Imagine these Chinese factory workers competing not on low wages, as they do now, but on innovation.

Published in the Gananoque Reporter

by Cameron Smith

For a generation the Gananoque area has seen industry vanish as companies either outsourced to Mexico or Asia, or refocused on core operations in the United States. And along with the departure of jobs came (at least from some parts) a hostility toward the whole idea of outsourcing.

I’ll return to the issue of lost jobs in a moment, but first let me look to the big picture. Outsourcing has delivered the greatest transfer of wealth and technology from rich countries to poor countries in the history of civilization, and this will change the dynamic that has been driving the world toward ruin. Population growth is the largest single issue we face, and it is growing fastest in disadvantaged regions. Yet we have known for more than half a century that by far and away the most effective birth control measure is to provide a decent standard of living. Outsourcing is providing this. It has already pulled hundreds of millions of people out of abject poverty. This doesn’t mean that they live comfortable lives; it does mean that they are able to see possibilities they never had before, and the pursuit of these possibilities inevitably will lead to a lower birth rate.

Among economists there is a debate over outsourcing and whether the rich countries really lose many jobs. The weight of the argument seems to be on the side of those who say the benefits that outsourcing brings to rich countries, in terms of efficiencies and increased exports of goods and services, are at least equal to the losses they suffer in departing jobs.

However, there are two kickers in this. The people who lose their jobs are not the ones who get new employment as a result of greater efficiencies and expanded services. So something needs to be done for those at the local level who are out of jobs. Secondly, the world is changing. Right now competition from India, China, and other countries to which we outsource work, is based on cheap labour. The big threat over the next 15 to 20 years, is that competition is going to shift to innovation as these countries concentrate on education and developing technology. If they take the lead in innovation, the tables will be switched. Rich countries will drop to second rank. And mid-sized countries, such as Canada, will decline farther and faster than the United States or the European Union. 

So, to come full circle back to Gananoque, there is, of course, a need for retraining and upgrading of skills, and there already are programs for this — at least in part. But by far and away the greater need is for area municipalities to contentrate on where they are going to fit in a world of fast-changing innovation. What needs to be done to attract centres of innovation?

The one overwhelming advantage that this area has is its beauty and its recreational possibilities. Konwledge workers can go anywhere in the world where they can hook up high capacity computers. Here is a great place to be. All knowledge workers will need will be career opportunities.