4 ms·

So if we outsource stuff to India, all the sit-down resturants in the United States will be forced to close? What?

olefoo 16y ago
If there isn't a sufficiently large class of people with both the money and the leisure time to be able to support the restaurant industry; yes. It's like this, if people who were earning enough to afford a decent sized apartment in a safe neighborhood with enough left over to eat out once in a while are all fired and replaced by overseas workers; their disposable income spending goes away too. And thus all of the businesses that were dependent on their being customers go away too.
- yummyfajitas 16y ago
  If we outsource lawyers, now everyone who was previously a lawyer can do other productive work; to keep things simple, imagine they all become maids/housekeepers. After this transition, we get the same legal services we had before (but provided by different people) and some people have cleaner houses. This may be bad for the lawyers and people in India who need legal services, but it's good for everyone else.
  - gaius 16y ago
    we get the same legal services we had before (but provided by different people) Yes that is the theory, but in practice I've yet to encounter a situation where outsourcing is as seamless as that. Generally communication overhead goes up and quality of service goes down. Ask anyone who's ever been put through to an outsourced call centre. Or spent more time writing a spec for an outsourced IT worker to implement 10 timezones away than it would have taken them to do the work themselves. The only people outsourcing is actually good for is those managers who are going to get a bonus for saving money this year and no downside in five years when the friction between the parts of the organization has reached the level that it seizes up and everything has to be brought back in-house.
    - cynicalkane 16y ago
      ...Good story, dude. What's the point? That outsourcing will eventually be abandoned because it will fail? Then why are you afraid of it? Guys, if you want to start arguing against outsourcing, you're gonna have to start making economic sense. It's a hard position to take--and very few economists take it--because it is very hard to economically justify protectionism. Right now I'm picturing some hacker sitting in Indonesian-made clothes, typing into his Chinese-made keyboard with ICs from Taiwan (or wherever) angry posts about how globalization is destroying our economy and depriving us of value. Meanwhile, the average wage of the low-class Chinese worker (as an example) rose 17% over the last year. Outsorcing is just globalization continued. And the people who complain about the low quality of outsourced labor remind me of Doc Brown in "Back to the Future", in a scene set in 1955: "No wonder this circuit failed... it was made in Japan..."
      - gaius 16y ago
        OK, in economic terms, I don't think outsourcing as often practiced in services and high tech adequately accounts for externalities. If someone is incentivized - through say a bonus system - to prioritize the short term over the long term then that is what they will do. If this means closing a call centre in the West and opening one overseas, then that might make perfect sense right now. Will it make so much sense when customers go elsewhere? That is what I mean when I say that a race to the bottom ultimately destroys rather than creates wealth. Some of your customers will go elsewhere. Some will simply stop using that product or service altogether. There are already signs this is happening; Nat West (a UK high street bank) are now advertising "only UK call centres". Now, it doesn't matter one little bit that their cheque processing is done in India, that is, to borrow a bit of programming jargon, referentially transparent. That is just one example. So what I am afraid of? I am afraid of being personally inconvenienced by the interests of the organizations I transact with being further misaligned with my own. In other words, it's a tragedy of the commons scenario. So I know it will fail. I just don't see why we have to go through the pain first when there's no need.
        cynicalkane 16y ago
  - olefoo 16y ago
    But maids and dishwashers don't eat out as often or as well as journeyman lawyers. What happens to places subject to this type of dislocation is similar to what happens to ecosystems undergoing desertification; fewer species, and the ones that survive are hardier and use far fewer resources. The trattorias go away, and all that's left are taco stands and bento carts.
    - yummyfajitas 16y ago
      It's certainly true that Legal Grounds Cafes (a chain of coffee shops which is often situated near courthouses) might suffer. But on the other hand, a consumer of legal services has more money to spend on restaurant meals. Over the past 20-30 years, we have outsourced a huge amount of labor to other countries, and we outsourced even more of it to machines. And yet, we are more prosperous, have more consumer goods, and we generally eat out more often. Why is that? (Incidentally, I generally find that the truck food is superior to restaurant food in Jersey City. I love thetacotruck and the H1B cart isn't bad either. Au Bon Pain, meh.)
gaius 16y ago
They will if "what's the cheapest option, I don't care about the quality" becomes the default choice. Outsourcing is a symptom, not the root cause.
- cynicalkane 16y ago
  As long as a sufficient number of people care about quality, quality won't go away. People still go to the symphony, wear fancy American-made clothes, eat out at resturants, fly business class, and shop at farmers' markets. These things are more expensive than the alternatives, but it's not that they've gotten more expensive so much as the alternatives didn't used to exist. For example, before airline deregulation, only the well to do could afford to fly. Before industrialized food, the urban poor lived in poverty and malnourishment, with infant and child death rates comparable to what you'd expect to see in developing countries today. Also, part of living in a capitalist society is you have no right to tell other people how to spend their money.
  - gaius 16y ago
    Oh absolutely. Some routes I fly are only serviced by Ryanair, and I sometimes see business travelers who buy two seats so they can put their work next to them. No doubt they, or at least their companies, are delighted at how much money they're saving compared to BA. I keep meaning to ask one, are you working so hard so you can take your family on holiday to Butlin's in Skegness?

