He's suggesting that something mindlessly embraced by Dear Leader (who grasps economic theory roughly the way Toby Keith understands jazz) is based on falsehoods and malice. Isn't that enough?

I would like to know what he feels 're-education' would involve, exactly.

The kind of person whose job is offshoreable is most likely best suited for just that kind of job, whatever his education.

So, does he think they should all learn ballet?

Or, is it, that we might use this as an opportunity to improve the quality of our teachers, who may now expect to paid a wage commensurate with their societal value?

It's apostasy because the Republican CEO's say it is, which means that even these meager policies will be fought tooth and nail.

I don't get it. What exactly is Blinder's "apostasy"?

Maybe he's trying to punch up a run of the mill op-ed by making it sound like he's saying something scandalous?

We're going to get slaughtered re: offshoring. I think the economics profession has been remiss in not being clear about the costs and overselling the benefits. Case in point: IBM is set to lay off 150 THOUSAND.
link: http://www.pbs.org/cringely/pulpit/2007/pulpit_20070504_002027.html

Read the comments at the above link by IBM employees. Horrifying!

How surprised are those free-trader economists going to be when their jobs get offshored?

---
I would like to know what he feels 're-education' would involve, exactly.
---

Well, I imagine the CEO's would have something slightly different in mind, maybe an approach involving more of a 're-education camp' sort of feel...

So, tens of millions of the best and brightest Americans will lose their jobs in the next decades. That's on top of the millions that have already lost their jobs.

So, free trade gets us massive unemployment, probable social unrest and a growing conviction that education may be a bad investment. Yet, economists remain committed to the idea that free trade is an unvarnished good.

Outside of the vast profits going to the top 1 percent, what's the upside to all of this again?

Offshoring looks good on paper, but in practice the savings -- if any -- aren't that good. The few instances I've been personally exposed to didn't work out well at all for the offshoring companies. In fact, "disaster" would
be a pretty good description.

Does anyone here really think we can protect our way to prosperity and low unemployment? For years, developing nations complained that they didn't benefit from free trade, which was just US imperialism. Now that developing countries do benefit, Americans complain they get no benefits from free trade. The funny thing is more jobs come from abroad into the US than into any other country. The US is the world's biggest recipient of FDI. If anything, the rest of the world should be complaining that Americans are taking their jobs.

The reason for my alleged apostasy is that the nature of international trade is changing before our eyes. We used to think, roughly, that an item was tradable only if it could be put in a box and shipped. That's no longer true. Nowadays, a growing list of services can be zapped across international borders electronically. It's electrons that move, not boxes. We're all familiar with call centers, but electronic service delivery has already extended to computer programming, a variety of engineering services, accounting, security analysis and a lot else. And much more is on the way.

It sounds to me that his concern is for his fellow professionals. When it was it was only blue collar workers losing their jobs, it wasn't a big problem.

His apostasy is saying the downward effect will be much greater than predicted, and as veblen says, his apostasy is saying this reaches into service jobs.

IIRC he also says that the replacement jobs (IE Walmart Greeter) are pretty sucky compared to the original jobs (Aerospace Engineer).

All three elements could be misconstrued as saying that maybe the Brad DeLong's fucked up.

P.S. Did your dog die because of adulterated food? Did you eat an adulterated chicken? Blame it on free traders. It's because of free traders.

I don't get it. What exactly is Blinder's "apostasy"?

Really, is this hard to get?

He is an apostate because he is honest enough to talk in an unflinching way about the real costs of globalization, instead of adopting the pretense that virtually all economists have assumed that the downsides of globalization are relatively minor and should not affect public policy.

He's calling economists as a profession dishonest snake oil salesmen who have sold a truly toxic bill of goods to the American public.

Which, of course, they have proven themselves to be.

Smug, pompous ass destructive over-their-head putzes.

And I'm talking about virtually all of the "liberal" ones too. Demonstrably not knowing in the slightest what they're talking about has done nothing to dampen their enthusiasm for making truly sweeping and damaging recommendations.

