Outsourcing is a corruption of the Ricardo principle [19th century economist] of comparative advantage: that is, nation’s should specialize only in commodities they are most efficient in producing, rather than attempting to be self-sufficient. In other words, when the US oil production began to wane, oil corporations turned to the huge reserves in the Middle East, and domestic oil was virtually abandoned for some thirty years until OPEC no longer would tolerate the longstanding $3 a barrel. When the cost of oil exploded in the 70s, suddenly the American automobile lost its prestige and the Japanese began to flood the market with its highly efficient four cylinder cars. Thus, the division of labor became worldwide.
Pandora’s box was opened and other nations joined the ranks of this modern division of labor. The likes of China and India with billions of idle hands could now be put to work as instruments of global capitalism. Into the efficiency equation came lower cost labor, together with capital outsourced to build modern factories abroad so technology and quality would not suffer. What could be more logical? After all, did not the backward southern states use the same strategy on the industrial north? So why not the same for developing nations?
The problem with economic theory is that it covers the human factor only as laboring consumers. What it fails to consider in its end run to the bottom line is the damage to the principle of self-sufficiency not only of a nation but the individual as well. Of course, in an interdependent society self-sufficiency, not to mention self-reliance, cannot be fully obtained, but if theory disregards the attainment completely, the esteem and independence of nations, along with their citizens, will be lost.
“Comparative advantage” should no longer imply that specialization of production is at the expense of human dignity. The Chinese worker should not be exploited in behalf of its own government and foreign capital; his reason for working is the same as the American worker, that is, to create comfort for himself and family while simultaneously generating prestige for his country and, yes, reasonable profit for capital.
What is happening today is shortsighted in that no nation will achieve 19th century advantage as each will be paranoid, looking over its shoulder wondering what other developing nation will be the next successor to “comparative advantage.” In its wake will be the drowning of human and national pride.
Copyright © 2004 Richard R. Kennedy All rights reserved. Revised: March 11, 2004.