I guess that I see that as a short term phenomenon. In the long run, if US workers have higher productivity, their wages will be higher. Otherwise, the wage gap will narrow over time. If we impose trade barriers which prevent services from being offshored, then the equilibrium will occur in a different way. Perhaps the US companies making products (possibly for export) which might have contracted overseas for some of their IT services will instead lose market share to overseas competitors.
As it happens, I am unafraid of the scenario you describe. The US is actually a next exporter of services (like offshored IT), so making trade less free would be more likely to hurt than help (for good measure, less free trade would have indirect effects which would make unrelated US industries less competitive).
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timeasmymeasure
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Date: 2004-12-31 04:38 pm (UTC)As it happens, I am unafraid of the scenario you describe. The US is actually a next exporter of services (like offshored IT), so making trade less free would be more likely to hurt than help (for good measure, less free trade would have indirect effects which would make unrelated US industries less competitive).