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Two cool news stories

The first cool news story is that the outsourcing industry in India is in trouble. A corollary (and more positive way of viewing it) is that American programming jobs are a little bit safer now. All without protectionist legislation, which is great.

I used to worry about outsourcing. I knew that we were in lean times for programmers, but I wasn't sure if it was because of the saturation that occurred during the tech boom, or because of outsourcing.

Economist Paul Craig Roberts was a big proponent of the latter view. Traditionally, free traders have pointed to the economic theories of David Ricardo, who said that with free trade every country would ultimately excel in producing whatever they have a comparative advantage in.

Roberts thesis was that Ricardo's theory was outmoded and said that countries with cheaper labor had an absolute advantage. In a debate with economist Jagdish N. Bhagwati he asserts  " that comparative advantage [theory] might be broken". His reasoning was that competitive quality was no match for third-world wages, and that the wage gap would never close.

I found many of his arguments persuasive (some of them a bit shrill), but wasn't completely convinced. I strongly believed (and still believe) that outsourcing would strengthen the Indian economy, thus making the wages there rise. I also believed that it wasn't necessary for the wage gap to close. Outsourcing has its costs, and it's only necessary for the gap to be narrow enough to make those costs unjustifiable. It didn't have to close.

It looks like I was right on both counts

The other cool story was George Bush's planned trip to Graceland with Japanese Prime Minister Junichiro Koizumi. Apparently Koizumi is a huge Elvis fan. I love the many amusing ways that Japanese culture and American culture influence each other. We love Speed Racer, Karaoke, and Pokemon. And they love Elvis!! And to think we used to be such mortal enemies.

I wonder if we will have this kind of relationship with Iraq someday. I hope I live long enough to see what the Iraqi equivalent of Pokemon will be.