free trade causing everyone in the same profession (or owning the same sort of business) to be brought to the same level. From a selfish or even nationalist viewpoint, this is not necessarily a good thing.

    There is another practical difficulty. Free trade isn’t all that free, because most countries have all sorts of government meddling in their economies (such as environmental rules, ownership rules, varying tax politicies, etc). In fact, those rules may constitute a significant part of a comparative advantage or disadvantage.

    Capitalism is often praised for its “creative destruction” and rightly so. I just don’t want to be one of the destroyed!

    On the other hand, I have trouble imagining government intervention that will do much good. So I look at the trends, worry if I will suffer personally, suggest that all is not as rosy as the free trade purists suggest, and offer no alternative.

    As to the comment on freedom and the implied use of force, that applies to virtually every action any government takes.

  • Kamil Marcinkowski

    I received a BSc in Computing Science 2 years ago, having taken most of my options in economics, and I have not found any job in industry.

    I do not believe what is happening can be described by comparative advantage.

    Explanation of Comparative advantage:

    Larry the lawyer can practice law at $200 /hr and type at 60wpm, Sara the secretary can type at 30 wpm and charges $20 /hr. It makes sense for Larry to hire Sara to do his typing even if he’s better at typing then Sara because his comparative advantage is doing law at $200 an hour while 1 hour of his typing can be done by Sara for 60/30 * $20=$40 everyone benefits.

    Ok so US / Canadian workers should pursue high value jobs were their better training and work culture should give them a comparative advantage over their foreign competitors. This may have been true before but not now; these highly skilled jobs are the ones being “exported” because they are the easiest to export.
    In fact jobs it seems the only determinate of weather the job will be exported is how difficult is it to do the job remotely.

    The culprit I believe is mostly the Asian exporting countries keeping their currencies low instead of appertaining naturally as their workers gain in productivity. The effect of this are:

    1) Helps manufacturers and service industry in the developing country by keeping developed countries goods expensive

    2) Stops the developed country exporters since the now their products are being sold in dollars while the developing countries currency is depressed.

    3) Lets the countries government invest in US (gaining political power)

    4) Slows the growth in income and prosperity in the developing country (this is less noticeable since it is developing and the economy is growing strongly)

    5) Helps the developing country export into the developed country.

    6) Destroys the all the workers of the developed country that are in jobs that can be moved elsewhere.

    There is no comparative advantage as long as China and India don’t spend the money (forcing the currencies to their natural value) but instead buy US bonds and assets.

    This also means that US/UK/Canadian bonds, stocks and bonds are overvalued, and these countries will lose lots of money (like Japan did) buying overvalued US assets.

    The answer seems to be to devaluate the currency until we get a comparative advantage is some of the easily exportable jobs. This may be difficult to do without triggering an inflationary spiral, but that may be better than the deflation we are seeing in products of our easily exportable jobs.

    Kamil

  • DSpears

    Kamil,

    What you are saying is that essentially, the developing Asian contries are paying us to take their goods at a cheaper price while over-charging and under-paying their own people. That sounds like a good deal for America. They are going out of their way to screw themselves in order to serve us better.

    The mistake that these countries make is that they assume they can get their collective foot in the door to the American market through government action (subsidies and currency manipulation), gain market share, then gradually reduce the susidies, normalize their currencies and they will have gained a permanent position in the world economy. Sounds like a no brainer.

    The problem is that when you gain “advantage” through those sort of means you shield your industries from hard competetion and they get very addicted to this sort of government help. The reality is that when the government stops using it’s powers to help the fledgling industries and transfer some of the benefits back to it’s home people in the form of higher wages and lower prices at home, they will find it very difficult to maintain what they have gained through artificial means. The problem here is that no economic gain is permanent, and the economic gains achieved through government action even more so, because the conditions under which the gains were gotten will no longer exist. Unless of course the people of that country continue to be satisfied with a lower standard of living.

    Whether they will be better off through this process in the end will be determined by a lot of things, but while they are trying to figure it out, the people in the market who they are trying to export to (America) benefit greatly. Again, THEIR government is using THEIR people’s money in order to give US goods at lower prices.

