Alan Blinder's recent about-face on free trade, as described in Wednesday's featured Wall Street Journal front page article, provides a lot of food for thought.
Within the very long article, a key section, from my point of view, refers to Greg Mankiw, who, in 2004, as Bush's chairman of the CEA, stated,
"Does it matter from an economic standpoint whether items produced abroad come on planes and ships or over fiber optic cables?....Well, no, the economics is basically the same...More things are tradable than...in the past, and that's a good thing."
The point is not that education, or even "skills," per se, protect against Ricardian effects of trade. It is simply the ability to add value. If it can be added elsewhere, then workers in first country are at risk. Theoretically, given certain assumptions of transportation costs and timeframes, an Indian could replace your local shoe shiner.
As always, Americans have to innovate. And some 'innovations' may be less lasting or successful than you would imagine. For example, my father has tossed out his PC, for an iMac. Microsoft's subcontinental Indian 'helpless' desk finally drove him to reject the brand wholesale. I have read of other call centers returning to US shores, as Americans find themselves furious over poor communications with distant customer "service" reps.
Blinder is, I think, being somewhat foolish in cataloging his "little list" of occupations, with his assessment of their ability to be outsourced offshore. Such replacement of US labor is a function of speed and uniqueness of delivery of solutions to customer needs, not merely the availability of educated people on other continents, connected by packet networks of voice and/or data.
It's one thing for a company to choose locations from which it will serve its customers. It's quite another for a country to begin enforcing those choices by fiat. The US is, fortunately, still not France. Let's hope Alan Blinder doesn't influence too many politicians, or it soon may be headed in that direction.
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