I got into an argument with a group of people recently who seemed to believe that outsourced jobs and free-trade were a bad thing (as opposed to fair trade). I want to try and put things on an even keel here.
For starters, in voluntary trade, everyone wins - if you didn't win you wouldn't trade. Imagine going to the gas station with a couple of bucks in hand and you of course need gas. The fact that you chose to pay for the gasoline shows that you gained a benefit from the gasoline equal to or greater than the cost. You may be unhappy that the increased price has made you poorer, but you certainly win in this situation. Trade increase wealth - and by wealth I mean what makes you happy. Trade makes you happier (even if it is marginally).
Now, if a product becomes cheaper, then our happiness goes up. Here I want you to imagine the radiology industry. One day, a guy comes up with a new technology that reduces the cost of analyzing an x-ray by 50%. He's heralded as a genius. No one knows quite how his invention works, but they do know that x-rays are cheaper and thus people can get more, those who got them already get them at a lower cost (making more money available for other tests), and it is saving more lives, but some radiologists in America have lost their jobs.
Now pretend that the genius' secret is reveal: his invention was just a laptop! He just sent the x-rays to China were they examined them for a fraction of the cost! Americans are outraged! The benefit of the increased wealth doesn't matter, only the fact that some of our jobs went to foreigners.
I hope I'm making my point clear: free trade is good (in another blog I'll tell about the perverts you're helping by buying Starbuck's fair-trade coffee). We don't like it because we can see that our neighbor is out of a job, but it is harder to see the greater long-term benefits. Your neighbor should be doing something he has a higher comparative advantage in.
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People often assume that because jobs are being outsourced, that they are leaving America. This may not always be the case.
Americans need to realize the limitedness of our economy. Gone are the days where we are the production leader of the world. Given that outsourcing becomes a competitive necessity. Manufacturing jobs are outsourced, but they are not the center of the economy. because we are able to outsource labor intensive jobs, companies in America are able to expand their service industry.
The service industry is now lauded as the center of the American economic system. The manufacturing jobs leave, but higher level, better paid, service jobs are being created. Often this result in not a loss of jobs, but the creation of even more jobs.
Thats all incredible and good for Ameirca. The reality if you are a person who has their job outsourced is no less grim. In the end, outsourcing is nothing but a necessary evil.