Guest columnist
Outsourcing: the strains of global capitalism

By Floyd J. McKay
Special to The Times

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This newspaper's extensive look at job outsourcing and its implications for our region brings up side issues that will be important as the world's job base expands — as it surely will.

Outsourcing is the inevitable result of mature capitalism, and it was capitalism that won the Cold War with the collapse of the Soviet Union, the only non-capitalist society of any significance. Don't call China communist any longer; it is rapidly becoming one of the premier capitalist societies on Earth, putting the lie to the idea that capitalism only works in a democratic society.

China is one of two major recipients of outsourcing, the other being India.

The sheer size of these nations — together nearly 2.5 billion people — means that even if outsourcing is limited to the relatively elite, educated class, there are more people willing to work hard and compete than there are jobs in the United States. The city of Mumbai (formerly Bombay), featured in The Times last Wednesday ("High technology from India is just down the street," page one), is more populous than the combined states of Washington, Oregon and Idaho.

One of the implications of a shift of wealth to these nations is a frightening increase in demand for the world's natural resources, particularly oil and natural gas.

Americans should see the train coming down the track. As China and India grow their economies and working families begin earning middle-class incomes, the demand for energy expands. Already, China's increased demand for oil is blamed in part for the increase in oil prices. And we ain't seen nothing yet!

Chinese and Indians are not so different from Americans. A family with additional spending power will want a car, a larger home (perhaps with air conditioning), and electric gadgets. When I was in China two decades ago, traffic in Shanghai meant jams of bicycles. Today, the jams are automotive.

It is not radical to predict that the super-size SUVs of 2004 will mark the end of the oversized, gas-guzzling era for Americans. As more nations go automotive, the world's limited supply of oil will be more expensive. Europeans are already well ahead of us in driving sensible-size vehicles, and resentment of our gas-hogging habits is a factor in the world's image of this country.

Add to oil a host of other natural resources that accompany an advanced, mature, capitalist society, and the implications of spreading the workforce mean additional pressure on resources and also the world's limited supply of clean air and water, timber and farmland. As nations such as China and India grow their economies and welcome more into the middle class, America and Europe will be forced to work and buy smarter. This country has no energy policy other than to drill and dig; that is not enough in the 21st century.

A second implication worth pondering is the location of outsourcing. Beyond India and China, the top 10 outsourcing locations include three others in Asia (Singapore, Malaysia, Philippines), two in Latin America (Brazil, Chile), two in Europe (Poland, Czech Republic), and Canada.

What is missing here are the world's poorest nations, in Africa, and the world's most volatile area, the Middle East. Only two nations with a sizable Muslim population (India, Malaysia) are listed.

Lack of education, despotic and corrupt governments and, in the case of the Muslim world, the heavy hand of religion are keeping these countries from the gravy train.

Nothing would help stabilize the Middle East, including Iraq and the Palestinian territory, like decent jobs for thousands of young men who have nothing to do when they awake in the morning other than shoulder a gun and go to war. Simply having millions of potential workers doesn't cut it in today's economy; the key is education and some acquaintance with a capitalistic economy. As long as the Middle East is in the grip of Islamists who reject modernity, the teeming slums like Baghdad's Sadr City will turn out armies of the unemployed, uneducated and unmotivated with nothing to do but go to war.

Africa is, generally speaking, less in the grip of religionists than it is crippled by disease, poverty and corrupt and dictatorial rulers. Opportunities for mature capitalism are few and educated Africans are well-advised to emigrate in search of work.

Can America, and the Western world, develop policies to avert the drain of resources and spread the wealth in ways that replace guns with jobs and alleviate the desperation of the poorest people? Capitalism is an economic force without a moral compass; that is the role of politics if it is to be done.

Floyd J. McKay, a journalism professor emeritus at Western Washington University, is a regular contributor to Times editorial pages. E-mail him at floydmckay@yahoo.com