Outsourcing = Economic Activity
By Arnold Kling
SO YOU want to withdraw cash from your bank account? Do it yourself. Want to install a broadband internet connection? Do it yourself. Need a boarding card issued for your flight? Do it yourself…
Many people complain about companies outsourcing work to low-wage economies: but how many notice that firms are increasingly outsourcing work to their own customers?
Thanks to Michael Stastny for the pointer.
On the other hand, Glenn Reynolds quotes Virginia Postrel.
“As incomes go up, Americans spend a greater proportion on intangibles and relatively less on goods. One result is more new jobs in hotels, health clubs and hospitals, and fewer in factories.
“In 1959, Americans spent about 40 percent of their incomes on services, compared with 58 percent in 2000. That figure understates the trend, because in many cases goods and services come bundled together.”
The service sector is growing, because consumers are outsourcing some activities (such as meal preparation and cleanup). At the same time, businesses are outsourcing other tasks to their customers.
It is interesting to note that in heavily regulated industries, such as medicine, little outsourcing takes place. Thus, if one of our children has what appears to be strep throat, we cannot self-diagnose and self-prescribe. Meanwhile, I would not hold my breath waiting for a health insurance company to compete for business based on offering consumers a “good experience” dealing with their rules and forms.
a good way to attain clarity in discussing the issue of outsourcing is to substitute the phrase “economic activity” for outsourcing
For Discussion. Why do computer-related businesses try to outsource technical support to their customers, and what alternatives should they consider?