If there isn't a sufficiently large class of people with both the money and the leisure time to be able to support the restaurant industry; yes. It's like this, if people who were earning enough to afford a decent sized apartment in a safe neighborhood with enough left over to eat out once in a while are all fired and replaced by overseas workers; their disposable income spending goes away too. And thus all of the businesses that were dependent on their being customers go away too.

yummyfajitas 16y ago
If we outsource lawyers, now everyone who was previously a lawyer can do other productive work; to keep things simple, imagine they all become maids/housekeepers. After this transition, we get the same legal services we had before (but provided by different people) and some people have cleaner houses. This may be bad for the lawyers and people in India who need legal services, but it's good for everyone else.
- gaius 16y ago
  we get the same legal services we had before (but provided by different people) Yes that is the theory, but in practice I've yet to encounter a situation where outsourcing is as seamless as that. Generally communication overhead goes up and quality of service goes down. Ask anyone who's ever been put through to an outsourced call centre. Or spent more time writing a spec for an outsourced IT worker to implement 10 timezones away than it would have taken them to do the work themselves. The only people outsourcing is actually good for is those managers who are going to get a bonus for saving money this year and no downside in five years when the friction between the parts of the organization has reached the level that it seizes up and everything has to be brought back in-house.
  - cynicalkane 16y ago
    ...Good story, dude. What's the point? That outsourcing will eventually be abandoned because it will fail? Then why are you afraid of it? Guys, if you want to start arguing against outsourcing, you're gonna have to start making economic sense. It's a hard position to take--and very few economists take it--because it is very hard to economically justify protectionism. Right now I'm picturing some hacker sitting in Indonesian-made clothes, typing into his Chinese-made keyboard with ICs from Taiwan (or wherever) angry posts about how globalization is destroying our economy and depriving us of value. Meanwhile, the average wage of the low-class Chinese worker (as an example) rose 17% over the last year. Outsorcing is just globalization continued. And the people who complain about the low quality of outsourced labor remind me of Doc Brown in "Back to the Future", in a scene set in 1955: "No wonder this circuit failed... it was made in Japan..."
    - gaius 16y ago
      OK, in economic terms, I don't think outsourcing as often practiced in services and high tech adequately accounts for externalities. If someone is incentivized - through say a bonus system - to prioritize the short term over the long term then that is what they will do. If this means closing a call centre in the West and opening one overseas, then that might make perfect sense right now. Will it make so much sense when customers go elsewhere? That is what I mean when I say that a race to the bottom ultimately destroys rather than creates wealth. Some of your customers will go elsewhere. Some will simply stop using that product or service altogether. There are already signs this is happening; Nat West (a UK high street bank) are now advertising "only UK call centres". Now, it doesn't matter one little bit that their cheque processing is done in India, that is, to borrow a bit of programming jargon, referentially transparent. That is just one example. So what I am afraid of? I am afraid of being personally inconvenienced by the interests of the organizations I transact with being further misaligned with my own. In other words, it's a tragedy of the commons scenario. So I know it will fail. I just don't see why we have to go through the pain first when there's no need.
      - cynicalkane 16y ago
- olefoo 16y ago
  But maids and dishwashers don't eat out as often or as well as journeyman lawyers. What happens to places subject to this type of dislocation is similar to what happens to ecosystems undergoing desertification; fewer species, and the ones that survive are hardier and use far fewer resources. The trattorias go away, and all that's left are taco stands and bento carts.
  - yummyfajitas 16y ago
    It's certainly true that Legal Grounds Cafes (a chain of coffee shops which is often situated near courthouses) might suffer. But on the other hand, a consumer of legal services has more money to spend on restaurant meals. Over the past 20-30 years, we have outsourced a huge amount of labor to other countries, and we outsourced even more of it to machines. And yet, we are more prosperous, have more consumer goods, and we generally eat out more often. Why is that? (Incidentally, I generally find that the truck food is superior to restaurant food in Jersey City. I love thetacotruck and the H1B cart isn't bad either. Au Bon Pain, meh.)

gaius 16y ago

They will if "what's the cheapest option, I don't care about the quality" becomes the default choice. Outsourcing is a symptom, not the root cause.

cynicalkane 16y ago
As long as a sufficient number of people care about quality, quality won't go away. People still go to the symphony, wear fancy American-made clothes, eat out at resturants, fly business class, and shop at farmers' markets. These things are more expensive than the alternatives, but it's not that they've gotten more expensive so much as the alternatives didn't used to exist. For example, before airline deregulation, only the well to do could afford to fly. Before industrialized food, the urban poor lived in poverty and malnourishment, with infant and child death rates comparable to what you'd expect to see in developing countries today. Also, part of living in a capitalist society is you have no right to tell other people how to spend their money.
- gaius 16y ago
  Oh absolutely. Some routes I fly are only serviced by Ryanair, and I sometimes see business travelers who buy two seats so they can put their work next to them. No doubt they, or at least their companies, are delighted at how much money they're saving compared to BA. I keep meaning to ask one, are you working so hard so you can take your family on holiday to Butlin's in Skegness?