Little suggestion to economists: when your cherished theories make exactly the wrong predictions, it becomes a major contribution to the public good simply to shut your fucking mouth.

"These include scientists, mathematicians and editors on the high end and telephone operators, clerks and typists on the low end."

Um, excuse me, but if we're talking about scientists and mathematicians having their jobs "offshored" what sort of "retraining" does he actually think is going to make a difference? Is he advocating the gov't enact programs to teach scientists and mathematicians to say "would you like fries with that?"

"Apostasy"?... that seems overblown. IMO, most mainstream economists are well aware of potential labour market dislocation in the event of technological, demographic or institutional change. It's a not a radical diagnostic.

Moreover, he then states that trade protection is not a solution, and that increased spending on eduction, R&D, etc. are musts. That hardly makes him an apostate.

A self-perceived martyr? Perhaps.

"Demonstrably not knowing in the slightest what they're talking about has done nothing to dampen their enthusiasm for making truly sweeping and damaging recommendations."

You should know.

He's apostasic (?) because he's a free trader economist who cares about people (as opposed to the "greater" good).

They're claiming a loss of 4 million jobs; he's claiming a loss of 40 million. They're not saying he's a heretic; they're saying he's a loonie.

So, who's right?

My guess is that if we agree to call his very mild criticisms of economic orthodoxy "apostasy" we will have succeeded in setting the outer bounds of the debate.

Reminds me of the early 80s, where the debate concerning Nicaragua was whether we should work with the Contras to overthrow the Sandinistas by force, or just cut them off from the world economy and try to starve them out (this was the approved Democratic dissent that was allowed on talk shows). The notion that it should be up to the Nicaraguans to choose their own leaders without American interference was irresponsible leftist talk, not suitable for McNeil-Lehrer.

I guess it's apostasy because he thinks it's going to get ugly. Economists are supposed to buy in to the net effect of such processes being positive. And the orthodoxy is these forms of job losses are pretty much the same as the loss of blue collar positions. Blinder seems to have snapped to this being a bigger deal than before.

See the discussion at Delong. Also, Dean Baker is solidly for this form of economic redistribution. FWIW, these two are among my favorite reads.

I think the guy at the very bottom gets bumped by the mid 50s programmer who just lost his job. And that the wage differential shows up largely in profit, not in particularly cheaper services. But my ox is seriously gored by this issue so count me biased.

"....That is why I am going public with my concerns now. If we economists stubbornly insist on chanting "Free trade is good for you" to people who know that it is not, we will quickly become irrelevant to the public debate. Compared with that, a little apostasy should be welcome..."

He is issuing a *warning*. I think that the barometer in his office is showing an alarmingly low pressure. That barometer is his gut. Catastrophic hurricanes are *natural* phenomena after all. The free trade purists embrace this naturalism with respect to the global economy and often conveniently forget they we are humans that live in communities and nations with interests that conflict with the global market. Ironically, if we don't find ways to throttle the pace of the changes he talks about, there will not be any markets to take advantage of them-they will collapse from the fruits of their own unrestrained self-interest.

veblen is spot on.

Also, I think Blinder might not be using the word "apostasy" correctly. A better analogy would be to compare him to a defense lawyer providing statements against interest to the prosecution in violation of his duty to mount the most rigorous defense available under the law. It doesn't make him an apostate to his cause, just an apostate to the political party that has appropriated its advocacy.

The internet and rapid telecommunications certainly are playing their part, but one elephant in the bedroom that nobody talks about (much, anymore) is the human population explosion. Garrett Hardin once pointed out sarcastically that if you read news accounts, "nobody ever dies of overpopulation," whereas the real world effects of all these people competing for limited resources are severe. It has now become clear that one of those resources being competed over is the limited number of technological jobs. The fact that a billion people living on the Indian subcontinent are competing for a few niche jobs ramps up the competition enormously as long as they have access to our current jobs.

