This post by economist Brad DeLong is worth reading for a couple of reasons.
First, because he quotes a skeptical American Prospect article about outsourcing at length. So go over and read that bit.
Second, because of the extraordinary weakness of DeLong’s response:
I suppose it’s theoretically possible, but that’s pretty plainly not what’s happening to actual workers in the actual marketplace. What’s also possible – and closer, I suspect, to the real world – is that low-wage workers have not benefited in the slightest from higher-wage workers being outsourced. Instead, the extra money is going to wealthy stockholders and to overpaid CEOs (on and off the books). Wheeeeeee.
I have nothing against upper wages in the US being pushed down to benefit folks who need the money in India. But half the people I know don’t even have jobs. There needs to be a sufficient supply of jobs for American workers; not great jobs, but jobs that enable people to get by. Or, failing that, there needs to be a much, much more generous safety net.
That a respected economist apparently thinks that things are getting better for the folks near the bottom of the scale doesn’t give me much faith in the dismal science.
Also check out the comments – I don’t think I’ve ever seen a thread on his site in which fewer readers were willing to agree with Mr. DeLong..
Jumping in here without reading any of the linked articles, I just want to point out that while it may be true, as economists love to point out, that the forces of free trade and globalization have done a lot to raise the world’s poorest out of poverty, the fact that this comes at the expense of increased inequality is not something that should be ignored. If we just look at the starkest figures, such as infant mortality rates, it is true that trade has done wonders for the world. But if we look at other statistics, such as life expectancy, we don’t see such a pretty picture. As the nobel prize winning economists Amartya Sen has argued, increased inequality can actually lower life expectencies for the disadvantaged in the world’s wealthiest countries. Even without such stark statistics, inequality creates a host of social problems which have serious long term reprocussions for society. Check out inequality.org!
Read Sen’s “Development as Freedom” it is a very readable and important book!
There used to be a whole branch of economics that looked at income distribution between capital and labor, people like Kaldor and Robinson. I guess it still exists, but it sure isn’t easy to find in the U.S..