From the Daily Reckoning; and I agree with this 100%. I'm glad I have some technical skills that can't be programmed, or be furnished by someone at a distance, on a computer. In a way I'm also glad my career is winding down.
Back in Ouzilly...
*** "Technology went bust on the Nasdaq," said a friend
visiting last night, "but it is changing the world anyway.
And what it means is that Americans and Western Europeans
are going to have tighten their belts...
"This is something most people haven't realized. So far,
we've seen the deflationary effects of China and India only
in the manufacturing sector, among blue collar workers.
Wages for manufacturing workers have not increased, in real
terms of course, in 30 years. Factories get shut down in
the U.S. all the time. And factory utilization has been
dropping for the last 4 years.
"But the next phase is going to affect white collar
workers. It's already happening. I'm working with companies
that do e-learning. Well, they've found that they can hire
people in India who speak good English...and offer
educational opportunities...via live internet...at a
fraction of the cost of other alternatives.
"It's possible because the cost of telecommunications keeps
falling. The telecommunications revolution is real...and
it's only barely begun.
"Already...you won't believe this, but when you apply for a
mortgage in the U.S. or make an insurance claim or
something that involves paper processing - like a credit
card application - the work is likely to be done in India.
In fact, there is a whole industry in India where people
learn to speak English with a Midwestern accent. They even
learn to do small talk...you know, they ask how the weather
is and things like that. You think you're talking to a
neighbor, but it's really someone in Delhi or Bombay...
"Well, these people will work for $1 an hour...or
less...and what they're going to do is to reduce the cost
of the service industries in the western world.
"Deflation, so far, has been confined to manufacturing,
where the Chinese and Indian can undercut costs. But the
service sector has been fairly immune. Now, it's going to
begin to see competition too. The barriers that have kept
wages high in America are coming down. Already,
globalization has knocked down a lot of the trade barriers.
You can ship physical items across borders with not much
trouble. The U.S. and Europeans try to protect their
markets from time to time, like import quotas on steel and
lumber, for example, but it generally doesn't work very
well.
"Now, the second barrier is coming down. I mean the barrier
against immigration. Only, people don't have to physically
immigrate...thanks to low-cost communications, they can
work from where they are. And a lot of office-style work is
going to go down in price. This is not just a blip on the
screen, but a trend that will last for decades - just as
deflation in manufacturing has been going on for the last 3
decades." |
