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The Great Outsourcing Scare of 2004

Here’s a new piece of mine on outsourcing from the latest Hoover Digest. I look at the fears that there are a fixed number of good jobs and that every Indian with a good job means one less available to Americans.

At the heart of these fears is a theory about how nations prosper–the key is to get the good jobs. Ross Perot had a simple way of expressing it. He said it’s better to make computer chips than potato chips. In this mistaken theory of how jobs affect our standard of living, wages depend on the title on your business card. If somehow the foreigners corner the computer chip market, we’re left peeling potatoes for minimum wage, if we’re lucky.

The problem with this theory is that, if a nation’s skill level is low, making computer chips makes you poorer, not richer. It’s like me at 5′ 6″ deciding to be a basketball player because basketball players have high salaries. Or Haiti trying to jump-start its economy by creating a domestic pharmaceutical industry sector because pharmaceuticals are very profitable.

I also explore the similarities between today and America in the early ’90s when Japan was going to steal all of our good jobs.

This may be the only piece on outsourcing that gets in a reference to Pokey Reese.