Tag: outsourcing

Outsourcing American Jobs

Outsourcing is once again in the news, including this attention-grabbing headline: “Developer outsources job to China so he can watch cat videos.”

That’s a pretty self explanatory, though misleading, characterization, I’d say.  It seems he’s outsourcing his job because he can reduce his own personal costs significantly without a detectable decrease in quality.  That’s efficiency enhancing, no?

Further evidence to support my conjecture comes near the end of the article:

The kicker: Further digging found that Bob was taking jobs with other firms and outsourcing that work to China too.  “It looked like he earned several hundred thousand dollars a year, and only had to pay the Chinese consulting firm about fifty grand annually,” said Verizon.

All this seems to suggest that there is no world equilibrium wage in the software industry right now.

And, as for what he does with the time saved — watching lolcats videos — well, de gustibus non est disputandum.

Whatever Works

The misery accompanying the U.S. recession / depression manifests itself firstly, I think, through the job market.  There seems to be an increasing perception that policymakers in Washington and at the Fed aren’t taking the unemployment situation seriously enough. Nonetheless, jobs are certainly on the minds of people who have them and, even moreso, people who don’t have them. We learned yesterday that the declining unemployment rate is actually bad news. Why? Well, in order to be counted as unemployed, a person has to be seeking employment, and consequently so-called discouraged workers, people who are no longer looking for work, do not count as unemployed.  And would-be workers are pretty darned discouraged.

This gives us a fundamental measurement problem, how can we determine how bad the employment situation really is?  One common way to tackle it has been to track the total adult population in the workforce.

EmpPop

As you can see, the picture isn’t a pretty one. Continue reading Whatever Works

The End is Near

Many students find the end of the term the ideal time to break up with that not-so-special person they’ve been seeing.   Maybe your returns to scale in the relationship are constant or even decreasing.  Or maybe you really don’t have that much specific capital invested in the relationship (K is low).  Or, perhaps, you’ve found a relatively higher redeployment value for your affections.   If that’s the case, transaction cost theory suggests that you might consider outsourcing your break up.

That’s right, a mere $10, will get you into a “basic break up,” with escalating rates based on increasing specificity (engagement, divorce), but, interestingly, not based on increasing complexity.

Huh.

McOutsourcing in Moscow

Solid New York Times piece on McDonald’s in Russia. To wit:

The company celebrated a different milestone earlier this year by outsourcing the last product — hamburger buns — it had made at a proprietary factory outside Moscow called McComplex. It was built before the chain opened its first restaurant. Nearly everywhere else, McDonald’s buys ingredients, rather than making its own. But in the Soviet Union, there simply were no private businesses to supply the 300 or so distinct ingredients needed by a McDonald’s outlet.

Everything — from frozen French fries to pie filling — had to be made from scratch at a sprawling factory.

McDonald’s is always a good lens through which to view the 118 or so countries where it operates. In the 20 years since McDonald’s arrived in Russia, enough private enterprises have sprung up to supply nearly every ingredient needed to operate one of its restaurants.

Today, private businesses in Russia supply 80 percent of the ingredients in a McDonald’s, a reversal from the ratio when it opened in 1990 and 80 percent of ingredients were imported.

Fascinating stuff. I could probably write an entire final exam around that passage.