January 29, 2004

SPELLBOUND, OUTBOUND, AND SCHOOLBOUND: As I promised yesterday, today’s GlennReynolds.com post ties together the movie Spellbound with the question of outsourcing.

UPDATE: More on outsourcing here and here.

ANOTHER UPDATE: Virginia Postrel continues to call me “coy” on the outsourcing issue. I’m still confused as to why. Here’s what I wrote in the original column on this topic, which I’ve linked in most of my posts since:

With all sympathy to Mr. Paris, people usually conclude that foreign competition has “gone too far” when it threatens their job. (And if we could import foreign politicians to compete with domestic ones, you’d see tariffs and protectionism that would make Napoleon’s Continental System look like free trade.) Nonetheless, this sort of competition can certainly cause dislocations, both political and economic. (For more, here’s a report that outsourcing to India increased by 25% last year, and a somewhat sunnier view of the situation from the Hindustan Times.)

But it also causes moral dislocations, and in various parts of the political spectrum. Bray’s story reports on an “alliance of liberal activist groups and labor unions” that is opposing the outsourcing of jobs. And while it’s easy to see why labor unions might oppose this sort of thing, it’s hard for me to see it as a liberal issue, really. After all, aren’t liberals supposed to be for the redistribution of wealth from the better-off to the less-well-off? These jobs don’t disappear, after all: they go overseas, to people who probably need them more. Isn’t that a good thing? Or, at least, to me it’s not obviously worse than, say, taxing corporations in a way that causes them to cut jobs, and then using the money to pay for foreign aid.

I wrote something similar over at GlennReynolds.com, but it vanished in the MSNBC non-archive black hole. But it should be obvious: I’m against bans on outsourcing, and I think that the moral case for them is as weak as the economic one.

But — and maybe this is what Virginia is picking up on — I do have a certain degree of ambivalence. Arthur Leff, in a review of Posner’s Economic Analysis of Law, famously worried about how many lives would be lashed to ribbons as the supply and demand curves flailed around, “desperately seeking equilibrium.” On policy grounds, it probably is better to be coldhearted where this sort of thing is concerned. But I see how hard this has hit parts of the IT sector, and I think that in many cases it’s more of a management fad than it is a source of real economic efficiency. If Virginia thinks that I’m the one ginning up controversy in this area, then she’s very much out of touch with what tech people are talking about, because the subject has been all over Slashdot (look here and here, for example, and note the number of comments) and the various tech publications for a while — and you hear a lot of it from IT people whose interest in the subject didn’t come from InstaPundit. I’m just passing it along.