Block that Free Lunch
By Arnold Kling
Russell Roberts speculates on what might happen if Indian outsourcing really gets out of hand.
suppose Indians decided to work for free and give away the software, the ultimate competitive threat. If outsourcing work to low-wage Indians is bad, surely free software from zero-wage Indians is even worse.
Free software would be hard for the U.S. workers in the software industry to compete with. But it would be a boon for America — plenty of U.S. outfits would expand. Having free software would let a lot of new companies come into existence that couldn’t have been profitable before. Programs at no cost would mean lower prices across the board. That would liberate resources to do new things all over the economy. Many of those out-of-work American programmers would find new jobs.
My guess is that free software would be subject to John Kerry’s proposal requiring three-month advance notification for outsourcing.
Kerry’s major rival for the nomination, North Carolina Sen. John Edwards, also supports the idea. He and Kerry are co-sponsors of legislation in the Senate that would require the 90-day notification.
Thanks to Kevin Brancato for the pointer to Roberts’ piece. Kevin’s value-added is a back-of-the-envelope calculation comparing the wages of low-skilled workers one hundred years ago to today.
For Discussion. Many European countries have laws that make it difficult to lay off workers. How have these laws affected their employment situation?