IT JOB OUTSOURCING: Will it ever END?

Worstall on Wednesday HL Mencken once told us that in a democracy the electorate should get what they voted for – and good and hard too. So, on that basis, I present to you a piece on outsourcing, as requested by one Gordon 10.

The commenter in question wrote:

What would be really nice is [an article] on the race to the bottom on labour outsourcing and how long we have until a global equilibrium of sorts is reached ... where the incremental savings from outsourcing are not enough to pay for the cost and disruption of that outsourcing. Most companies in my industry are already on their 3rd or 4th offshoring country because the previous ones have become too expensive.

Well, there are two answers to this one and they are: around 2080 (2090 maybe) and never. And there are two flavours of that “never” answer too.

The thing is that we have got two very different kinds of outsourcing and it is never really entirely certain which type any specific example of the practice is.

The first is the one we usually think of, the bastard capitalists nipping off in the search of cheap labour and leaving their devoted domestic workforces starving in the gutters. That one has very definitely got to the third and fourth levels. Cheap plastic tat came from Japan in the '50s, Hong Kong in the '60s, Taiwan and South Korea in the '70s and '80s, China in the '90s and now its migrating to places like Vietnam and Indonesia. What happens is that people sate their lust for cheap labour in a place until that labour's not all that cheap any more and thus another move for that lifeblood of predatory capitalism is necessary.

Electronic waste dump in China – in the '90s, your PC was likely built here

On the other hand, making cheap plastic tat is a leg-up for the local economy. OK, that first generation of jobs is pretty shitty, but as we've seen in all of those nations, things do develop. People work out how to do things – how to run a factory, serve a customer, make more complex things – and as the value chain is climbed, that labour gets paid more and we move, over the decades, from poor country to thriving modern economy.

Of this first type of outsourcing, the end is presumably going to be when there's no more really poor places where the plutocrats can go oppress people. Exactly when that's going to be, well, I would like the King of Sweden to give me a gold medal one day and he would if I knew when this was going to happen. But we can have a good guess by using our old friends the IPCC. If you follow the link, you'll see the economic models that provide the emissions numbers for everyone to run through their climate simulation software. They're not perfect for our use here but they're still a damn good look at how the global economy might develop in the remainder of this century.