Ellen1910 -- The estimated 3-4M jobs include only job classes that are currently at risk. Binder's 40M estimate is the total of all job classes that are likely to be at risk.

Binder went into this in more detail in Offshoring: The Next Industrial Revolution?, Foreign Affairs, March/April 2006.

Let's think again about the magnitude of what Blinder says. 30 to 40 *million* jobs.

What's our working population, something like 150 million or so? He's talking about one in four or one in five of all our total jobs, people.

I have to think the apostasy is this dissent from the established view that off-shorable jobs are the ones where we're losing our competitive advantage anyway, the all-but-dinosaur jobs like coal mining in Wilkes-Barre.

He's saying it isn't only those jobs, but enough currently solid ones that a fifth to a quarter of our jobs are going bye-bye.

Then, in three or five or eight years, when it's far too late, the entire economics profession will execute one massive dope slap of its collective forehead and say in unison, "but you can't run a consumer economy if a quarter of the working population has no income!"

D'oh.

IMO, most mainstream economists are well aware of potential labour market dislocation in the event of technological, demographic or institutional change.

If they've been so keenly aware of this, and have been honest with themselves about the extensive damage it might wreak, please explain to me how they have almost uniformly advocated every policy that would promote unfettered globalization, and pretended that the negative consequences would be minor compared to the upside? And how, exactly, is the elimination of the jobs of perhaps 10s of millions of American workers, even those who prepared themselves by extensive training, a relatively minor downside?

No: it's obvious enough that the extent of this effect on jobs caught these pretentious clowns essentially unawares -- and you, too, it would seem.

Pompous ass jerk.

"It doesn't make him an apostate to his cause, just an apostate to the political party that has appropriated its advocacy."

If he's apostate, then that might be it. At the end of the day, it's the political class that makes the calls, not technocrats. Talking about 30-40 million job losses is a good way for a messenger to get shot.

At the end of the day, it's the political class that makes the calls, not technocrats. Talking about 30-40 million job losses is a good way for a messenger to get shot.

This is just more dishonesty. These economists aren't the "messengers"; they are the ADVISORS on economic policy. They have been inexcusably miles off the mark with their recommendations for growth. Both conservative and "liberal", they have made recommendations that have in fact, resulted in evident peril to 30-40 million jobs, not to mention enormous increases in the gap between the rich and the poor.

These ugly consequences took place under BOTH Republican AND Democratic administrations, under BOTH sets of economic advisors.

Economists seem to be more responsible for economic damage to the average worker than Republicans, since they manage to wreak that damage across parties.

If these consequences are in fact in large measure due to globalization, tell me, why have economists of all stripes advocated completely bowing to the pressure of globalization rather than find ways of resisting it, or constraining its negative impacts?

I'll tell you why: because they are idiots, who don't in a fundamental way understand the very things about which they are making recommendations. They think they know, but don't. They thought it would all be candy and roses in the end, and instead they brought into being a crock of shit.

They are like Beltway pundits with fancy ass mathematical models.

Kevin,

I hate to think you're being deliberately obtuse about this, but it comes across that way.

Blinder's point is that the after effects of globalization on our labor force will be so dramatic that US social security, education and health care policies will have to be totally revamped, deepened and broadened to deal with the fallout. Leave aside the fact that all of the privatization of those services is currently a joke. They will have to go so far in the other direction that socialism doesn't even begin to cover it.

The effects are massive, and the net benefit is highly, highly questionable, which is why he is out in the cold over this.

For an equally worried Free Trade cheerleader see: Rubin, Rick.

frankly0,

We have no choice but to deal with the a vast shock in information technology and the modernization of China and India. International competition is not going to wait for us to get our collective heads out of the sand... the internal market in China alone will create a scale economies in certain areas with which we can't compete. (It also seems to me we're also discounting future wealth generated by demand from China and India).

Anyway, measures to counteract the job losses, such social welfare net and meaningful retraining, are certainly crucial, and I'll admit they can't make up for the loss of good jobs. Domestic prosperity and social cohesion has to be safeguarded in the most effective way possible. (So, this claim re: "unfettered globalization" is total political bunk, what is that based on?) However, protectionist policies aren't going to change the technological and demographic reality.

