Neutralizing Outsourcing

In the Washington Post Outlook, Alan Blinder, a free-trader, points out the problems with outsourcing. The problems he identifies are very real, however limiting outsourcing is dealing with the effect rather than the cause of outsourcing. Advising workers to go into different fields does not fix the systemic problems which arise from and contribute to outsourcing.

The way to cope with outsourcing is to enhance employee-ownership and to adjust corporate governance to that paradigm. Capitalism is appropriately managed under a principal-agent model, which is a form of hierarchism. Employee-owned operations which retain this model will in no way outperform capitalist firms. The way to limit outsourcing, or to apply it only when it is not exploitive, is to expand both employee-ownership and the type of workplace democracy and pay equity we suggest on our web page. Once this is established in the American economy, either by unions concentrating their pension funds investment to control where their members work or by hijacking Social Security reform to include direct employee-ownership of the workplace, it can be brought overseas so that all workers for a multi-national and its suppliers have the same standard of living. If enough firms do this, currencies will automatically adjust so that moving operations to a country with an inferior standard of living will no longer be an economically viable option. This can even be done in former and current Marxist economies, a major source of current outsourcing.