OffShoringWhyIsItInteresting

There are many interesting things about the OffShoring discussion (as exemplified in this article in Wired) : http://www.wired.com/wired/archive/12.02/india_pr.html

Suddenly a new swathe of US workers, educated, middle-class, are discovering what it means to be on the losing end of unfettered capitalism. And suddenly they don't like it all. Suddenly all their intuitions are that this is wrong.

Now there are several reactions. We can celebrate that a whole new group of people finally get it about capitalism. And we can take a guiltier pleasure in the apparent poetic justice, of a class who were generally enthusiastic when it came to offshoring other peoples' jobs, now have a taste of their own medicine. And lastly it may really redistribute wealth and power from the US to other poorer countries in the world, which is a good thing from the perspective of world politics.

More interesting, we can really see the new off-shoring wave as a test of two rival theories :

• 1) that the US will simply move on to the next big thing. It will discover and embrace that new thing, maintaining it's "top nation" status in the process.

• 2) that the US will fall victim to capitalism's systematic pull towards an extreme PowerLaw distribution of wealth. Unchecked, the US will become as economically divided as many third-world countries.

: Ultimately this dynamic is due to wealth accruing to the owners of things (the capitalist) and away from the producers (the workers). Now this pull is opposed by viscosities which constrain the market. But whenever you make the market more free, you accelerate the process.

How plausible is each scenario?

Of course, we are likely to see both happening together, the question is the relative importance of each. The cheer-leaders of the free-market will be emphasizing evidence of 1) and down-playing evidence of, or the importance of, 2).

The crucial tests will be NOT the total amount of wealth in the US economy, but some measure of it's distribution and use. A small minority of super-wealthy owners of businesses which employ workers elsewhere in the world is not the next big thing. In fact, you shouldn't mistake ownership for the next big thing. If people start pointing at ownership as an example of the next growth sector for the US, then they've given up all pretense that this is anything other than a straight fight between capital and labour, and they just hope to sucker you into thinking you're part of the owning class.

How might this emphasis on ownership appear? See ProductStrategy for more details.

On to "what's OffShoringTheNextBigThing?"

CategoryPolitics, CategoryBusiness, CategoryEconomics