Outsourcing breeds more jobs
<p>CNNMoney <a href='http://money.cnn.com/2006/02/23/news/economy/jobs_it_offshoring/index.htm'>reports</a>:</p>
<blockquote><p>
Demand for technology workers in the United States continues to grow<br />
in spite of American companies shifting more technology work overseas,<br />
according to a new study.
</p></blockquote>
<p>Sigh.  Is there, like, some cosmic law that reporters have to be<br />
poisonously ignorant about economics?  Of <em>course</em> outsourcing<br />
stimulates domestic demand.  Increases in efficiency and better<br />
exploitation of comparative advantage <em>do</em> that.</p>
<p>Maybe I&#8217;m just naive, but shouldn&#8217;t a reporter at a <em>business<br />
news channel</em> know better than to subscribe to the fixed-lump-of-labor<br />
fallacy?</p>
<p><span id="more-264"></span></p>
<blockquote><p>
The study cites estimates that between two to three percent of IT jobs<br />
will be lost annually to lower-wage developing countries through the<br />
process known as offshoring. But it said the U.S. IT sector&#8217;s overall<br />
growth should outpace that loss of jobs, expanding opportunities for<br />
those trained in fields such as software architecture, product design,<br />
project management and IT consulting.
</p></blockquote>
<p>Comparative advantage, kids.  That&#8217;s what it&#8217;s all about.  If<br />
there&#8217;s <em>any</em> way in which the average programming skillsets in<br />
the U.S. and India diverge, market pressure will sort jobs and push them<br />
where they&#8217;re most efficiently performed.</p>
<blockquote><p>
&#8220;Despite all the publicity in the United States about jobs being lost<br />
to India and China, the size of the IT employment market in the United<br />
States today is higher than it was at the height of the dot.com boom,&#8221;<br />
[...] lower wage scales in India and China are not pushing down pay<br />
for U.S. IT workers. [...] IT workers have seen steady gains in<br />
average annual wages for different fields in the sector of between<br />
about two to five percent a year.
</p></blockquote>
<p>This is where libertarians like me get to gloat a bit, pump a fist<br />
while shouting &#8220;laissez-faire!&#8221;, and point out that both left-wing<br />
antiglobalization moonbats and right-wing isolationist/protectionist<br />
wingnuts that they are full of horse puckey up to here.  Welcome to free<br />
trade, making everybody richer exactly the way we expect it to do when<br />
governments don&#8217;t piss in the soup because they think they&#8217;ll like the<br />
flavor better.</p>
<blockquote><p>
The study suggests that there are several factors in the continued<br />
growth in demand for IT workers here. The report said part of it is<br />
due to the use of offshoring by U.S. companies, including start-up<br />
firms, to limit their costs and thus grow their businesses. That, in<br />
turn, creates more opportunities here even as an increasing amount of<br />
work is done overseas.
</p></blockquote>
<p>And there it is. Offsharing grows businesses so they can find or<br />
create more domestic opportunities.  That&#8217;s the invisible hand right<br />
there, giving a rude finger to every single &#8220;managed trade&#8221; idiot and<br />
regulatory busybody on the planet.</p>
<blockquote><p>
The study also said that companies from a variety of sectors in the<br />
economy continue to discover greater efficiency and more competitive<br />
operations through investment in IT. The study therefore argues there<br />
will be continued growing demand for IT as underserved fields such as<br />
health care, retail trade, construction, and certain services make<br />
greater investment in technology.
</p></blockquote>
<p>This means that IT is being substituted for other, more expensive<br />
inputs of production (a kind of <a href='http://esr.ibiblio.org/?p=262'>ephemeralization</a>).  As long<br />
as that keeps happening, demand (and IT wages) will continue to<br />
rise.</p>
