In this election, outsourcing is getting a lot of heat from the left as a force destructive to our economy. The right, on the other hand, seems to believe that outsourcing is generally good for the economy. The Indian press seems scared. Which is it?
The answer clearly depends on the perspective of the person asking the question. But with some basic assumptions, one can, I believe, come up with an analytical perspective that makes some sense.
Let me begin by making some basic assumptions (assumptions that many will disagree with, but I believe are reasonable and defensible). First, the political right identifies primarily with shareholder and ownership rights – in the US often tied closely to private property rights. As such, that which is good for the “owners” – which include diverse shareholders – is viewed as good for the country and the economy.
The left takes a somewhat different approach, looking at what is good for stakeholders. These stakeholders include the communities, employees and environments of the companies – as well as the shareholders. Depending on the gradation of left, ownership rights can be equally to slightly more important than stakeholder rights – or substantially subservient to the rights of the other stakeholders.
Analyzing outsourcing in this manner, one can easily see how one group – the outsourcing companies, the C-level large company executives and the major shareholder groups would be aligned to support a pro-outsourcing position. After all, it is good for the bottom lines of these companies, good for the shareholders and good from the economic perspective of these players.
The other group, including labor unions, many community governments, local service providers and local businesses, aligns against outsourcing. Why? Because it adversely affects their micro-economies – either directly or indirectly.
Because there are so many pundit talking about outsourcing – and since Mr. Obama is making it a political issue, this is a debate that will likely last through the election. Understanding the underlying perspective will, therefore, be useful in any policy analysis. Hopefully, this short post will help explain the seemingly opposite positions.