(Moreover, a lot of job losses up here were due to radical technological changes, and not so much trade arrangements. I mean, *China* has lost a lot of manufacturing jobs. Some to other low-cost countries, but some were lost simply due to upgrades in machinery. So, what exactly is the real nature of the problem here?)

We're competing, not trading. Economists just don't get it.

Alan Blinder shouldn't be treated as a heretic - he should be treated as a dumb guy who doesn't know what he's talking about. The issue of outsourcing is complex, as the history of economics is. Many basic concepts of free markets are counter-intuitive. Jobs have been destroyed and created over and over, and the fact that jobs will be destroyed is not news.

Blinder writes: (an appropriate name, as it seems like he has his blinders on) Because U.S. labor cannot compete on price, we must reemphasize the things that have kept us on top of the economic food chain for so long: technology, innovation, entrepreneurship, adaptability and the like. That means more science and engineering, more spending on R&D, keeping our capital markets big and vibrant, blah blah..

Isn't this what the US always has done? Americans have never been about following rules - go back and look at the Steve Jobs and the Henry Fords. Why would we do anything different? This will play into our strengths. Americans have always accepted the inevitability of change, better than any other country.

Second, outsourcing has been a mixed bag - many companies have realized that the work turned out by Indian or Chinese firms have been substandard. Not that Indian or Chinese firms are incapable of producing great work, but India has serious infrastructure problems, and China has serious problems with their IP laws. There is a reason why labor is cheap there - if India had the correct infrastructure in place, their salaries would be much higher. The market compensates for the lack of infrastructure by giving them low wages. There's a reason why Google continues to pay programmers $130k - it's because a programmer working in San Jose is worth more to Google and 5 programmers in India. And look at Google's product - it's clearly superior.

We've had economics scares before - there was the so-called Japanese Fifth Generation project, which scared the bejesus out of many economists back in the 80s. What happened to the computer field? In the end, American innovation led the way, from Microsoft, to the likes of Ebay and Google on the Internet. Blinder seems to have learned nothing from history, and he deserves the pariah status he gets from his peers.

Hey frankly... believe you me, it's the politicos that make the calls (well, up here they do). If the advice doesn't fit their world view, they'll ignore it.

Do you seriously think the career guys at the CBO would have supported Bush's tax cut? Give me a break.

This is really a lame argument, because Blinder provides no time frame for the loss of jobs. When are the 30 to 40 million jobs going to get outsourced? In 5 years? In 10 years? In 20 years? If it's 5 years, I say no way, because Lou Dobbs has been crying wolf about that for 3 years, and it's been nothing even close to what he predicted. If it's 10 or 20 years, very likely salaries will have gone up in places like India and China to the point where it doesn't make economic sense to outsource offshore. Remember, salaries don't just have to be less than what they are here - they need to be much less to be worth it - there are opportunity costs in terms of time lost, etc. If an Indian programmer costs 40% of what he would cost here, I would say it wouldn't be worth it to a firm to outsource.

Blinder is talking 10-20+ years (see link in my previous post). However, he openly admits that this is unknown territory.

Andy: "USA Number 1" is neither an economic analysis nor a policy recommendation.

For someone who pronounces a major economist "ignorant", this strikes me as amusing: "There is a reason why labor is cheap there - if India had the correct infrastructure in place, their salaries would be much higher. The market compensates for the lack of infrastructure by giving them low wages."

10 years ago, the infrastructure wasn't there, so the jobs didn't exist. Today, most of the necessary infrastructure is there, so the market is sucking away American programmers' jobs. In 10 more years, all of the necessary infrastructure will be there, and four things will have happened: the rupee will have risen substantially, Indian programmers' salaries will be substantially higher, US programmers' salaries will be substantially lower, and a large portion of the programming jobs in the US will have migrated to India.

