Mark Andreesen, pioneer of the Mosaic browser and later Netscape, is briefly mentioned in a USA Today op-ed piece defending outsourcing. Larry Ellison, Paul Romer (Economist at Stanford), He also, elsewhere, made a list of America's "comparative advantages." (I found this, of course, on MR). To something Bobber had mentioned, the article also briefly comments on how international trade affects political relations between hostile countries.
"One last note: The more this goes on, the less likely the United States will have enemies. If India's economy is booming because U.S. companies outsource there, India pretty quickly becomes our friend. Same with China and elsewhere. We'd have a lot easier time with North Korea's Kim Jong Il if a few American telemarketers could move their call centers to Pyongyang."
Now, whether international trade is actually good for political relations, whether international trade is indeed a threat to national security, requires more careful study. But, intuitively, it strikes me that national security would actually be helped, not hurt, by trade. (I'm not being original here). It builds friendships and alliances between the two countries and also raises the living standards in both. When one of those countries having their living standards raised is dirt poor and is trying its dangdest to undo decades of damage caused by high tariffs and centralized planning (India), as well as Western colonialization, then it seems as though there's the potential to build strong relations between the two countries by allowing trade. Besides, the fears are misplaced as the article notes. Japan was once feared to take away all our jobs, and what happened? Does anyone really believe that Japan has made us worse off? Japan is better off, in fact, due to its specialziation and open trade policy and we are better off. Living standards rose in both countries, job creation occurred here at rapid pace, outstripping even the rate that the population itself grew, even while productivity slumped. The best thing for America is every developing country becomes as wealthy as we are and if we can export more jobs to them. As bad as that sounds, such a reality will drive growth in our country, create more jobs here, increase living standards in all partners in trade, and lead to the creation of important, new technologies.
Posted by scott at March 23, 2004 07:01 AM | TrackBack22hrs 50mins. That just might be a record for being in and out of blogger hibernation (not to mention the 10 pages of commentary)!
Glad to see that you haven't gone too far...
Posted by: Wayne at March 23, 2004 12:18 PMWell yes, building better relations with other countries is always healthy but what about emergencies? Or do you propose that we should have just started outsourcing some work to the Talaban and Iraq instead of fighting them? If we have need of some kind of defense, and that defense is dependent on manufacuring might, we will be handicapped by the country that manufactures our defensive mussle for us. That's pretty easy to figure out don't you think?
And again, what happened to France? Have we not been outsourcing enough work to them, is that why they don't seem to be intersted in helping us in the war on terror?
Posted by: Bobber at March 23, 2004 06:09 PMIt seems like the concern about national security makes the most sense when you're talking about government contracts of some sort. So, maybe a case could be made that the United States, during times of war, will only hire firms to produce military weapons that can ensure critical parts of the order were not produced by individuals from Iraq or N. Korea, or something like that. There's some concern about espionage or sabotage, so the the US only contracts with a firm that can make those kinds of guarantees. But, this isn't really at all what's going on with private firms contracting with foreign labor. Where exactly is the national security risk for Dell to employ Indian call centers, or any firm in Silicon Valley to hire foreign programmers to help in the coding? I understand your concern about national security, but it seems like only certain sectors and under limited situations does that concern make sense. In the context of the current debate over outsourcing, I don't see the national security risks.
As for France - I don't think France has the most open trade environment among developed countries. I didn't respond, because I didn't know for sure, but I seem to remember hearing that they are relatively more protective of domestic industries than other countries in Europe.
And anyway, the war on terror isn't really an exmaple of what I was saying. Trade between partners would seem to me to give incentives to both parties not to war with one another. If you have big contracts with the United States, then you have incentives not to see that business disrupted. But this is all in the context of the individual firms and the individual customers. You have to remember - trade is not between countries. It is between firms and households. Those are the relevant economic actors, not governments. Governments account for a small fraction of the trade in the world. When we're talking about the War against Iraq, whatever trade flows exist between firms and households in France and the US wouldn't necessarily be impacted by the war, either way. If the war happened, that trade shouldn't be disrupted. If the war didn't happen, that trade shouldn't be disrupted. But, if the war did happen, and France had pre-existing contracts of some kind with Iraq, then it would disrupt it. If I'm not mistaken, Iraq under Saddam did owe France money, and secondly, I think that there is some evidence that Iraq had been paying French politicans bribes in the form of oil for several years. Newspapers reported back in January or late 2003, but now I've forgotten the details.
Posted by: scott cunningham at March 24, 2004 07:08 AM