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Monday, June 21, 2004
Outsourcing or Innovation?
A question of outsourcing or innovation?
By Anthony Bradley
Special to Knight Ridder/Tribune

An edited excerpt follows. For the complete original article go here.

The article discusses the issue of outsourcing of jobs overseas and says that it ignores a crucial fact: People are always developing innovative ways to do things more efficiently and effectively. Human creativity, it says, is a double-edged sword, bringing productivity improvements and, very often, widespread job loss. But what we don't seem to realize is that the net result is not fewer jobs but more jobs -- and more productive ones.

Most job losses are a consequence of people cultivating creation.
To really understand what's going on, we need to look at the economic fundamentals and this question : Was the layoff caused by the introduction of a more productive technology, a smarter way to manufacture or a shift in consumer preferences?

Although outsourcing has generated headlines, it is not the chief cause of job losses. The Business Week magazine reports that 1 percentage point of productivity growth can eliminate up to 1.3 million jobs a year.

So, the cause of job losses is: Automation, which affects sectors like: construction, manufacturing, retail and wholesale trade, transportation, information and food services. Airlines have reduced the number of ticket agents because of airport kiosks, online ticket purchases and online check-in. Grocery store clerks are on the decline with the onset of automated checkout counters.

As the economy industrializes, the life cycle of entire industries is radically shortened.

Some specific examples:

The Innovation:
Lyman Blake's shoe-manufacturing machine.
The Consequence: the need to make shoes by hand quickly disappeared -- and so did related jobs.

The Innovation: Henry Ford's Model T.
The Consequence: Horse and buggy industry declined.
Another Consequence: Ford's mass production genius also spawned new industries -- many carriage companies flourished as makers of motor vehicle bodies -- and made human transportation exponentially more efficient.

The Innovation: Freon and the introduction of electric refrigerators.
The Consequence: the ice industry declined. (Until that point, ice was taken from rivers and ponds, cut into blocks and delivered to insulated storage buildings for summer use).

The Innovation: General Motors' Frigidaire "electric icebox".
The Consequence: icebox manufacturers, ice gatherers and the manufacturers of the tools and equipment needed to handle large blocks of ice, all went out of business.

The Innovation: Robots are used for factory tasks.
The Consequence: Jobs that were often dangerous, dirty and tedious, don't require humans anymore.
Another Consequence: Robots need to be manufactured, sold, installed, delivered, maintained, repaired and improved - and who will do that?

Technological advances must always occur within a sound moral framework. If consistent with genuine human flourishing, advances should be embraced as a product of human creativity rather than feared as a source of human suffering. Using foreign workers as scapegoats for the fallout from technological change sabotages any economy's preparedness for such change. This type of sabotage leads to misguided policies that impede productivity improvements and innovations -- which are the very things that make our lives more comfortable, safer and healthier.
posted by Naina @ Permalink 6/21/2004 01:51:00 AM   0 comments  --- Google It! ---
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