As this process continues, US programmers will find themselves ill equipped to compete with Indian programmers because they have higher fixed costs: the costs of food, rent, health care and education in the US are vastly higher than those in India. If competition between US and Indian programmers grows fierce, Indians can drop their wage demands to levels US programmers can't match.

You appear to believe that US programmers are endowed with magical innovation abilities which make them forever superior to foreigners. That belief didn't work out so well for US auto manufacturers.

Andy makes a good point. I worked for a CRM company in Seattle that outsourced most of their technical and customer support to India. Monitoring the chat support provided by the Indian support staff was embarassing. My employer's model made assumptions about the quality of the Indian electrical engineering graduates who staffed the support desks that didn't pan out.

Matt Steinglas touches on the differences in infrastructure as an explanation. There's more to it than that. Differences in rules and regulations put U.S. workers at a disadvantage because employers who hire them have to observe OSHA, healthcare, EPA and other local, state and federal mandates. If only there were some way to force India and China to adopt equivalent laws, the playing field would be much more level.

I'm liking this frankly0 a lot less than I did when I woke up this morning. Probably inevitable since I'm an econ grad student and he declared war today ...

But yeah, Kevin, Blinder is now a "heretic" because he is on the high end of the estimate of off-shorable jobs. And I bet he still gets invited to all the neat econ dinner parties (ugh)

How come nobody talks about the strategic importance of these jobs? If we don't maintain a large pool of engineers, technicians, programmers, if we don't maintain a significant manufacturing base and the knowhow that goes with it, if we can't feed ourselves, we're at the mercy of nations that do.

And the knowledge doesn't stick around. Decimate a field, and in 30 years there will be almost nobody left who knows how to do it.

Is Blinder seriously suggesting that it's apostasy in the economics profession merely to point out that some people will be hurt by offshoring, and that we ought to think about helping them?

Is he right that merely bringing up this subject prevents you from being invited to whatever passes for A-list cocktail parties among economists?

Yes. And yes.

Blinder is threatening to let the cat out of the bag and tell the peasants what the corporate and political leadership has believed for some time now - that the only way the American economy can be competitive with Third World economies is to become a Third World economy ourselves. Globalization really isn't being sold to the American people - we're just being told that that's the way things are gonna be, like it or not.

Economists of the current generation are doing the same thing that the rest of the baby boomers are - praying that they'll be dead and buried before things fall apart completely.

Reading this thread just underlines the extent to which the American left is a mirror image of the American right - all that matters is Americans and screw the rest of the world.

80 million people have escaped extreme poverty (living on less than a dollar a day) in the past two years - and almost all this is down to China and to a lesser extent India.

Reaction of the American left? This has cost American jobs... And most preposterously, the US is being forced to 'become a Third World economy' to compete...

You guys have no idea. It's as if 45% of the world's resources isn't enough for you.

Dr. Blinder might have had an epiphany about the difference between so-called "free trade" and fair trade. Until we refuse to trade with countries that employ child and slave labor and until we require that they follow reasonable policies regarding workers rights and environmental protection, there is going to be a diminuition of American standards of living. I don't care to compete with slave laborers in China's prisons, do you?

Well said, DS! If there's one thing that pisses me off it's Americans complaining about free trade. Since third world countries have been pushed to open up their markets to the first world, entire small and cottage industries lie in ruins.

In Bangladesh, from where I write, much of the local handicrafts and cottage industries have been laid to waste by globalization. They simply can't compete with mass-produced items from the West and, increasingly, other Asian countries. Let's face it - plastic buckets and pails are cheaper and more long-lasting than ones made of clay.

Certainly, it is better to work in a sweatshop than to be forced into prostitution or to do back-breaking manual labor for 12 hours a day. But the flip-side is that as many jobs are lost to imports as are created by sweatshop exports. So there are down-sides as well as benefits to a freer trade regimen.

On the whole, I think that Bangladesh would ultimately benefit from a freer trade regimen, but it is important to recognize that the process is not painless and that there are losers as well as winners even in a country such as Bangladesh.

