[ale] India Outsourcing effects on the economy

[Greg Freemyer]

I did not read the thread on outsourcing, but I saw there was a lot of
interest.

I just came across this discussion at Morgan Stanley. (dated Jan 30, 04)

http://www.morganstanley.com/GEFdata/digests/latest-digest.html#anchor0

If Steven Roach (SR) is right the indian oursourcing issue could have
huge negative impact on the US economy.

ie.  SR argues indian outsourcing is preventing significant job growth
in the US, and that it will continue to do that:

>>
DB and SR: If that?s the case and this recovery remains jobless, then we
both agree that likely policy and political responses could well pose
the greatest risks of all.  Two stand out in our minds: First, the Fed
would stay overly accommodative, risking the creation of additional
asset bubbles that it will not have the ammunition to contain or to use
in limiting the post-bubble damage.  And second, Washington will
undoubtedly take the protectionist bait, erecting barriers to the free
flow of goods, services, capital, and people that borrow a page right
out of the Smoot-Hawley nightmare of the early 1930s.  We agree that the
outcome for a US-centric global economy under those circumstances would
be devastating.  The adjustments in world financial markets would be
wrenching.  

The stakes are obviously huge as an increasingly integrated global
economy attempts to come to grips with pressures on job and income
security.  Cycles come and go, but many of the structural pressures we
have debated above are likely to be enduring features of the macro
climate.  These are the tests that often mark critical turning points in
history.  In this case, the choice boils down to protecting old sources
of employment or fostering a climate that spurs new avenues of job
creation.  In our view, there can be no mistaking the real lesson of
this debate:  The world has to do a much better job in living with the
stresses and strains of globalization.  The alternatives are simply
unacceptable.  
<<

Greg
-- 
Greg Freemyer