    Now if this looks familiar, it is the way Japan got to where it is today. TODAY, not 15 years ago. Japan’s problems of today are a direct result of thinking that they could continue subsidizing cheap goods in America and that their people would never notice. About 15 years ago their people started getting very agitated because they were the supposed economic kings of the world yet it costs $25 for a steak in Tokyo and over a million dollars for a 2 room apartment that would fit in the kitchen of my house.

    As a side note I learned a lot of this when I worked for a Japanese company in the early 90’s. The Japanese who were living in America were awestruck by what was available dirt cheap at the grocery store, Walmart, or even high end stores at the mall. They were living in 2 room apartments that would have been considered mansions in Kobe or Nagoya. And the fact that none o ftheir wives ever wanted to go back to Japan was a whole other conversation in itself.

    Their government and industry working together spent many years pursuing market share instead of maximizing profit as their main goal. Market share at the expense of profits cannot be sustained once the government stops manipulating things. So Japan’s government never did stop manipulating things. Ultimately Japan has made different choices than America: We want cheap goods, they want “full employment” even if their standard of living is lowered in return.

    But in 2004 we still have cheap goods, but they no longer have full employment. Who has “absolute advantage”?

    In the end everybody benefits: America gets cheaper goods which has allowed our resources to be spent on a greater variety of products and investments. The Asians ultimately get to build an industrial base that will allow them to provide a rising standard of living ofr their people eventually. With that higher standard of living they will either demand more goods which America can provide some of, or they protect their market from competition by contuinuing to send that money back to us in the form of subsidies for the goods we buy.

    Everybody wins. Unless people who don’t understand all of this fuck it up.

  • Kamil Marcinkowski

    Dspears

    I should have included in the list of effects the large positive effect of cheap goods on US consumers.

    I do not believe this is a mistake on the developing countries part, the overcharging and underpaying of their people hides structural economic problems: lack of secure property rights, corruption and a to cosy relationship between bankers, government and industry The effect on the developed countries is the opposite bringing these problems to light, and working to fix them.

    I agree that the advantage gained through artificial means can be addictive, however if the industry has large barriers to entry, requires a highly educated, skilled and specialised workforce, the advantage may become permanent.

    I understand that the people of these countries will eventually demand prosperity equal to their new productivity created by globalisation. People are satisfied with fast growth in their prosperity even if it does not equal to productivity growth as long as it is rapid. This will be great problem for these developing economies when they grow to the point that growth is slowed and cheap labour advantage is greatly decreased, all the problems hidden by these artificial market games will come to life simultaneously.

    I understand that the US/Canada/UK will in 20 years be better of because of globalisation both absolutely and relative to the developing countries. The developing countries will be at the position South Korea is in now a great improvement for them.

    I know we as a society will win eventually in the long run.

    Why should we not minimize our short to medium term damage these countries are causing our economy, why should we not depreciate our currency till we can compete and have a comparative advantage in some of the easily exportable jobs. It would cut back the windfall western consumers experience enabling the workers to use comparative advantage to work, to gain skills to better themselves.

    I graduated with good marks from one of the best universities in Canada for my program and I can’t find any job in my industry. My class mates are better educated then the vast majority of workers in our industry here, not to mention developing world were the gap is enormous. We should have great comparative advantage, instead less than 1% have found work. What should I retrain into as my skills become out of date, should I keep training in IT industry, train in some job that is and will not soon are easily exportable? What jobs are those? As the IT revolution happens they are disappearing, even retail jobs will be made obsolete with RIF tags replacing most cashiers, and inventory position in the next couple years. Or should I give up dream of being a professional, work a job just higher than minimum wage hoping I don’t have to default on my student loans?

    Kamil

  • Ken

    “Mostly true. And THAT is where the problem truly lies. Yup, we in the USA can buy oodles and oodles of cheap goods. We are awash in them. Except for housing, schooling, and a few other “luxury” items, life would be so perfect! When consumers in the USA can purchase a home for $40,000 please let us know. (One without wheels on it.) When that happens, outsourcing and free trade with Third World nations will be a good thing. Until that point, it ain’t. ”

    You can have that $40,000 house. Just get rid of the zoning boards, regional planning commissions, “smart growth” initiatives, and all the other nonsense that holds down the supply of housing and jacks up its cost.