This is what infuriates me about all the hand-wringing and hair-rending over outsourcing. It seems to me that the US and other Western countries are only prepared to accept the benefits of globalization and want to shift the burdens onto the third world.

Its a two-way street. Yes, there are difficulties for some in the US (those who lose their jobs) but this is nothing to the difficulties we face here in a country like Bangladesh where entire villages and communities have been made destitute and we have no social safety net or public education or retraining programs.

If the US wants to reap the benefits of globalization then it must be willing to accept the burdens as well. It would be foolish to pretend that the burdens do not exist. But they should be shared as much as possible. This is why Cancun descended into fiasco.

The time has come for the US to understand that if it suffers a couple of hits due to globalization that this is far less than the rest of the world has suffered. The US really has very little cause for complaint.

Are they going to start teaching Walmart greeter and hamburger flipping in the schools now?
My job is safe, I don't think they could do off shore hotel night auditing. At least I hope not.

DS and logicat: The tone of your comments almost seem to suggest that an American economic collapse triggered by globalization would be our just desserts; given the manner in which the US has behaved in global affairs over the last several decades, I can't say that I blame you. Trust me on this, though - you do not want to see that happen. You think George W. Bush is a bastard? Wait until enough Americans start blaming Third Worlders for the collapse of their economy. They'll elect leaders who make GWB look like Mother Teresa by comparison.

"I don't get it. What exactly is Blinder's 'apostasy'?"

Economists understand that people lose jobs to off-shoring and suffer the consequences. Most claim, however, that the ecnonomy as a whole benefits. To argue that it might not is certainly 'apostasy' and contrary (mostly) to U.S. trade policy for at least the last couple decades.

Some economists even argue that the people who lose jobs don't, on average, lose out in the long run. One argument is that they typically find new jobs at N% lower pay, but prices tend to be N% lower due to off-shoring (or something like that). I've not read the papers purporting to present data that this is what happens, but they exist.

I don't know if this is true or not. That's one experiment I don't want to a data point for either.

I don't get it. What exactly is Blinder's 'apostasy'?

Regarding the issues he described as bugs, not features.

Pointing out the obvious is the apostasy.

Of course he seemed to do that rather late in the game. When it was manufacturing jobs was he still saying the same things or was he all gung-ho. Now that the job that weren't supposed to go overseas (i.e. those that require advanced degress) now he is a bit bent out of shape?

The company I work for is outsourcing validation testing to India. This means that much of the test script writing is done by non-native English speakers. The results can be ludicrous and time-intensive when garbled language needs to be fixed. The company's solution is to develop validation documentation templates that are supposedly idiot-proof--even a manger can fill in the blanks and get a document that supposedly will pass an FDA audit. So tech writing jobs won't be outsourced, only eliminated.

Kevin,
He has committed a politcal aposty.
Elite economists are not allowed to point out how the bottom half lives and expect to be invited to the seminars, retreats and cocktail parties of the upper 10th.
The system works very well for them, thank you, and pointing out the facts may give people ideas.
Oh, and your offers to write op eds and submit articles will also diminish, since the upper 10th owns the periodicles, newspapers, radio and television stations that make up the Media.

No, if he keeps it up Mr Blinder will be relegated to the fringe, also know as "far left" media such as: Harpers, Mother Jones, Now with Bill Moyers, Utne reader. They don't pay as well, by the way.

Kevin:

You're forgetting that what the blogosphere and elite opinion journals feature opinions which are apostasy on any major television, radio, or newspaper page.

We all know this, but we also knew there were no WMDs in Iraq about 1 year before the rest of American and forever before the 30% that will never fund out. The major outlets have a very constrained discourse.

When are we going to start seeing some corporate boards off-shore the position of CEO? I'm sure there are millions and millions of well-qualified Indians who'd do it for, oh, say $100k a year. Just imagine the savings!

Come now Kevin. There is no need to play the know-nothing, though you do it quite convincingly.

