A well thought-out comment on outsourcing from slashdot

See the actual post for the debates

I would argue that the companies doing the outsourcing aren't bearing the full economic costs of the transition, and that there are other costs that need to be factored in.

First, there is the cost to the employees of finding a new job, which is never fully reflected in severance pay. Severance pay probably only covers the amount of time the employee will be idle. Other costs include retraining the employee to fit the new job (paid by his new employer), the psychological effects of having his job terminated (paid by him, his family, and society at large), the costs of moving if the new job requires it, and the loss of community if he does have to move. This last item is important: while a loss of community has all sorts of ill effects, the expectation of losing it several more times over the course of your work history is even worse. Ask anyone raised by parents who got moved around a lot by the military.

People who expect to move away end up less trusting, less willing to invest in new relationships, less willing to participate in community functions or worry about local issues. There was a time when the rich still had some sort of shared community life with their workers, and it was a time when employers had loyalty to their employees. But now those who own the wealth--and decide how it will be used--are more distanced from the rest of us, and have no stake in that shared community life. So they'll happily move jobs to Outer Ohfuckitstan to earn an extra 1% return on their investment, without regard for the problems these moves cause the wider society.

The country that benefits from the new jobs also receives increased inequality between the well-off and the poor. India's rise has been accompanied by increased tension between wealthy urban areas and poor rural areas. Back when everyone was poor, the rural areas weren't likely to complain about not having electricity, because few did have it, and it's hard to want things you don't see anyone else enjoying. While an increase in the standard of living is wonderful, it is poisonous to a society when extreme inequalities in wealth exist. Of course, by this metric, our own society is very, very unhealthy.

There is another cost that employers do pay, but rarely fully account for when planning an offshoring: the loss of expertise. No matter how well the departing employees train their replacements (and what's their motivation to do a good job?) it will be years before the replacements can match the original expertise. Some of the knowledge lost in transition may never be rediscovered, leading to permanent inefficiencies.

No, I'm not a socialist. But I'm coming to the belief that collective ownership of wealth is a good thing. If Bank of America was owned by its employees, then their salaries would show up on the "income" side of the accounting ledger rather than the "expenses" side, and much of the motivation to outsource would evaporate. Otherwise, there is an inherent conflict of interest between management and labor: management wants to keep costs low, and labor is simply another expense to be minimized.

Additionally, a worker-owned setup is necessarily more efficient. Workers have the greatest incentive to make the company run as efficiently as possible, so management doesn't have to spend its time figuring out how to best motivate the employees. The workers would just tell them. Worker-owned companies are also more concerned with long-term stability, because there is no golden parachute waiting if they can just keep the stock prices from tanking in the next three quarters. There is only the promise of continued employment. Finally, when a few investors own a company, the goal is to maximize their profit. When workers own a company, they still want to maximize their returns, but they can accept a wider variety of payment: a cleaner environment, more free time to spend with their families, improvements in the social fabric of their communities, less stressful working conditions.

In short, collective ownership allows the wealth of a company to serve the many, not the few. So bring it on, free market boy.