Paul Samuelson's Outsourcing "Bombshell"

[Beet]

Very troubling.



By STEVE LOHR
 
Published: September 9, 2004

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http://www.nytimes.com/2004/09/09/business/worldbusiness/09outsource.html?_r=1&pagewanted=all&position=

[Torie]

The genie cannot be put back into the bottle Beet. IT rules. Transportation costs continue to go down, in part because stuff is getting lighter. That is why if you don't create virtuous barriers to entry such as high educational levels, one is destined these days to slowly regress to the median anyway. The US still has an advantage due to the dollar being the reserve currency, but that regime is on borrowed time. The bottom line is that wage levels anyway, if not the standard of living as a whole, is destined for large swaths of the planet to slowly converge, and all the protectionism in the world will not reverse that.

[opebo]

The interesting dichotomy in the world economy is between owner and owned, not between the various nationalities of serfs.

[○∙◄☻¥tπ[╪AV┼cVê└]

It's pretty obvious that H-1Bs and outsourcing have been used as a tool in open warfare against workers in STEM fields for quite some time now. The supposed shortage of workers in those fields is a myth. Unlike lawyers, people in those fields didn't get to write the laws regulating their profession.

[Beet]

The genie cannot be put back into the bottle Beet. IT rules. Transportation costs continue to go down, in part because stuff is getting lighter. That is why if you don't create virtuous barriers to entry such as high educational levels, one is destined these days to slowly regress to the median anyway. The US still has an advantage due to the dollar being the reserve currency, but that regime is on borrowed time. The bottom line is that wage levels anyway, if not the standard of living as a whole, is destined for large swaths of the planet to slowly converge, and all the protectionism in the world will not reverse that.

That's funny; China's eastern seaboard, Bangalore, and a few Pacific NICs aside, there is no real evidence of industrial-based convergence. And even in these cases, the statistics are unreliable, at best. If anything the gap between the developed nations and Africa and much of Asia and Latin America has gotten wider in the past 30 years, not narrower. This is why defenders of the Solow model are only able to point to "conditional convergence."

[Torie]

The genie cannot be put back into the bottle Beet. IT rules. Transportation costs continue to go down, in part because stuff is getting lighter. That is why if you don't create virtuous barriers to entry such as high educational levels, one is destined these days to slowly regress to the median anyway. The US still has an advantage due to the dollar being the reserve currency, but that regime is on borrowed time. The bottom line is that wage levels anyway, if not the standard of living as a whole, is destined for large swaths of the planet to slowly converge, and all the protectionism in the world will not reverse that.

That's funny; China's eastern seaboard, Bangalore, and a few Pacific NICs aside, there is no real evidence of industrial-based convergence. And even in these cases, the statistics are unreliable, at best. If anything the gap between the developed nations and Africa and much of Asia and Latin America has gotten wider in the past 30 years, not narrower. This is why defenders of the Solow model are only able to point to "conditional convergence."

Africa is sui generis. Anyway, I have seen Mexico transform before my very eyes, and it is pretty dramatic. I think the larger model over the longer sweep of time stands.

[Beet]

The genie cannot be put back into the bottle Beet. IT rules. Transportation costs continue to go down, in part because stuff is getting lighter. That is why if you don't create virtuous barriers to entry such as high educational levels, one is destined these days to slowly regress to the median anyway. The US still has an advantage due to the dollar being the reserve currency, but that regime is on borrowed time. The bottom line is that wage levels anyway, if not the standard of living as a whole, is destined for large swaths of the planet to slowly converge, and all the protectionism in the world will not reverse that.

That's funny; China's eastern seaboard, Bangalore, and a few Pacific NICs aside, there is no real evidence of industrial-based convergence. And even in these cases, the statistics are unreliable, at best. If anything the gap between the developed nations and Africa and much of Asia and Latin America has gotten wider in the past 30 years, not narrower. This is why defenders of the Solow model are only able to point to "conditional convergence."

Africa is sui generis. Anyway, I have seen Mexico transform before my very eyes, and it is pretty dramatic. I think the larger model over the longer sweep of time stands.

Mexico is a beneficiary of NAFTA.

And East Germany is still poorer than West Germany. The latter's growth has slowed, but it hasn't regressed.

[Storebought]

I think Torie's explanation could be made even simpler: India is massive, extremely poor, and uses English as its effective second language. Of course, with improvements in transportation and communication, businesses that require low-skilled white collar labor will take advantage of that. Or until the US uses another language besides English for the bulk of its business transactions, at which point India has all the advantages of China. Not many call centers and engineering firms in Shanghai, I think.

[opebo]

Anyway, I have seen Mexico transform before my very eyes, and it is pretty dramatic. I think the larger model over the longer sweep of time stands.

Mexico is a beneficiary of NAFTA.

I think it is also worth pointing out that the standard of living and quality of life has declined much more in the US than it has come up in Mexico. 

We should remember that globalization is in fact worse than a zero sum game for the working class - while the standard of living for those in the slave countries does increase somewhat, it is only a little, while the condition of workers in places like the US or Europe declines precipitously.  Where does the resulting benefit go?  I think we all know - straight to the top.

[jokerman]

Perhaps, Opebo, but the fault then is in the fiscal policies of the individual states, failing to tax wealth and provide a welfare system, rather than being a fault of the trade.  More wealth overall is created to distribute, even if its distributed unfairly.