Blinder is an apostate because he refuses to be mindlessly free-trade always and everywhere. Among conservative, libertarian and most liberal economists, supporting free trade--which (logically) includes being uncritical of it--is what makes one a "serious" economist in the same way that supporting an increase in the size of the military and military spending makes a candidate "serious" on national defense. It's a quick-and-fast barometer that lets other people know you have the correct opinion (Isn't "correct opinion" an oxymoron?)

Blinder no doubt feels professional peer pressure to stick with the program. Kudos to him for saying what a lot of people, especailly progressives, have been saying for a while. If you've read DeLong diligently for any length of time the pressure to be pro-free trade is quite apparent.

Mentioning any drawback for anyone anywhere from free trade is worse than criticizing the Israel Lobby. It simply cannot be done in polite society.

"free trade" is to economists as "tax cuts" are to republicans.

Jeez, guys, America turning into a third world country does not enrich the poor in other countries. Anything that drives wages down keeps driving wages down.

Globalization as practiced in the "free-trade" environment just globalizes the Iron Law that wages, if unregulated, will tend toward subsistence.

Blinder is saying, "Look how honest I'm being - so you can believe me when I tell you that re-regulating the market is not the answer. Now go learn to be a butler, maid, gardener, or waiter so you won't have to just be a day-laborer."

"...Because U.S. labor cannot compete on price, we must reemphasize the things that have kept us on top of the economic food chain for so long: technology, innovation, entrepreneurship, adaptability and the like..."
Posted by: Andy on May 7, 2007 at 2:21 AM

That all sounds fine, but corporations can hunt out lower costs abroad far more quickly than they can nurture domestic investments. Those corporations are predominantly thinking short-term and tend to prop up the current quarter they happen to be in and not doing much long-term domestic investment at all. I think that is what is behind our increasingly lackluster recoveries:
http://streetlightblog.blogspot.com/2007/04/bafflingly-weak-recovery.html
http://streetlightblog.blogspot.com/2007/04/bafflingly-weak-recovery-part-2.html
(thanks Kevin for that site!)

"...How come nobody talks about the strategic importance of these jobs? If we don't maintain a large pool of engineers, technicians, programmers, if we don't maintain a significant manufacturing base and the knowhow that goes with it, if we can't feed ourselves, we're at the mercy of nations that do..."
Posted by: Boronx on May 7, 2007 at 5:07 AM

I think there is going to be a LOT of talk about that in the next few months and years. This is where economic rationalism will butt heads with political realities. The comment above is quite apt-How DO you retrain a mathematician?

Yes, this kind of outsourcing is going to occur, and it will hurt.

I work in a company that is starting to outsource some (not all) of it's deeper analytic work to statisticians and actuaries in India. Why? Because they're expensive in our part of the country, and you can get them cheaper in India. My brothers tech company is doing the same, they are starting to locate a lot of their engineers with their manufacturing in China, Thailand, and so on.

This is not an unexpected outcome. This is policy. Look at what Alan Greenspan said: "Our skilled wages are higher than anywhere in the world. If we open up a significant window for skilled workers, that would suppress the skilled-wage level and end the concentration of income."

Read that again.

For guys like Greenspan, the only economic disparity that matters is between different members of the working class. If we can make white collar workers suffer as much as blue collar or service workers, resentment will disappear.

The fact is, the economic policies of Republicans and the Greenspan types are designed to benefit one class - the capital class, the top one tenth of one percent.

Class struggle is not longer about the other half - it's about the other 99.9% who won't benefit from the policies that this administration puts in place.

This story is ten years old.

At least among the outsourced software engineers, who have been discussing this issue since roughly 1996 - when Clinton's team jacked up the H1-B visa ceiling, and companies started opening up offices in Pune.

What's a guy to do? Get a job in the defense sector, and get a security clearance. They aren't shipping THOSE jobs to China. Yet.

