4 ms·

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

by 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
        The existence or nonexistence of outsourcing won't change the fact that people do not always make the optimal economic decisions. The fear of some economic agent making a suboptimal decision is a pretty poor reason to argue against anything, unless there's something intrinsic to the economic good in question that inspires suboptimal decisions (drugs, gambling). In fact, when it comes to drugs, I bet the majority of people people on this website would support legalization of at least some drugs, and allow people to make their own bad decisions. But we're still poisoned with the notion that companies in market economies in general have to be prevented from making sub-optimal decisions. Why? Why do people still think this?
        gaius 16y ago
        Hey, I'm not calling for protectionist laws or anything. I'm just pointing out that people who outsource are optimizing the wrong thing if their goal is net wealth creation in the long term. And it most likely is; we'll all retire one day. Gambling is an entertainment product; it's no more or less a suboptimal use of money than going to the movies.
- 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.)

by olefoo 16y ago

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
      The existence or nonexistence of outsourcing won't change the fact that people do not always make the optimal economic decisions. The fear of some economic agent making a suboptimal decision is a pretty poor reason to argue against anything, unless there's something intrinsic to the economic good in question that inspires suboptimal decisions (drugs, gambling). In fact, when it comes to drugs, I bet the majority of people people on this website would support legalization of at least some drugs, and allow people to make their own bad decisions. But we're still poisoned with the notion that companies in market economies in general have to be prevented from making sub-optimal decisions. Why? Why do people still think this?
      - gaius 16y ago
        Hey, I'm not calling for protectionist laws or anything. I'm just pointing out that people who outsource are optimizing the wrong thing if their goal is net wealth creation in the long term. And it most likely is; we'll all retire one day. Gambling is an entertainment product; it's no more or less a suboptimal use of money than going to the movies.
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.)