Since World War II, trade and technology have been expanding rapidly. Increased technology has led to increased trade, which spurs increases in technology and contributes to a constant fear of outsourcing.

As technology progressed in the 1960s, Americans began to fear the loss of our manufacturing jobs. Then again, in the late 90s, we feared the loss of our administrative jobs. Today, we fear the loss of online jobs: graphic design, web development, translation, and transcription jobs are going overseas.

But each time technology has increased trade, the data shows that there was nothing to fear. Outsourcing was good for individuals in the past and online outsourcing is good for individuals today.

Moving Jobs Overseas

Historically, technology has always caused shifts in the labor market and these shifts always lead to an increase in human productivity. The invention of the airplane did not replace driving but allowed humans to travel widely, creating connections between cities and societies that would not have existed before.

Similarly, the evolution of the Internet has not resulted in robots eliminating all jobs but rather has provided humans with the tools required to increase productivity.

For over two centuries, starting with economists like Adam Smith and David Ricardo, people have recognized the benefits of trade at the international level. Ricardo referred to this as comparative advantage: even when one country is more productive than another in two industries, each nation is better off specializing in one field and trading for access to the other.

Online outsourcing is the modern manifestation of international trade and should receive the same support from economists as free trade does.

When outsourcing shifted manufacturing jobs overseas in the 60s, U.S. parent companies used more labor overall. Because outsourcing reduces costs for the firm, freeing up resources for capital investment elsewhere, the firm is able to hire more labor in new areas. Similarly, during the second wave of outsourcing in the late 90s, when American companies chose to outsource their back-office work to call centers in India, we saw an increase in trade and employment for U.S. foreign affiliates.