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No Such Thing As “Pure” Economics

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As I have been arguing all along, the trade/”outsourcing” debate can never be about “pure” economics, because this is the real world, and in the real world economics is inextricably bound with politics, as Thomas Friedman notes in yesterday’s column:

    BANGALORE, India

    ….Watching these incredibly enthusiastic young Indians preparing for their call center jobs – earnestly trying to soften their t’s and roll their r’s – is an uplifting experience, especially when you hear from their friends already working these jobs how they have transformed their lives. Most of them still live at home and turn over part of their salaries to their parents, so the whole family benefits. Many have credit cards and have become real consumers, including of U.S. goods, for the first time. All of them seem to have gained self-confidence and self-worth.

    ….I was most taken by a young Indian engineer doing tech support for a U.S. software giant, who spoke with pride about how cool it is to tell his friends that he just spent the day helping Americans navigate their software. A majority of these call center workers are young women, who not only have been liberated by earning a decent local wage (and therefore have more choice in whom they marry), but are using the job to get M.B.A.’s and other degrees on the side.

    ….There is nothing more positive than the self-confidence, dignity and optimism that comes from a society knowing it is producing wealth by tapping its own brains – men’s and women’s – as opposed to one just tapping its own oil, let alone one that is so lost it can find dignity only through suicide and “martyrdom.”

    Indeed, listening to these Indian young people, I had a deja vu. Five months ago, I was in Ramallah, on the West Bank, talking to three young Palestinian men, also in their 20’s, one of whom was studying engineering. Their hero was Yasir Arafat. They talked about having no hope, no jobs and no dignity, and they each nodded when one of them said they were all “suicide bombers in waiting.”

    What am I saying here? That it’s more important for young Indians to have jobs than Americans? Never. But I am saying that there is more to outsourcing than just economics. There’s also geopolitics. It is inevitable in a networked world that our economy is going to shed certain low-wage, low-prestige jobs. To the extent that they go to places like India or Pakistan – where they are viewed as high-wage, high-prestige jobs – we make not only a more prosperous world, but a safer world for our own 20-year-olds. [NY Times]

A corollary applies to NAFTA and Mexico: the better Mexico does economically, the less incentive there is for illegal immigrants to come to the U.S. This is also a political matter wrapped up in an econoic package: trying to separate the economic from the political aspects of these issues is disingenuous and self-defeating.

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About Eric Olsen

  • Hal Pawluk

    Your comments sound almost exactly like something I’d have said. I’d probably extend “…real world economics is inextricably bound with politics” to include “and narrow business interests.”

    As to Friedman, I skipped that for now but will get back after I’ve had to a chance to read his column.

  • Hal Pawluk

    Okay, I’ve read it and really don’t have much to say except: “Gosh, that’s nice.”

    It’s harmless but not helpful.

  • mike

    A much better assessment was provided by Krugman in Friday’s Times. As he says, when free trade is tempered by concern for domestic workers, and for labor and other standards, it thrives, as it did under FDR and Truman. When only the law of the jungle applies, as it does these days with India, then people turn to protectionism and xenophobia to save their jobs.