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Other Industries Provide Models

As mentioned previously, many predictions about futuristic trends are based on extrapolation of current trends. But we can also "extrapolate" in another fashion: The trends that we've seen with outsourcing of jobs in automobiles, steel, textiles, and other forms of manufacturing are indicative of what we can expect with the knowledge-based industries in the next five to ten years.

Of course, an industry that manufactures tangible products is quite different from one dealing with intangible "bits" of knowledge. If we want to prevent entry of imported Japanese automobiles, French wine, or Cuban cigars, we can simply place customs inspectors at the ports of entry. If we really want to be extreme about it, we can arrest anyone that we see driving around town in a Japanese car and smoking a Cuban cigar with a glass of French wine in his free hand. But it's far more difficult to accomplish the same thing with knowledge-based products and services, for they provide no visible, physical presence. Arguably, a government ban (or tariff, or import duty) on such goods and services would be respected by law-abiding providers in foreign lands and customers in the domestic marketplace.

But even large, respectable companies are sometimes tempted to cheat. As we've learned from the government's limited capability to halt the importation of illegal drugs, it's very difficult to stop providers and customers who desperately want to trade with one another. As IBM's CEO Sam Palmisano put it at the company's 2004 annual shareholder's meeting, "Most people recognize that you can't lock down jobs, businesses and skills, and you can't lock down nations."29 Unless we shut down all or parts of the Internet, we simply cannot expect to stop offshore outsourcing of knowledge-based products and services to the same degree that we've accomplished with more traditional industries.

There's another important difference between the outsourcing situation with "old" industries and "new" industries: Blue-collar workers have less economic clout, and are typically less vocal, than white-collar workers. A lost job is just as much of a personal tragedy and a family crisis for a $25,000 assembly line worker as it is for a $50,000 computer programmer. However, the computer programmer is likely to be able to make his protest heard, in the form of mass e-mails, dedicated Web sites, and Internet discussion forums30. And notwithstanding the "equality" of sacrifice felt by the blue-collar and white-collar worker, the economic trickle-down consequences of a $50,000 lost job are likely to be greater than that of a $25,000 job—after all, that computer programmer's $50,000 salary was presumably being spent to purchase goods and services from other (domestic) providers, all of which will feel the impact of the lost income.

In terms of sheer numbers, there have probably been millions more unemployed automobile workers, steel workers, and textile workers during the past 20 years than there will ever be unemployed computer programmers, call-center workers, or back-office administrative employees. Assuming that approximately the same percentage of blue-collar and white-collar workers show up at the voting booth to express their opinions about outsourcing on Election Day, one might expect politicians to devote an equal amount of attention to both groups. But because white-collar workers tend to be more vocal31, and because they are more likely to have discretionary income to spend on campaign contributions, there's a good chance that politicians will pay more attention to them.

Politicians pay more attention for another reason: Outsourcing of white-collar, knowledge-based jobs is newer and more unexpected. Again, this is not to suggest that it was any less devastating for an automobile assembly line worker to lose his job in 1984 than it is for a computer programmer in 2004, but it's difficult for politicians to maintain their sense of righteous indignation for 20 years. Indeed, even the most sensitive, sympathetic friend or family member is likely to say to that unemployed auto worker, after five or ten or twenty years, "Enough already! What's done is done! Move on! Do something about it!" We might reach the same level of callous indifference a decade from now, when listening to the plight of unemployed knowledge workers, but for now, we (and the politicians) regard the situation as new, painful, and infuriating.

Notwithstanding these differences, it's still useful to think of the "traditional" examples of outsourcing whenever we contemplate what's likely to happen with this new form of outsourcing. For example, lots of workers lost their jobs, and lots of American companies went of business, but some of them scrambled and fought their way back into a competitive position. We should expect to see the same thing happen with the knowledge-based industries; and as you'll learn in Chapter 6, that means you should be looking carefully at your employer to see whether it has the awareness, the capability, and the determination to be a survivor in this new era of Darwinian competition. If your company is not going to survive, now is the time to jump ship and find a employer that will survive. If you decide to go down with the ship next year or the year after, you might get some sympathy from your friends, but it won't pay the rent.

Similarly, experience from the outsourcing of manufacturing jobs tells us that, notwithstanding the impassioned political speeches, the government isn't going to stop outsourcing. NAFTA hasn't gone away, imported automobiles haven't stopped arriving at our ports of entry, and nobody is seriously suggesting that we should outlaw shoes and shirts imported from China or Malaysia. As covered in Chapter 9, this is partly because of what I call the "Wal-Mart factor": Despite the loud protests about job losses caused by outsourcing, American consumers insist on their right to visit their local discount mega-store to purchase the best-quality, lowest-priced goods available. And I believe the same attitude will prevail with knowledge-based products and services as well.

But the American government and society have not been completely callous and indifferent to the economic consequences and personal pain caused by the outsourcing of manufacturing jobs during the past 20 years. We've spent millions of dollars—if not billions—on retraining programs, community revitalization efforts, and government subsidies to help launch new industries to take the place of the older ones. But, as with many well-intentioned social assistance programs, these efforts have often been under-funded, disorganized, and poorly promoted. The unemployed blue-collar workers who have been able to take advantage of these programs to launch a new career and rebuild their lives have either been very lucky that they were in the right place at the right time—or, more likely, they were very well-informed and very persistent. Darwinian principles are at work here, too.

As a result, we should expect that some unemployed COBOL programmers and accounting clerks are going to sit on their rear ends, whining about the inequity of their fate, while waiting for some unknown government bureaucrat to knock on their door and present them with a custom-designed, all-expenses-paid re-training program. But other COBOL programmers and accounting clerks will see danger looming ahead before they get laid off, and instead of spending their evening watching re-runs of Seinfeld and Sex and the City, they'll be busily googling the Internet to find out where they can apply for those hard-to-find government re-training funds.

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