Nothing new here. Drezner has always been blind to the problems inherent in globalization. This is not to say that free trade is bad. But I think it's pretty clear to all except Dan that companies are scouring their payrolls looking for jobs that can be done by a contractor in a cheaper country, and that the US economy has only retail sales jobs to take the place of the lost programming/telephone support/insurance adjuster/etc jobs. Many economic experts say it should be expected that the effective increase in the supply of low-cost labor at all skill levels should depress wages while increasing profits. What is so difficult to understand about that?

I agree that eventually, the US economy will adapt, and that gradually China will respect workers' rights and the environment more, but the long run will not arrive soon enough for many Americans. By the way, it's not clear what exactly IS the US' comparative advantage that will produce this miracle. It seems to me that we oought to be more concerned about enhancing our competitiveness.

1 of 7 homes in Cleveland is in foreclosure proceedings, and real incomes are declining steadily. Why? The decimination of light and medium manufacuturing, the slow motion suicide of domestic auto makers, amd the difficulty of making a living on an $8 an hour job.

Michigan is worse than Ohio.

After a worker loses a job, healthcare, pension and home, shopping at Wal-Mart does not compensate, except in the minds of some economists.

Clearly we are creating new jobs, mostly in healthcare and government. We will just need more taxes to pay for the healthcare and more government to administer it. All solved. Now you can go back to sleep.

Blinder also assumes that not only will the job shift happen incredibly quickly, but that somehow this incredibly high productivity, equal to that of the US and other advanced economies, that he's predicting for China and India will neither lead to higher wages nor a massive increase in the wealth of the entire world to be shared, or if it does at least not in the short run.

I think it's rather bizarre to assume that the one thing would be so incredibly fast but the other response so slow.

But I think it's pretty clear to all except Dan that companies are scouring their payrolls looking for jobs that can be done by a contractor in a cheaper country, and that the US economy has only retail sales jobs to take the place of the lost programming/telephone support/insurance adjuster/etc jobs.

Astonishingly, really, that so many of my new graduate friends have taken jobs programming at Google, Microsoft, Amazon, and a host of smaller companies that are all expanding in the US. How can that be, given your statement? Amusing that you think that telephone support is better than retail sales.

The wages for offshoring jobs have gone up, and in the long run you get what you pay for.

Agreed - interpretations of "minimum working standards" are massively divergent event between e.g. the USA and France, let along for someone living in a hut trying to feed 6 ill relatives than for someone in corporate america who is annoyed that they cant buy a newer car or live in an area where their child will go to a better school...

Having said that, people around the world also have different impressions of the costs of labour standards - I work in Lesotho (less well known but bigger population than Botswana, Namibia or Swaziland) for the Ministry of Finance, and despite the long queues for textiles jobs, many despise the chinese for running the factories that offer these jobs - anti-chinese industry is a hot electoral ticket...

http://www.sabcnews.com/africa/southern_africa/0,2172,145742,00.html

Its a complex world out here! None of us should forget that.

Some quick thoughts on prqacticalities, based on my own experiences with working with personnel outsourced to India.

1. Retention has become a real problem. Intelligent people who do the arcane thing you have trained them at are much more valuable to a competitor, who is suddenly quite willing to pay them more.

2. because retention is a problem, productivity growth is not happening at the expected rate. If you are always having to train people, they are going to be slow to pick it up.

3. English is a real problem. Yes, the folks we work with in India speak English. They just don't speak it in a way that we Americans find easy to understand. The written English is also a bit eccentric. This makes communication (which is essential in a successful outsourcing project) really hard -- thus declines in roductivity.

Now, the economics of the tasks we have India do requires that we outsource. They are often well- educated, and so much cheaper. But the price for using them keeps rising. And the comunication problem (which is just going to be worse with the Chinese) makes it really tough to assign them complicated tasks? (How can I discuss the work project if I have to get them to repeat things twice?)

I just got a call from one "Kevin Watson", offering me some financial deal or another. Even pesky phone-solicitation has been outsourced.

Now, I used to ride to work on a bus route that also served a major phone bank operation in San Diego -- let's just say that if these people are outsourced, they don't have a lot of personal or financial resources to fall back on. It's not likely they will be getting one of those better jobs that comparative advantage enthusiasts are always going on about.

