NoApparentMotive

I had lunch yesterday with an economist friend who is writing a book on globalization. We spent some time talking about the politics and economics of "outsourcing" and "offshoring" and I mentioned to him an almost certainly apocryphal story I heard back in 2004.

As the story is told, a US-based computer programmer wrote a post on geek-site Slashdot announcing: "About a year ago I hired a developer in India to do my job. I pay him $12,000 out of the $67,000 I get. He's happy to have the work. I'm happy that I have to work only 90 minutes a day just supervising the code. My employer thinks I'm telecommuting. Now I'm considering getting a second job and doing the same thing."

I've searched Slashdot's archives and haven't found the original post. The source, rather, seems to be a story in the India Times in July 2004. (Let me know if you have any evidence that a Slashdot post does exist.)

Whether this act of outsourcing ever really happened or not is irrelevant. The story illustrates an essential aspect of globalization (and technological change, too). Our relationship to the process, not nearly so much the process itself, is what overwhelmingly determines our attitudes.

If US workers "owned" their jobs, and could do what this programmer claims to have done (albeit, surreptiously), I think most of the US work force would be vocal supporters of outsourcing.

In the economy we live in, however, firms "own" the jobs and pocket all the benefits of outsourcing (except any resulting price declines for consumer products --which are a fairly small compensation for your lost job, health insurance, and pension).

In standard trade theory, the gains to the owners of the firm are sufficient to compensate the losses to the firm's workers. In practice --in the United States, at least-- the winners in globalization (or technological progress) actively resist sharing any benefits of globalization with the losers. I take this as evidence that the benefits of globalization are probably substantially smaller than proponents claim. If the benefits were large, there would be plenty of money to make a deal with the losers.

One last point. In the example here, the US programmer comes across as pretty clever. At the same time, I find myself judging the guy (I'm guessing that the likely fictitious programmer is a guy) for exploiting his Indian counterpart, especially, when the US programmer announces the idea of getting another job and hiring another Indian programmer. (Until that point, I saw the US programmer as, fundamentally, a peace-loving slacker. When he wants to sign up for another job, he suddenly sounds greedy.) Sure, the Indian programmer is happy to be earning $12,000, but it is purely an accident of birth that lets the US programmer net $55,000 a year from the deal for working 90 minutes a day, while the Indian programmer makes $12,000 a year for working what is presumably something like a full-time job. (I'm leaving aside that it is much cheaper to live in India than it is to live in the United States, let alone Northern California.) The arrangement essentially personalizes the exploitation of the Indian programmer, and I find it interesting that I react viscerally to that in a way that I don't when it is a US software company doing the same thing --and screwing a US programmer, to boot.