Last time I checked we were still nominally a democracy. 'Kitchen Table' economics and populist sentiments played a surprisingly large role in the midterms. If the author's projections are anywhere close accurate we won't need to worry about free trade. The US will singlehandedly kick off a century of bilateralism, protectionism, and restraints on out-sourcing through the ballot box, the economic models be damned.

Forgotten gets closer than anybody else: offshoring isn't based on "market" forces. As a practical matter, it's based on the labor subsidy of NON-immigration policy.

Kevin "born yesterday" Drum wonders why Blinder is an apostate? Like any cult, the free traders demand that their members "exaggerate" (fancy way to lie) about the positives, and never even hint at the negatives.

For a good example of classic dishonesty in the "free" trade debate, see Dani Rodrik's latest blog entry.

The mainstream of the economics profession is a complete mess. That he would get the boot from the kewl kids parties simply for acknowledging that supposedly neutral, all-powerful 'pro-market' policies actually disadvantage some people is not surprising at all.

There is a certain group of mainstream, relatively liberal economists who say things like this, and yes, by all accounts they have been kicked out of the clubhouse.

I think it's mostly a matter of scale. It's easy to admit that outsourcing is a little painful. It's another thing altogether to say that this globalization which is supposed to be so great may threaten the existence of a great swath of middle and upper-middle class citizens.

It is not clear anymore what an American company is.

It's interesting looking in on people who think they live in the real world.

There's actually a way to specifically punish companies who don't spend a lot of money on wages, and that's through tax-code measures. Multiply the actual employment costs by a multiplying factor, and reduce the counting of other expenses, and then tax the remainder on a graduated percentage of gross basis. It or similar is at least worth thinking about.

tyrannogenius

"...economists remain committed to the idea that free trade is an unvarnished good."

Accountants and other white-collar folk are facing the same job losses that blue-collar America faced. I eagerly await the accountants cheering on globalization, as they join the ranks of the unemployed.

What they are finding out is that economic theory is fine, but the real world will not accept "theory" over having a real job they can use to support a family.

Economists act as though real life simply does not exist.

"Computer programming is offshorable; computer repair is not." says Binder.

I especially love that! Does Binder actually know the low regard those folks are held in? Does he know how little they're paid compared to IT people they work alongside? Is this where the middle class of IT tomorrow is coming from? For an apostate, does he know this?

Nobody's digging in with a soldering iron like on the family Philco 70 years ago, or the DuMont 50 years ago, or the Cobra CB 30 years ago, or a kit in the "garage days" of the PC.

All that matters is Americans and screw the rest of the world.

Uh, not quite. Some Americans are just looking for a definition of "American multinational" that explains what right the Hoover vacuum and Stanley Tools Boards Of Directors have to fly the Stars 'n' Stripes. Governments make choices, those choices have consequences, and I don't know that I want those consequences to be called "free trade".

PS I'm willing to get data points for a real trade experiment, no exploiting workers here or abroad. I care where my strawberries, my chicken parts, and my sneakers come from. And it's a bit embarrassing to have to put this disclaimer up here or be thought of as an insulated white-collar elite.

Per Cringely: IBM may be implementing stealth plan to move 100K + jobs off shore, mainly to Asia.

http://www.pbs.org/cringely/pulpit/2007/pulpit_20070504_002027.html

I don't get it. What exactly is Blinder's "apostasy"? That offshoring hurts the workers whose jobs are offshored?

Exactly; the orthodoxy of so-called "free trade" is that "free trade" benefits everyone.

The observed results, of course, are that "free trade" benefits the major capitalists in all countries involved, and particularly in the most advanced countries.

dr. sardonicus: globalization won't ruin the US economy. it hasn't and won't ruin the bangladesh economy and i suspect that the US economy is a tad more resilient. i am not suggesting that it is just desserts for the US to have its economy ruined, only pointing out that there are positives as well as negatives and it is only fair that these be shared somewhat equally. or as they would say in east london: you have to take the rough with the smooth, me old china.

The mind reels

Some day, Kevin, you might understand a few things about people. You are just a kid, and a niave kid at that.

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