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In defense of job "stealing" and outsourcing

    I work at the college library.

    So I was at work and my supervisor along with myself were talking about banks and apparently, he tried to stat an HSBC account but was told to call this number only to find out that the woman on the other hand was in Bombay, India. He then decided not to get an account with them because they're letting Indian people "steal American jobs."  I kept insisting that it's impossible to "steal" jobs, as that would suggest there is some fixed number of jobs in an economy, but he kept firmly insisting that they are making American people starve because Indian people are getting rich. Pretty much the conversation ended when I said "Well, I'll be sure to find an article on comparative advantage that shows that even though we might be losing jobs to India, we can still gain from that."

      The sad thing is, he's definitely not the only person who believes that you can "steal" jobs away from an economy - one doesn't have to try hard to find prominent politicans who claim how Mexicans are "stealing" American jobs (though I don't see too many Americans fighting for the chance to water gardens or harvest crops). Frankly, as many of you readers know, that isn't the case. You can't "steal" a job - in fact, in the case of outsourcing for HSBC, everyone wins. An Indian person, instead of starving, now has a good paying job at a call center. The bank, being able to save on calling center costs, can now offer things like a higher interest rate which encourages people to invest through them or perhaps pay higher wages to other employees or perhaps in the form of higher dividends to stockholders which increases confidence. Even if it goes to "greedy" CEOs, then that should serve as a profit for finding a way to economicly cut their costs.

    As for compartative advantage, it's probably one of economic's greatest ideas. In case you're not familar, it's the idea that even if you're a nation that is utterly devoid of resources or skills, you can still benefit from trade as you might be able to do something more cheaply than another more resourced nation. One of the nice things about using mathematics in economics is that you can show that mathematically, in addition to logic, that both nations get more of what they want from trading.

      This idea of trade and "stealing" jobs really goes back to Bastiat's idea of What is Seen and Not Seen. Sure, you might see someone losing a "stolen" job at an American call center, but what people need to see is the creation of a job in India, more money that can go to other more useful endevours, and an increase of goods and services to everyone.

Posted Dec 08 2007, 03:05 PM by champthom
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Attackdonkey wrote re: In defense of job "stealing" and outsourcing
on Sun, Dec 9 2007 2:26 PM

I agree with the overall idea here, but there's nothing contrary to a free market in a person not doing business with a company because they hire foreigners? I mean it isn't just raw products that a business sells, they also sell themselves. I might support Bob's hardware (who has higher prices) over Lowe's, because Bob supports the peewee football league, while Lowe's doesn't... and likewise an American working for HSBC or Liberty National Bank will contribute back to the American culture, while an Indian can only contribute in a monetary sense in the way you mentioned, just to save money to someone on this side of the sea.  

This is not of course to justify any action by the gov't in anyway. but  there's no harm in people choosing to do business with the home town burger joint over a chain, or a bank with American employees over one with Indian employees.

ricarpe wrote re: In defense of job "stealing" and outsourcing
on Mon, Dec 10 2007 12:16 AM

Since he is worried about Indians "stealing" American jobs, you could tell him that his intentions opening an accoutn were actually aiding in the "stealing" of business from an American bank since HSBC is headquartered in London, UK.

Brutus wrote re: In defense of job "stealing" and outsourcing
on Wed, Dec 12 2007 12:28 AM

Compartative advantage is one thing but absolute advantage is another, especially when based on fiat currency and labor.

How can someone in another country doing the exact same job as an American be 10 times cheaper? If we say it is an oversupply of labor then why don't we let them all move?  What are the consequences for labor to move to any location where the currency is stronger?  How would you like mass migrations of billions all over the world following the fiat currency of higher value?

It isn't job stealing, but it is labor arbitrage because it is absolute advantage.  These countries are using first world capital and first world education and the only thing Americans can do is take a paycut to balance the difference and then pray that we can employ most of the worlds labor very quickly.  

Unless of course you truly enjoy living on about 2 dollars a day if things were truly allowed to balance with real free trade.  It won't be bad for India, but it would be very hard for America to adjust to this balance especially if done over night.  Even worse is they can keep the value of labor low through fiat manipulation.