The Logic of Outsourcing

One of the most common and most dangerous economic fallacies that the average person makes is to think of labor fundamentally differently than he thinks of other economic goods. It's easy for him to see that catering a wedding or offering legal counsel is a service, and that when the caterer or lawyer charges him a fee for it, he is acting as a consumer. It's not as easy to see that employers act as consumers of labor when they pay employees for their services.

For your weekly dose of fallacy, the ever-reliable has this in How to Effectively Debate Offshore Outsourcing:

If you buy a product that was not made in America, then aren?t you displacing an American worker?

Yes, if I buy a product made in another country, then I am guilty of displacing an American worker. But if that product is inferior to the imported product, then that worker should be displaced. This is why I say the playing field should be level - not tilted in American workers' favor. If the prices are the same, then the consumer can make the choice, and that will force efficiency and quality to rise both in America and foreign nations - this will result in the rise of the standard of living throughout the world while protecting the standard of living in America. (italics mine)

So if the economic good, labor, provided by a foreign worker is superior to the same supplied by a domestic worker, the labor-consuming employer should hire the foreign worker. This is indeed a rare burst of economic good sense from RAJ, odd as it is that it's in How to Effectively Debate Offshore Outsourcing.

Unless they deny that A) economic good X's identical quality to but lower price than good Y makes it superior, and/or B) labor can be thought of as simply another economic good, subject to the same laws that the rest are, their case against outsourcing fails even according to their own argument.

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(1) 1994 Mazda Proteg? (1)

(1) 1994 Mazda Proteg?
(1) 2002 Volkswagen Golf
(2) JVC CD MP3 in-dash car stereos
(1) Toshiba TV
(1) Samsung VCR
(2) Sony stereos
(myriad) overseas computer parts
(1) slowly expanding wardrobe of mixed domestic and foreign-made clothing
(rapidly approaching infinity) Canadian, British, German, and Mexican beers

Egads. I must be responsible for the loss of thousands of American jobs! Does this mean I have to pay more taxes? Maybe the Feds should send someone over to educate me in what economic decisions I'd better be making...

I think I've started to seek

I think I've started to seek out and buy non-American-made products just out of spite. :)

do any of you think there

do any of you think there will eventually be a chain called "America"? or something, which only sells products made in the US? i'm not sure if it would be feasable, but there is certainly a large enough groundswell to attempt it. why not?

In economics arguments, the

In economics arguments, the most common type of argument deployed by the illiterate is "this market is somehow fundamentally different than other markets. Apparently, the laws of economics only work for widgets and wheat.

This problem comes up most often in two areas - labor and health care. In calling these marets "different" that get the word "different" confused with "unique." All markets are unique, but few, if any, markets are fundamentally different so that they fail to obey basic economic laws.

Imports can be a mixed bag

Imports can be a mixed bag too, though. On the one hand, we love our Honda. It's cheap, reliable, safe, and gets great gas mileage.

On the other hand, a lot of ordinary household items made cheaply abroad are utter crap. Sure, they cost less, but you may actually spend more replacing them than you would on a higher-quality item. (Not to say that China, etc. are incapable of producing quality goods, but as a general rule, they don't.) There are certain items where I would prefer a moderately-priced, moderate to high quality American or European item, over one made for three cents out of inferior materials in some Chinese gulag. (Finding the American item is the hard part. Most people just see price, so of course the cheap crap often wins, even if it's not necessarily the best buy for the money.)

Labor IS fundamentally

Labor IS fundamentally different from other economic goods, as Bohm-Bawerk and Mises recognized. One distributes the entire available quantity of non-labor factors among the competing uses, limited only by the amount you have to invest. The employment of labor, alone, carries a positive disutility.

There is a fundamental difference between the cost of labor as a disutility, and the costs of other factors as a mere opportunity cost (entirely relative to the ability to charge for access to them).

Mutualist Economics
and particularly the chapter
A Subjective Recasting of the Labor Theory of Value

If I choose an imported

If I choose an imported product over a domestic product, then I have demonstrated by my action that I consider it to be superior (whether this is due to price or quality is immaterial). Ergo, ANY AND ALL displacements of domestic workers are justified by RAJ.o's own logic.

Do they not see this, or do they deny it?