On Wed, Mar 24, 2004 at 08:52:02AM -0800, Gautam Mukunda wrote: > > http://www.foreignaffairs.org/20040501faessay83301/daniel-w-drezner/the-outsourcing-bogeyman.html
Excellent article! Thanks for posting the link. Here it is in a more easily clickable form: http://tinyurl.com/2wg84 As for his suggestions on how to help the people affected by offshoring, I think he has one bad and one good. > The problem of offshore outsourcing is less one of economics than of > psychology -- people feel that their jobs are threatened. The best > way to help those actually affected, and to calm the nerves of those > who fear that they will be, is to expand the criteria under which > the Trade Adjustment Assistance (TAA) program applies to displaced > workers. Currently, workers cannot apply for TAA unless overall > sales or production in their sector declines. In the case of offshore > outsourcing, however, productivity increases allow for increased > production and sales -- making TAA out of reach for those affected by > it. It makes sense to rework TAA rules to take into account workers > displaced by offshore outsourcing even when their former industries or > firms maintain robust levels of production. TAA has been found to be largely ineffective. It encourages people to stay out of work longer since it provides a disincentive to take a lower paying job. One study (Decker and Corson, Industrial and Labor Relations Review v48 July 1995) found that those who went through the training program did NOT find better-paying jobs than those who did not attend the program. One alternative proposal is to only pay the displaced workers AFTER they find a new job, and only if their new salary is lower than their old salary. This provides a strong incentive to find a new job quickly, while partially compensating them for any loss in income (the compensation would phase out with time so they would still have an incentive to keep looking for a higher paying job which frequently means they have an incentive to train in an in-demand skill) > Another option would be to help firms purchase targeted insurance > policies to offset the transition costs to workers directly affected > by offshore outsourcing. Because the perception of possible > unemployment is considerably greater than the actual likelihood of > losing a job, insurance programs would impose a very small cost on > firms while relieving a great deal of employee anxiety. McKinsey > Global Institute estimates that such a scheme could be created for > as little as four or five cents per dollar saved from offshore > outsourcing. IBM recently announced the creation of a two-year, $25 > million retraining fund for its employees who fear job losses from > outsourcing. Having the private sector handle the problem without > extensive government intervention would be an added bonus. Now THIS idea I like. I've often thought that the world needs employment insurance that really behaves like insurance (costs based on risks and market rates, etc.) instead of like a handout that current "unemployment insurance" provides. -- Erik Reuter http://www.erikreuter.net/ _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
