The Armchair Politician

I’m glad somebody has finally taken a rational stance on the Indian outsourcing issue. As Jordi will tell you, I’ve from the beginning stated that our current trend towards outsourcing IT is not only inevitable, but probably for the better, too. It’s simple capitalism, folks. It’s a perfect example of the free market at work. Indian programmers are providing a product, their labor, at a better price/performance efficiency than American ones are.

Many people blame this trend on companies, but I place the responsibility on consumers. We continually demand better products at cheaper prices. What most of us never accounted for is that nature provides a balance–although we may get those, we lose something else. However, that’s not to say we’re worse off than before, or that things will be worse in the future. While we may lose jobs in the short-term, that’s for the better. It’s natural selection. Many people neglect the fact that in this trade-off, we’re still receiving a benefit: lower prices.

There also seems to be a misconception that lost American jobs are gone forever–this, as well, is untrue. As unemployed laborers become more numerous, their cost drops. As their cost drops, jobs that were once unavailable because the cost outweighed the revenues suddenly open up. Americans will be reabsorbed into the workforce, and will be placed in jobs that are more effective uses of their labor. Given, pay will probably drop. That’s not a problem, thanks to the equilibrium of the economy. Pay dropped, but didn’t we cover the fact that prices did, too? And if you’ll notice, that implies the valuation of the dollar on the exchange market. When fewer dollars are buying the same product, that means the dollar is becoming stronger. In common terms, it’s deflation. In reasonable amounts, this is a Good Thing™.

Americans are often the first ones to criticize a monopoly. Wal-Mart, Microsoft, and others are evil monopolies, right? Well so was the American job market. We’ve for decades charged prices that, on the world market, are princely sums. I’m not surprised in the least that companies have found a way to circumvent our monopoly on the product of labor. Once again, competition is going to take effect. The net result is that we’ll be forced to be harder workers, and probably accept lower wages. Sounds bad, right? Not when you realize how circular and intertwined a capitalistic economy is. Our lower wages and better products will benefit companies. They have lower costs and better products. Thanks to competition that they have to face, that means they’ll lower prices for us. In the end, it translates to better products being created at roughly the same price.

The worst thing we can possibly do is attempt to combat this change. Regressive protectionist policies may help in the short-term, but American consumers’ demands will force American companies to find a way around the restrictions. We thought we had an indefinite monopoly thanks to location and immigration policies, but computers and the Internet have allowed businesses to circumvent this limitation. The phrase, “life always finds a way” applies here, too. But shouldn’t we hold out as long as possible? Won’t every day we prevent the outsourcing of jobs allow us to benefit further? In the short term, probably. On the other hand, the current waves we’re feeling throughout the IT job market are directly proportional to the disparity between the wages and product quality that Americans and their Indian counterparts provide. We’ve insulated ourselves, only to be affected by a larger degree now that that insulation has faded. Rather than have the changes occur slowly and naturally, allowing us to adapt at a comfortable pace, we’ve been protected for years, and now are being flung wholly unprepared into the world market. It’s my belief that the longer we continue to insulate ourselves, the more it will hurt when the inevitable finally occurs.