If a new measure reduces costs significantly, then yes, it becomes economically necessary for all companies to adopt it, to match competitors' cost reductions and thereby percentage profitability increases.

The problem is the left has convinced too many of us that shifting ('sourcing') low-skilled labor inputs to locations outside a company benefits its' bottom line and negatively impacts everyone else. This is a familiar response employed by the left whenever an innovation invites labor to participate in positive change. In this instance low-skilled labor 'inside' a company can 1) upgrade their skills and match their labor to the higher-skilled labor input now needed by the company, or 2) they can take their low-value skills elsewhere, or, 3) more likely, they can refuse to grow, launch a labor dispute, politicize the issue, and damage the company, by causing it to opt out of other, subsequent innovations due to falling profits, etc.

In effect, labor's resistance to change is used by the left to hold back corporate innovations, thus holding back growth, and as this proliferates, as feeds into other companies' reduced activity, at higher cost, it produces lower profits upstream and downstream, and in due course potential economy-wide stagnation.

That outsourcing can usually benefit a company is not in dispute. But is it true that it negatively impacts 'everyone else', as the left argues?

It's rational for production to flow naturally to wherever the labor input cost is the lowest. This imbalance exist because of an imbalance in knowledge among different societies. Higher knowledge generally produces production innovations, new products, and higher levels of productivity, all of which lead to greater wealth. The knowledge imbalance 'causes' the wealth imbalance. The left believes, in all sincerity, that the wealth imbalance causes all other imbalances. This world view leads to the familiar worker-narrative: oppression, resistance, revolution.

Therefore, outsourcing, as an innovation introduced by companies, is immediately seen as corporate wealth expanding its oppression and victimization of low-skilled labor. It truly is regrettable this closed paradigm still has such currency, despite all the evidence of its destructive impact on employees, companies, industry sectors, economies, and the global trading system.

Outsourcing is a necessity because it lowers costs through a more rational, efficient allocation of the labor resource. I contend that this is not a negative development.

Learn more about this author, Stephen Carter.
Click here to send this author comments or questions.

---

Add your voice

Know something about How outsourcing is becoming an economic necessity?
We want to hear your view. Write now!