January 29, 2005

Cold, Naked and Hungry. (What do you get from trade barriers?)

 
  
There is no logical reason to focus on outsourcing across national boarders any more than outsourcing of any other kind. Actually, the word outsourcing can be misleading, because people think there is something that distinguishes outsourcing from trade. Outsourcing is simply trade in services. Anytime you hire someone to provide a service you are outsourcing. If you go to a barber, a restaurant, lawyer, etc., you are outsourcing.
 
Try to imagine your life with no trade (including outsourcing). In other words, anything you pay for, you now have to do for yourself. What would your clothes be like? What kind of food would you eat? Do you think you would have much of a house? You can forget about electricity or toilets. Your only running water would be in a stream. If you want heat, start rubbing those sticks together.
 
Trade creates wealth. That includes trade in services (outsourcing). Those who want to throw up barriers, including barriers to outsourcing, need to realize that while they may think that a particular barrier benefits them personally, it means that the world as a whole is worse off. Since the world is not likely to restrict its trade barriers to those that benefit them personally, they may want to think again before advocating barriers to free trade. Trade is what separates us form a life in which we are all cold, naked and hungry.