The Irony of Outsourcing

Monday, December 8th, 2003

The Irony of Outsourcing presents an amusing analogy:

Economically, trade is no different than other technologies. Economist David Friedman of Santa Clara University puts it most succinctly: there are two ways to make a car — you can either make it in Detroit or grow it in Iowa. You already know how to make it in Detroit. You get a bunch of iron ore, smelt it into steel, and have an assembly line of robots and workers shape it into a finished vehicle.

To grow it in Iowa, you plant car seeds in the ground (also known as ‘wheat’), wait until they sprout, and harvest them. Take the harvest and put it into a big boat marked ‘to Japan’ and let it sail off. A few months later a brand new car comes back.

As far as the economy is concerned, it has exactly the same effect on workers and consumers if we use a boat marked ‘to Japan’ or a fantastic new technology invented in Silicon Valley called the ‘wheat-to-car-converter’. Either way, if it takes you less effort to grow wheat into a car than it does to make it in Detroit, then you should grow wheat. Either way, jobs in Detroit would be lost, and either way people get cheaper cars. Trade is just another technology.

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