    The sectors that are comparatively lightly regulated have shown continuous improvements in product quality, performance, and price; computer products, being regulated the least, are at the top of this list. Other sectors that are more heavily regulated are characterized by steady or even rising prices. Our best bet is to change the regulations so that housing and medicine exhibit quality, performance, and price improvements like other products do.

    “Moral? Now you sound like some sort of transnational progressive. Why should I or anyone else sacrifice my job for your lofty market principles?”

    Because you don’t own your job in the first place! It’s only “your” job until the guy paying for it feels like continuing to buy your services. You’re really asking for that guy to sacrifice for the principle that you have some right to keep selling the same services at the same price for as long as you feel like it.

    “I thought libertarians were supposed to act out of self-interest (this is a libertarian blog, right?).”

    You thought wrong. Everyone acts partly out of self-interest – libertarians simply recognize that fact and advocate a system that allows self-interested people to freely cooperate for their mutual benefit as and when they choose.

  • why should we not depreciate our currency till we can compete and have a comparative advantage in some of the easily exportable jobs.

    Because ‘we’ are not bigger than the currency markets. Not even the Fed. In fact the dollar is heading south in much the way you might wish but that is not because of some political decision to depreciate the currency, and it will probably not last. Many is the government who have been eaten alive when they tried to inflate/deflate the value of their fiat money… and in any case, all that does is introduce distortions which tend to be worse than what the currency manipulation is trying to fix in the first place. It is a mugs game.

  • Jonathan

    as long as China and India don’t spend the money

    A country that exports products and fails to spend the proceeds is in effect giving the goods away.

    A government that taxes and regulates like most western ones do is guilty of destroying jobs. Without the dead hand of the state, outsourcing would lead to immediate increase in wealth. There would be no short term pain / long term gain equation.

    On the subject of Mob rule, those who fail to see the relevance of Perry’s comments should read the book, The Future of Freedom: Illiberal Democracy at Home and Abroad, by Fareed Zakaria. He explains it better than I can.

    .

  • Valentine

    Alright so outsourcing is good in the long term..just one point I’d like to bring up regarding outsourcing. Lets say I represent Lockheed Martin or IBM. I’ve just gotten a contract to develop defense software for say a new plane like the F-22 or for a missile defense system. I outsource to a country like China for programmers. Now whats the chance that THEIR government might get involved regarding influencing the program (as in sabotaging or inserting things like Trojans)? Outsourcing is also a national security issue folks the more and more companies outsource for programmers and engineers the more and more systems that are highly classified or sensitive in nature are subject to tampering.

    Don’t think it can happen? It probably already has

    http://www.strategypage.com//fyeo/qndguide/default.asp?target=israel.htm

    IBM was hired to work on Israel’s Arrow ABM system, but when they outsourced to Eygptian software engineers it was feared that they could have inserted Trojans into the programming. Now IBM not only had to remove those engineers from the project, but must in conjunction go through the programming to see if any damage was done. This will have cost actually a lot more than if they had done the project with in house and security cleared personnel.

  • A few observations:

    First, our free markets are considerably less than free. Governments and major corporations as well as other significant institutions (e.g., academia) really do distort our free markets in considerable ways to their own advantage. The advantage might be temporary, but it’s quite significant. And, a distortion that lasts “only” 15 years can have really dramatic impacts on the lives of individuals who must cope with that distortion.

    Secondly, not just governments engage in coercive behavior. Quite a few private sector institutions (e.g., major corporations, academia, religion) also coerce behavior in various ways. Yes, governments tend to monopolize certain kinds of force, but that doesn’t mean other kinds of institutions don’t have the ability to force people to behave in ways that said institutions want.

    Thirdly, are we sure outsourcing really accomplishes what its advocates claim? Lots of the advocacy seems to come from management. Anyone who thinks management has some sort of lock on competence isn’t paying attention to reality.

    I’d really like libertarians to being addressing, for example, corporate malfeasance and incompetence. What can libertarians do to address these kinds of problems?