Friedman on outsourcing:
“Taking all this in, two things strike me about this outsourcing issue: One, economists are surely right: the biggest factor eliminating old jobs and churning new ones is technological change — the phone mail system that eliminated your secretary. As for the zippies who soak up certain U.S. or European jobs, they will become consumers, the global pie will grow, and ultimately we will all be better off. As long as America maintains its ability to do cutting-edge innovation, the long run should be fine. Saving money by outsourcing basic jobs to zippies, so we can invest in more high-end innovation, makes sense.
But here's what I also feel: this particular short run could be a real bear — and politically explosive. The potential speed and scale of this outsourcing phenomenon make its potential impact enormous and unpredictable. As we enter a world where the price of digitizing information — converting it into little packets of ones and zeros and then transmitting it over high-speed data networks — falls to near zero, it means the vaunted "death of distance" is really here. And that means that many jobs you can now do from your house — whether data processing, reading an X-ray, or basic accounting or lawyering — can now also be done from a zippie's house in India or China.”
Western Europe will soon hit by this phenomena. No doubt. In the future, you'll survive on the creations of new ideas and capital. That's it. The cost of production is so low overseas that it affords almost anybody a production capability that they will not have here in the US.
If you are in the rat race in the corporation, be very good at it or skip the game and start your own company. I predict of rapid growth in the one-two micro size business in this coming decades.
As a global trend, we will see more and more water flow effect downstream based on cost and quality. All commodities will be done at the cheapest price (the Wal Mart effect), which is a moving target as the reality of cost shifted from one high demand place to another.
India will get more expensive as the economy improves and other smart countries will style itself just like India and take the price/brain that India has over US.
One thing is, never bet against the US. As long as the United States keeps its border open, it will still become the place of destination for the smartest and hardest working people on earth.