This installment’s “guest vetter” is Martin Neil Baily, now with the Brookings Institution. He was chairman of President Bill Clinton’s Council of Economic Advisors and is a certified VKP (very knowledgeable person). If you wish to be even more suitably impressed, check out his bio.
Question/Comment: I was interested in the piece you recently did about short supply chains and how that seemed to be implying that the days of outsourcing may be coming to an end. You focused on blue-collar jobs in the report. Do you have any information on white collar jobs such as computer programmers? (I admit that this is a completely personal question. I was once a programmer and I am wondering if I will ever work again in my chosen profession.)
Paul Solman: I didn’t mean to imply that the days of outsourcing are coming to an end, only that the outflow may not be as great as anticipated. As it is, two very eminent economists think outsourcing has been overstated. (See What Happened to the Great US Job Machine? by guest vetter Martin Baily and Robert Lawrence).
As for computer programming, it would seem to be a profession in which the supply chain can be short, and yet the programmer can be far away, while only light-seconds from the home office.
Martin Neil Baily: The outsourcing of service jobs has been going on a long time, with most of the jobs outsourced to other companies here in America-cafeteria workers, management consulting companies, etc. In the past few years, more of those jobs are being done overseas-call centers and computer programming, for example.
Three points: 1. So far, service sector off-shoring is very small in relation to the massive U.S. economy. Service imports from India in 2006 were 0.05 percent of U.S. Gross Domestic Product-tiny! 2. Overall, we benefit from services trade and the U.S. is actually running a significant and growing surplus in services trade. International trade creates service jobs in America. 3. Some workers do lose out as a result of this form of trade; basic computer programming jobs have declined, although overall high-tech employment has grown substantially.
There was a meeting at Princeton recently on this issue with a debate between Alan Blinder and myself. See copies of the presentations through the links here.