John Thacker, The fact that you can find a counter-example does not prove your theory. I know lots of people whose jobs were outsourced. They found other jobs, generally in sales, and always at a lower wage. But even more important is the overall statistic that median income is down in the US, even though average income is up. It doesn't take a PhD in econ to figure out what that means.

After participating in this debate for years, I have come to the conclusion that this is a religious dispute, in the sense that the facts are irrelevent to some people. Thacker and Drezner will only believe when THEIR jobs are affected.

Lord: very concise, thank you

It sounds as if Rodrik's biting comment about globalization's champions hit a nerve with Dan, whose otherwise convincing arguments in favor of trade liberalization have always had a sour garnish of obtuseness as to the negative consequences of that liberalization.

For the record, I don't find Rodrik that persuasive either -- for one thing, he elides over the fact that during the Bretton Woods era "developing countries" meant Japan and Europe. The majority of countries (and a vast majority of people) were indeed implementing "...their own growth strategies with limited external restraint," but they were failing miserably. One can question whether that was the fault of the Bretton Woods regime; actually, it pretty clearly was not. That still begs the question of whether anything like Bretton Woods is practicable now, in a much larger and more diverse world economy that incidentally has lifted hundreds of millions of people out of poverty.

With respect to Blinder, again, I tend to agree with Dan's view that Blinder is unduly alarmist, but "alarmist" is not the same as "completely wrong." I do believe the American economy is able to respond to globalization by creating new jobs; I do think that predictions of a sudden great sloshing of millions of high-paying tech and service jobs to India and China overlook a number of significant factors. But only parts of such predictions need to happen to cripple political support for further trade liberalization (indeed, this crippling is a process well underway already), and economists who watch complacently from the sidelines offering reassurances that all will come right are at a minimum not helping the cause of trade liberalization as much as they think they are.

Blinder also assumes that not only will the job shift happen incredibly quickly, but that somehow this incredibly high productivity, equal to that of the US and other advanced economies, that he's predicting for China and India will neither lead to higher wages nor a massive increase in the wealth of the entire world to be shared, or if it does at least not in the short run.

Quickly is a relative term. Quickly over the workspan of an individual, yes, but that is still decades. Of course he knows it will lead to higher wages and greater wealth but when there is such great disparity, higher wages will still be very cheap, and by far most of the wealth created will end up there and in a very few hands here.

Blind, blinder and blindest.

US business, not just manufacturing, has been outsourcing for at least two decades and NOT just offshore. It has focused on "non-core" tasks, loosely defines as all of that that is outside of the main business of the business, ie. from facilties management and other real estate activity to HR; "mail room," including copying etc; to payroll; one should get the picture. The vast/lion's share of this work does not go overseas/to countries with lower labor costs, but to US based service firms which specialize in the various disciplines, which are able to accomplish the tasks more effieciently and usually more professionally and certainly with less bureaucracy.

BTW, these outsourced jobs, often transferred from one org to another org, don't typically consititue "new" jobs but they're certainly not burger flippin jobs, either and they're NOT in the magnitude of blind, blinder and blindest predictions.

Daniel, you need to update your book recommendation and book-o-the-month segments!!!!! Totally off topic, I know.

Many in the software industry are finding out-sourcing to be penny-wise/pound-foolish. Unless/until the management is out-sourced too, the communication delays eat the cost savings. It's slowly becoming clear that unless your product is not time-to-market-sensitive, it's worth paying for local production (again, moving the whole enterprise off-shore would also solve this problem, but that doesn't seem to be happening).

The decimination of light and medium manufacuturing,

You should look at some stats: The US is manufacturing more than it ever has, hardly decimation. The labor involved is far less (and the population has grown, I don't know if per capita we are doing better or worse), but that has as much to do with automation as off-shoring.

the slow motion suicide of domestic auto makers

And whose fault is that? Toyota seems to be doing just fine manufacturing in the US. The UAW is having a hard time organizing in the South because the wages (non-union at Toyota and union) are just about equal. They are emphasizing "security" - yeah, that's working out. (source: WSJ last week some time).